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  1. 1. RELIANCE LIFE INSURANCE, KOPPAL A Project Report On Customer Relationship Management in Reliance Life Insurance KOPPAL Submitted in partial fulfillment of the requirements for Award of Master of Business Administration With Specialization In MARKETING Submitted by SUNIL CHOUDARY.K Reg No- MBA/08/48 Under the Guidance of COMPANY GUIDE INSTITUTE GUIDESANTOSH KUMAR B.R ROHITH C KALASKARCUSTOMER EXECUTIVE SECRETARY GENERAL HET-IMS HUBLI Indian Institute of Business Management Shivajinagar, Pune – 411 005 1
  2. 2. RELIANCE LIFE INSURANCE, KOPPAL DeclarationI hereby declare that the project entitled ―CUSTOMER RELATIONSHIPMANAGEMENT‖ undertaken at RELIANCE LIFE INSURANCECOMPANY LTD,KOPPAL submitted in partial fulfillment of therequirement for the award of the degree in Master in BusinessAdministration to the Indian Institute of Business Management, Pune. It ismy original work and is not submitted for the award of any otherdegree or diploma.PlaceDate SUNIL CHOWDARY.K 2
  3. 3. RELIANCE LIFE INSURANCE, KOPPAL ACKNOWLEDGEMENTAs I look back after the completion of my project I feel it would not have been possiblewithout the guidance. I am very grateful to all the people who have lent their precioustime and advice for rendering this project successful. I take this opportunity to thankthem all.Firstly, I am grateful to ―RELIANCE LIFE INSURANCE COMPANY LTD,KOPPAL‖ for giving me an opportunity to undertake this project in their organization.I sincerely express my thanks to my company project guide SANTOSH KUMAR B.Rfor his strong support and inspiration during my project period.I heartly thankful to all the executives of the company for their valuable guidance and forsharing their experience in completing this project successfully,I am thankful to our Chairman Dr. KALEEL AHMED for the strong inspiration duringthe project period.I would like thank our institute guide ROHITH C KALASKAR for having given methis opportunity and for his valuable ever-patient guidance ever endeavoring support,timely help and constant encouragement and also I am thankful to all faculty members ofmy institution for their valuable guidance in completing this project successfully.I also express thanks to my parents, my family members, and all my friends for theirvaluable support in completion of this project successfully.Last but not least I am thankful to all those people who helped us directly and indirectly.Place:Date: SUNIL CHOWDARY.K 3
  4. 4. RELIANCE LIFE INSURANCE, KOPPAL CONTENTS Chapter 1 Rationale for the study 1 Chapter 2 Objective of the study 2-3 Title of the project Objective of the study Scope of the study Chapter 3 Profile of the company 4-50 Chapter 4 Theoretical Perceptive 51-59 Chapter 5 Research Methodology 60-62 Research Design Data collection methods / sources Sampling plan which should include sampling unit, sampling size and sampling methods via questionnaire methods, interview methods, observations etc Chapter 6 Data analysis and interpretations using various charts and 63-77 graphs Chapter 7 Findings 78-79 Chapter 8 Limitations if any 80 Chapter 9 Expected contribution from the study 81-82 Appendix and Bibliography 83-89 4
  5. 5. RELIANCE LIFE INSURANCE, KOPPAL Rationale for the Project Reliance Life Insurance Company Limited is a part of Reliance Capital Ltd. of theReliance - ANIL DHIRUBHAI AMBANI Group. Reliance Capital is one of India‘sleading private sector financial services companies, and ranks among the top 3 privatesector financial services and banking companies, in terms of net worth. Reliance Capitalhas interests in asset management and mutual funds, stock broking, life and generalinsurance, proprietary investments, private equity and other activities in financialservices. Yet, nearly 80 per cent of Indian population is without life insurance cover whilehealth insurance and non-life insurance continues to be below international standards.And this part of the population is also subject to weak social security and pensionsystems with hardly any old age income security. This itself is an indicator that growthpotential for the insurance sector is immense. 5
  6. 6. RELIANCE LIFE INSURANCE, KOPPAL Title of the Project “Customer Relationship Management in Reliance Life Insurance” OBJECTIVES 1. To study the company‘s procedures conducted by the company for retaining the customers. 2. To study the current market trends in Customer Relationship Management. 3. To study the companies efforts in maintaining and motivating the advisors for retaining an existing customer and building a new customer 6
  7. 7. RELIANCE LIFE INSURANCE, KOPPAL SCOPE OF THE STUDY To understand the relations maintained by the Reliance Insurance Company withits customers. Ever increasing competition, low interest rates, and declining margins havedriven firms to discover the customer as the basic element in their business equationInsurance as a sector has shown tremendous growth in recent years. People now arebecoming more secured in terms of their life as well as their money. They want aprofitable benefit out of their investment. There is a need to know the companies‘ effortstowards convincing the customer about their product and to know how to create loyalcustomers. Insurance happens to be a mega opportunity in India. It‘s a business growingat the rate of 15-20 per cent annually and presently is of the order of Rs 450 billion. 7
  8. 8. RELIANCE LIFE INSURANCE, KOPPAL PROFILE OF THE COMPANYRELIANCE LIFE INSURANCE CO. LTD.Few men in history have made as dramatic a contribution to their country‘s economicfortunes as did the founder of Reliance, Shri. DHIRUBHAI AMBANI. Fewer still haveleft behind a legacy that is more enduring and timeless. As with all great pioneers, there is more than one unique way of describing the true genius of DHIRUBHAI: The corporate visionary, the unmatched strategist, the proud patriot, the leader of men, the architect of India‘s capital markets, the champion of shareholder interest. But the role Dhirubhai cherished most was perhaps that of India‘s greatest wealth creator. In one lifetime, he built, starting from the proverbial scratch, India‘s largest private sector enterprise. When Dhirubhai embarked on his first business venture, he had a seed capital of barely US$ 300 (around Rs 14,000). Over the next three and a half decades, he converted this fledgling enterprise into a Rs 60,000 crore colossus—an achievement which earned Reliance a place on the global Fortune 500 list, the first ever Indian private company to do so. Dhirubhai is widely regarded as the father of India‘s capital markets. In 1977, when Reliance Textile Industries Limited first went public, the Indian stock market was a place patronised by a small club of elite investors which dabbled in a handful of stocks. Undaunted, Dhirubhai managed to convince a large number of first-time retail investors to participate in the unfolding Reliance story and put their hard-earned money in the Reliance Textile IPO, promising them, in exchange for their trust, substantial return on their investments. It was to be the start of one of great stories of mutual respect and reciprocal gain in the Indian markets. 8
  9. 9. RELIANCE LIFE INSURANCE, KOPPAL Under Dhirubhai extraordinary vision and leadership, Reliance scripted one of the greatest growth stories in corporate history anywhere in the world, and went on to become India‘s largest private sector enterprise. Through out this amazing journey, Dhirubhai always kept the interests of the ordinary shareholder uppermost in mind, in the process making millionaires out of many of the initial investors in the Reliance stock, and creating one of the world‘s largest shareholder families. 9
  10. 10. RELIANCE LIFE INSURANCE, KOPPAL RELIANCE CAPITALReliance Life Insurance Company Limited is a part of Reliance Capital Ltd. of theReliance - Anil Dhirubhai Ambani Group. Reliance Capital is one of India‘s leadingprivate sector financial services companies, and ranks among the top 3 private sectorfinancial services and banking companies, in terms of net worth. Reliance Capital hasinterests in asset management and mutual funds, stock broking, life and generalinsurance, proprietary investments, private equity and other activities in financialservices. Reliance Capital Limited (RCL) is a Non-Banking Financial Company (NBFC) registered with the Reserve Bank of India under section 45-IA of the Reserve Bank of India Act, 1934. Reliance Capital sees immense potential in the rapidly growing financial services sector in India and aims to become a dominant player in this industry and offer fully integrated financial services. Reliance Life Insurance is another step forward for Reliance Capital Limited to offer need based Life Insurance solutions to individuals and Corporate.Reliance capital entered into the life insurance business by acquiring AMP Sanmar inOctober 2005. The business was thereafter renamed Reliance Life Insurance. TodayRLIC has over 20 products - 16 individual plans and 4 employee benefit plans - includingthe two new innovative products – Connect to Life and Reliance Money Guarantee Plan -that were launched recently.Reliance Life Insurance Company (RLIC) has been accorded the ISO 9001-2000certificate for its best-in-class management systems in Quality, Customer & Processorientation.With this, RLIC is one of the only two life insurance companies in India to get ISO9001:2000 certifications covering all functional areas. 10
  11. 11. RELIANCE LIFE INSURANCE, KOPPALThe scope of the certification covers the entire gamut of business processes ranging fromproduct design, sales - front-end and back-end operations, customer care and investment,to all business support functions. The certification has been awarded by internationallyacclaimed Bureau VERITAS and is valid till 2010 subject to continued satisfactoryoperation of RLICs Quality Management System."This certification is a significant milestone in our continuous quest to offer innovativeproducts, outstanding services and improved customer satisfaction. It indicates that wehave been able to install systems, processes & performance measures that are in line withthe best in the industry and will form the basis of our business growth in future", said PNandagopal, CEO, Reliance Life Insurance Company.Reliance Life Insurance is the fastest growing life insurance company in India and has anincremental market share of 4 per cent amongst private insurers. The company has thirdlargest distribution network in terms of number of agents operating out of 143 locationsacross the country.CORPORATE OBJECTIVEAt Reliance Life Insurance, we strongly believe that as life is different at every stage, lifeinsurance must offer flexibility and choice to go with that stage. We are fully preparedand committed to guide you on insurance products and services through our well-trainedadvisors, backed by competent marketing and customer services, in the best possibleway. 11
  12. 12. RELIANCE LIFE INSURANCE, KOPPAL CORPORATE VISION AND MISSIONVisionEmpowering everyone live their dreamsMissionCreate unmatched value for everyone through dependable, effective, transparent andprofitable life insurance and pension plans.Our GoalReliance Life Insurance would strive hard to achieve the 3 goals mentioned below:Emerge as transnational Life Insurer of global scale and standardCreate best value for Customers, Shareholders and all Stake holdersAchieve impeccable reputation and credentials through best business practicesAchievements RLIC has been one of the fast gainers in market share in new business premium amongst the private players with an incremental market share of 4.1% in the Financial Year 2007-08 – from 3.9% in April 07 to 8% in Feb 08. ( Source: IRDA) Also continues to be amongst the fast growing Private Life Insurance Companies with a YOY growth of 195% in new business premium as of Mar‘08. A Company that has crossed 1.7 Million policies in just 2 years of operation, post takes over of AMP Sanmar business. 12
  13. 13. RELIANCE LIFE INSURANCE, KOPPAL Initiated Express Life – an Unique ’Over the Counter’ sales process for Unit Linked Insurance Policies in the Industry. Accomplished a large distribution ramp-up in the Industry in a short span of time by opening 600 branches in 10 months taking the overall branch network above 740. RLIC continues to be one of the two Life Insurance companies in India to be certified ISO 9001:2000 for all the processes. Awarded the Jamnalal Bajaj Uchit Vyavahar Puraskar 2007- Certificate of Merit in the Financial Services category by Council for Fair Business Practices (CFBP).PRODUCTS OFFERED BY RELIANCE LIFEReliance has number of insurance products in it‘s Portfolio. It offers different productsfor different customer profile. It targets its product according to the needs of peoplewhich make them its customer.Protection PlansIn today‘s uncertain world, there could be calamity at every step of the life. It is up to youto ensure that your family stays protected always.Reliance Protection Plans helps you do exactly the same. You have a wide range ofoptions to choose a plan from. Right from limited period plans to lifetime protectionplans, you can opt for the one that suits your lifestyle.While we understand that nothing can compensate for the loss of a life, we intend toprovide you the peace of mind. Investing in Reliance Protection Plans would mean yourfamily‘s future is in safe hands. 13
  14. 14. RELIANCE LIFE INSURANCE, KOPPAL1.Reliance Term PlanInvest in the Reliance Term Plan, a pure life insurance plan that offers youcomprehensive and affordable coverage for a limited period of time to suit your needs.2. Reliance Simple Term PlanMake a smart investment move by investing in the cost-effective Reliance Simple TermPlan, which offers you comprehensive coverage for a specified period of time to suit yourneed.3. Reliance Special Term PlanImagine a life insurance policy, which on maturity returns to you all the premiums youhad paid for your basic policy. The Reliance Special Term Plan offers that and muchmore.4. Reliance Credit Guardian PlanThe Reliance Credit Guardian Plan secures your family from any loan liabilities you haveincurred in case of your untimely demise. On survival at maturity, you will be returnedall the premiums paid for the basic policy.5. Reliance Special Credit Guardian PlanInvest in the Reliance Special Credit Guardian Plan and protect your family from anyloan liabilities you have incurred. On survival at maturity, all premiums paid for the basicpolicy will be returned to you. 14
  15. 15. RELIANCE LIFE INSURANCE, KOPPAL6. Reliance Endowment PlanThe Reliance Endowment Plan gives you financial independence by allowing you todecide the amount of Sum Assured based on your current financial position and expectedfuture expenses… Dream!!..7. Reliance Special Endowment PlanImagine an endowment plan that protects you for a certain period even after you havereceived your lump sum—that is exactly what the Reliance Special Endowment Planoffers you with other added benefits.8. Reliance Connect 2 LifeThe Reliance Connect 2 Life Plan gives you the option to upgrade your life cover to keeppace with your changing lifestyle. As your income grows, your family will havesufficient cover.9.Reliance Whole Life PlanGive your family a lifetime of timely financial support by investing in the RelianceWhole Life Plan. This will help you enjoy your life to the fullest.10. Reliance Wealth + Health PlanInvest in the Reliance Wealth Health Plan and balance your health needs and wealthneeds, without compromising on either health or wealth. 15
  16. 16. RELIANCE LIFE INSURANCE, KOPPAL11. Reliance Cash Flow PlanInvest in the Reliance Cash Flow Plan and reap the dual benefits of a life insurance planand easy liquidity through lump sum cash, which means you can get a percentage of theSum Assured at periodic intervals.Savings & Investment PlansIn life, you have always given your family whatever they have wanted. Yet, there aresome promises you have to fulfill, such as taking your family for a vacation, or buyingthat dream house.Set aside some money to achieve these specific goals with the help of Reliance Savings& Investment Plans. The plan allows you to experience the joys of life and provide foryour family‘s needs.Enjoy life without worrying about the promises you have made—we are here to fulfillthem.1. Reliance Super Invest Assure PlanReliance Super Invest Assure is a complete plan which addresses your vital needs likeFlexibility, Security, Investment Return and Financial Planning. With all its key benefits,it is here to ensure that there will always be more than you can ask for!2. Total Investment Plan I - InsuranceReliance TIPS -Series I- Insurance is a Unit Linked Investment + Insurance Plan thathelps you meet all your financial needs, without the complexity of managing multipleproducts. 16
  17. 17. RELIANCE LIFE INSURANCE, KOPPAL3. Reliance Wealth + Health PlanInvest in the Reliance Wealth Health Plan and balance your health needs and wealthneeds, without compromising on either health or wealth.4. Reliance Automatic Investment PlanThe Reliance Automatic Investment Plan is an enhanced unit linked plan that allows youto choose the right investment mix to reap maximum benefits. It also provides you withenhanced Life Cover.5. Reliance Money Guarantee PlanTo reap the benefits of a rising market and to protect yourself from any market decline,invest in the unit linked Reliance Money Guarantee plan that gives you the perfectbalance between Protection and Savings.6. Reliance Cash Flow PlanInvest in the Reliance Cash Flow Plan and reap the dual benefits of a life insurance planand easy liquidity through lump sum cash, which means you can get a percentage of theSum Assured at periodic intervals.7. Reliance Market Return PlanThe Reliance Market Return Plan gives you insurance protection and allows you tobenefit from investment growth. It works through your life and meets the changingrequirements you may have from time to time. 17
  18. 18. RELIANCE LIFE INSURANCE, KOPPAL8. Reliance Endowment PlanThe Reliance Endowment Plan gives you financial independence by allowing you todecide the amount of Sum Assured based on your current financial position and expectedfuture expenses.9. Reliance Special Endowment PlanImagine an endowment plan that protects you for a certain period even after you havereceived your lump sum—that is exactly what the Reliance Special Endowment Planoffers you with other added benefits.10. Reliance Whole Life PlanGive your family a lifetime of timely financial support by investing in the RelianceWhole Life Plan. This will help you enjoy your life to the fullest.11. Reliance Golden Years PlanThe Reliance Golden Years Plan helps you save systematically and generate the much-needed corpus to help you enjoy life after retirement.12. Reliance Golden Years Plan ValueRealize all your dreams of playing golf, or going for a world tour after retirement byinvesting in the Reliance Golden Years Plan Value, which helps you generate the amountyou will need for the future. 18
  19. 19. RELIANCE LIFE INSURANCE, KOPPAL13. Reliance Golden Years Plan PlusInvest in the special Reliance Golden Years Plan Plus that not only helps you build thecorpus you need after, but also collects a basic minimum amount in case something wereto happen before you realize your dreams.14. Reliance Connect 2 Life PlanThe Reliance Connect 2 Life Plan gives you the option to upgrade your life cover to keeppace with your changing lifestyle. As your income grows, your family will havesufficient cover.Retirement PlansYou are a young and earning individual. The income you earn allows you to enjoy life,your only worry being whether you will be able to continue the same lifestyle afterretirement.A Reliance Retirement Plan will help you save money for your retirement. It ensures thatyou continue to get some income after retirement thereby ensuring that you do not haveto depend on any other person or make any compromises to maintain the same lifestyle.Invest in a Reliance Retirement Plan today and enjoy life after retirement on your ownterms.1. Total Investment Plan II - PensionWhen you invest in the Reliance Total Investment Plan, you give yourself the assurancethat you will make each one of your dreams come true!. 19
  20. 20. RELIANCE LIFE INSURANCE, KOPPAL2. Reliance Golden Years PlanThe Reliance Golden Years Plan helps you save systematically and generate the much-needed corpus to help you enjoy life after retirement.3. Reliance Money Guarantee PlanTo reap the benefits of a rising market and to protect yourself from any market decline,invest in the unit linked Reliance Money Guarantee plan that gives you the perfectbalance between Protection and Savings...Child PlansBeing a parent is one of the joys of life. Your child looks up to you and depends on youfor love, protection and support. You want to provide your child with the best in life.The Reliance Child Plan helps you save systematically so that you can secure yourchild‘s future needs. Be it higher education, his or her first home or any otherrequirement, you will always be there for your child when he or she needs you.So, invest in a Reliance Child Plan right away—it is the best gift you could ever giveyour child.1. Reliance Super Invest Assure PlanReliance Super Invest Assure is a complete plan which addresses your vital needs likeFlexibility, Security, Investment Return and Financial Planning. With all its key benefits,it is here to ensure that there will always be more than you can ask for!2. Reliance Child PlanSave systematically and secure the financial future of your child by investing in theReliance Child Plan and let your child enjoy today without worrying about tomorrow. 20
  21. 21. RELIANCE LIFE INSURANCE, KOPPAL3. Reliance Secure Child PlanReliance Life Insurance presents a unit linked insurance plan that secures your child‘sfinancial future, leaving you free from worry.4.Reliance Wealth + Health PlanInvest in the Reliance Wealth Health Plan and balance your health needs and wealthneeds, without compromising on either health or wealth.SOME LUCRATIVES PLANS WHICH RELIANCE OFFERSRELIANCE ENDOWMENT PLANIt takes a lot for a dream to become a reality. And money is surely an important part of it.Reliance Endowment Plan gives you just the financial independence to realize yourdreams in the future. It lets you decide how much you would like to set as your SumAssured based on your current financial position and your expected future expenses.So, go ahead... dream!!.Key Features1 .On maturity receive Sum Assured plus bonuses2. Wealth creation through bonus additions3. More Value for your money by way of High Sum Assured Rebate4. Choose to add the Benefit of three Riders-Reliance Term Life Insurance Benefit Rider,5. Reliance Critical Conditions Rider and Reliance Accidental Death and Total and6.Permanent Disablement Rider7. Choose to avail of Policy Loan after three years 21
  22. 22. RELIANCE LIFE INSURANCE, KOPPALCASH FLOW PLANWhile most insurance plans block your money for a certain period of time, Reliance CashFlow Plan gives you the double benefit of life insurance along with easy liquidity throughlump sum cash. It provides money periodically when you need it.It lets you live life to the fullest today and at the same time, helps you stay protected fortomorrow by giving you the flexibility of receiving a specified percentage of the SumAssured at specified intervalsKey FeaturesEasy Liquidity - Get periodic cash flows at the end of the fourth year and thereafter at theend of every three yearsWealth creation through bonus additionsOn maturity, accumulated bonuses along lump sum payout receive with finalMore value for your money by way of High Sum Assured RebateFull Sum Assured plus bonuses in case of your unfortunate death, this isover and above the Survival Benefits already paidOption to add two Riders - Critical Illness Rider & Accidental Death Benefit and Totaland Permanent Disablement RiderRELIANCE HEALTH + WEALTH PLANUNDER THIS PLAN THE INVESTMENT RISK IN THE INVESTMENTPORTFOLIO IS BORNE BY THE POLICYHOLDER.There are times when late working hours take precedence over your health check-ups.And there are times when a visit to the doctor seems more important than dividends onyour shares. In the rat race to make money, we often forget to take care of ourselves. 22
  23. 23. RELIANCE LIFE INSURANCE, KOPPALWe understand this predicament. Here is a plan that will ensure that your wealth keepsincreasing constantly and yet your health does not take a backseat. The RelianceWealth+Health Plan. A plan that gives you the benefits of wealth bhi. health bhiLife changes. And as it does, so do your priorities. After all, the circumstances of yourlife can determine the type of health coverage you need.India has made rapid strides in the health sector. Since Independence, life expectancy hasgone up markedly and survival rates have also increased, still critical health issuesremain. Infectious diseases continue to claim a large number of lives.Perhaps youre a freshly minted graduate, a joyful newlywed, retiring early or betweenjobs. Maybe youre running your own business or raising a family — or both. In any ofthe situations, GOOD or BAD, health cannot be taken for granted. All are affected by therising costs of medical expenses. That‘s why it is important to plan early and in advance.Reliance Wealth + Health Plan, a health insurance plan underwritten by Reliance LifeInsurance Company Limited, is designed to work in conjunction with contributionstowards savings. The uniqueness of this plan is that it not only provides benefits forcovered injuries but also for other injuries by encashment from the unit fund. This planfrom Reliance Life offers the Hospitalization and Surgical Benefits and also coversCritical Illnesses. In short this plan provides you with a personalized quality health coverthat fits your lifestyle.Key FeatureA Unit Linked plan with Unique Savings ComponentTwin benefit of market linked return and health protectionChoose from two different plan optionsFlexibility to take care of your family‘s healthFlexibility to switch between funds / plan options 23
  24. 24. RELIANCE LIFE INSURANCE, KOPPALOption to pay Top-upsOption to package with multiple ridersLiquidity through partial withdrawalsRELIANCE SUPERINVESTASSURE PLANUNDER THIS PLAN THE INVESTMENT RISK IN THE INVESTMENTPORTFOLIO IS BORNE BY THE POLICYHOLDER.You have always aspired for the best in life. And we help you achieve that.Here‘s a unique plan which combines protection and savings. It also offers completeflexibility to gain control over your investments vis-à-vis your financial needs and riskappetite.We value your regular investments and thus reward you with guaranteed additions thuspromising unmatched benefits. This plan also offers you a unique option of moving froma conservative fund to an aggressive fund systematically, to take advantage of the Rupeecost averaging model.A plan that promises you, what you ought to deserve as you reach greater heights in life.What more can you ask for except gifting yourself with Reliance Super Invest AssurePlanKey features – Reliance Super InvestAssure PlanTwin benefit of market linked return and insurance protection.Guaranteed additions at the rate of 50% of your first year‘s basic premium at interval ofevery 5 years from 10th year till policy is in forceInvestment opportunity with flexibility -Choose from 8 pure investment fund options.Option to pay Top-up premium(s) 24
  25. 25. RELIANCE LIFE INSURANCE, KOPPALLiquidity in the form of partial withdrawalsA host of optional rider benefits to enhance protection cover.RELAINCE AUTOMATIC INVESTMENT PLANUNDER THIS PLAN THE INVESTMENT RISK IN THE INVESTMENTPROTFOLIO IS BORNE BY THE POLICYHOLDERLife is indeed delightful if you have the freedom to make choices. The RelianceAutomatic Investment Plan gives you just that ample freedom! And we make thisfreedom more enjoyable by giving you a sense of security. Whether it‘s your insurance orinvestments, we let you make the choice and leave the rest to us.So allow us to take over and you can be rest assured, because for us your LIFE comesFIRST… always.This plan promise enhanced Life Cover, with complete flexibility to gain control overyour investments in tune with your financial needs and your risk appetite. A plan thatpromises you what you deserve as you reach greater heights in life.For a select few like you, the Reliance Automatic Investment Plan is an enhanced UnitLinked plan addressing comprehensive needs to strike that perfect balance of protectionand Savings with full flexibility as you grow in your career. The Reliance AutomaticInvestment Plan gives you full flexibility to choose just the right investment mix to reaphigher benefits.Key FeaturesTwo plan option to choose from Ready-made and Tailor-madeLife Stage asset allocation to ensure automatic change in investment patterns, under theReady-made Plan option 25
  26. 26. RELIANCE LIFE INSURANCE, KOPPALFreedom to decide your own fund mix based on your risk profile under the Tailor-madePlanAllows Systematic Transfer Plan to average out the cost of unit purchased in equalityRegular, limited, single premium paying optionsUnmatched flexibility through out ‗Exchange Option ‗Liquidity in the form of partial withdrawalOption to avail of Accidental Death and Total & Permanent Disability and TermInsurance ridersRELAINCE TOTAL INVESTMENT PLAN SERIES -1The journey of life, even though it may seem simple, comes with its own twists and turns,some good, some unfortunate. And along with these moments come new dreams. Withevery little twist, our dreams change and so do our ambitions. And most of all we desire asecurity that will help us follow our dreams, both financial and emotional. It is thissecurity that Reliance Life Insurance Company Limited promises to bring to you with itsTotal Investment Plan Series I Insurance.To know more, read further…We value your dreams in this journey of life. Reliance Total Investment Plan Series I -Insurance (TIPS-I -Insurance) helps you bring them to reality. Your need for investment,protection and financial liquidity keeps changing at different stages of life. The birth of achild will require you to increase your insurance cover; a marriage in the family willrequire additional money. We provide you that kind of flexibility which suits you best atyour convenience. Similarly on a promotion you may want to increase your investmentsto create a large kitty for future expenses. As you progress on this ladder of life weprovide you the platform to increase your investment. Usually you would require 26
  27. 27. RELIANCE LIFE INSURANCE, KOPPALmultiple financial products to meet all your needs and would have to actively managethem. However with the Reliance TIPS-I -Insurance, Unit Linked Investment + InsurancePlan you can meet all your financial needs, without the complexity of managing multipleproductsKey FeaturesThis is a Single Premium unit linked savings life insurance plan with options to purchasethe same plan with reduced allocation charges in subsequent policy years. Since morePremium is allocated towards investment due to lower allocation charges on subsequentpurchases, greater would be the returns. Purchasing the same plan in the subsequent yearsis an option.1st purchase would be called as ―Classic‖2nd purchase would be called as ―Silver‖3rd purchase would be called as ―Gold‖4th purchase would be called as ―Diamond‖5th purchase would be called as ―Platinum‖Once you purchase the first policy there will full flexibility, as to when second andsubsequent purchase can be made and how much Premium should be paid for eachpurchase subject to the following:The minimum Premium on each purchase should be at least Rs. 25000 for life assuredaged up to 40 and Rs. 50000 for life assured aged 41 to 64.The maturity date on each purchase cannot exceed 70 years.All the polices should mature on maturity date of the first purchase.The term of the polices purchased during second, third, fourth and fifth policy years willbe 9, 8, 7 and 6 respectively. 27
  28. 28. RELIANCE LIFE INSURANCE, KOPPALNew policy can be purchased only if all the previous polices are in force on the date ofpurchase of new policy.Plan Objective :The pace setter plan with protection to life which givesTax benefit under Sec. 80C and Sec. 10(10D)* of Income Tax Act 1961Investment opportunity with flexibilityLife protectionControl over your investments OVERVIEW OF INSURANCE SECTOR With 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 15-20 percent annually and presently is of the order of Rs 450 billion. Together with bankingservices, it adds about 7 per cent to the country‘s GDP. Gross premium collection isnearly 2 per cent of GDP and funds available with LIC for investments are 8 per cent ofGDP. Yet, nearly 80 per cent of Indian population is without life insurance cover whilehealth insurance and non-life insurance continues to be below international standards.And this part of the population is also subject to weak social security and pensionsystems with hardly any old age income security. This itself is an indicator that growthpotential for the insurance sector is immense. A well-developed and evolved insurance sector is needed for economicdevelopment as it provides long-term funds for infrastructure development and at the 28
  29. 29. RELIANCE LIFE INSURANCE, KOPPALsame time strengthens the risk taking ability. It is estimated that over the next ten yearsIndia would require investments of the order of one trillion US dollar. The Insurancesector, to some extent, can enable investments in infrastructure development to sustaineconomic growth of the country. Insurance is a federal subject in India. There are two legislations that govern thesector- The Insurance Act- 1938 and the IRDA Act- 1999. The insurance sector in Indiahas come a full circle from being an open competitive market to nationalization and backto a liberalized market again. Tracing the developments in the Indian insurance sectorreveals the 360-degree turn witnessed over a period of almost two centuries. Indian Insurance Industry: Insurance may be described as a social device to reduce or eliminate risk of life and property. Under the plan of insurance, a large number of people associate themselves by sharing risk, attached to individual. The risk, which can be insured against include fire, the peril of sea, death, incident, & burglary. Any risk contingent upon these may be insured against at a premium commensurate with the risk involved. Insurance is actually a contract between 2 parties whereby one party called insurer undertakes in exchange for a fixed sum called premium to pay the other party happening of a certain event. Insurance is a contract whereby, in return for the payment of premium by the insured, the insurers pay the financial losses suffered by the insured as a result of the occurrence of unforeseen events. With the help of Insurance, large number of people exposed to a similar risk make contributions to a common fund out of which the losses suffered by the unfortunate few, due to accidental events, are made good 29
  30. 30. RELIANCE LIFE INSURANCE, KOPPAL Potential Largely untapped market: 17% of the world‘s population o Nearly 80% of the Indian population is without Life, Health and Non-life insurance o Life insurance penetration is low at 4.1% in 2006-07 o Non-life penetration is even lower at 0.6% in 2006-07 o The per capita spend on life and non-life insurance is US$33.2 and US$5.2 (2006-07), respectively compared to a world average of US$330 and US$224 o Strong economic growth with increase in affluence and rising risk awareness leading to rapid growth in the Insurance sector o Innovative products such as Unit Linked Insurance Policies are likely to drive future industry growth o Investment opportunities exist in both Life and Non-life segments o Total estimated investment opportunity of US$14-15 billionSTRUCTUREIndian Insurance market was opened to private & foreign investment in 1999-2000  The Indian Insurance industry consists of a total of 31 players  Life: 1 Public sector player; 15 private players  Non-Life: 6 public sector players; 9 private players  Major international players like AIG, Aviva, MetLife, New York Life, Prudential, Allianz, Sun Life, Standard Life and Lombard are already present with minority stakes in joint ventures with Indian companies for both Life and Non-life segments  Life Insurance market is still dominated by Life Insurance Corporation (LIC) - a public sector company which has 75% share of first year premium in 2006-07 30
  31. 31. RELIANCE LIFE INSURANCE, KOPPAL  In Non-life, private sector companies (almost all are joint ventures with foreign insurers) accounted for 34% of the market in 2006 to 07.POLICY FDI up to 26% is permitted under the automatic route subject to obtaining a licensefrom the Insurance Regulatory and Development Authority (IRDA)Plans to increase FDI up to 49%Insurance Regulatory Development Authority (IRDA) is the regulator for the InsuranceindustryIn a landmark move the government detariffed the General Insurance business on 1stJanuary 2007What is Life Insurance? Life insurance is a guarantee that your family will receive financial support, evenin your absence. Put simply, life insurance provides your family with a sum of moneyshould something happen to you. It thus permanently protects your family from financialcrises. In addition to serving as a protective cover, life insurance acts as a flexiblemoney-saving scheme, which empowers you to accumulate wealth-to buy a new car, getyour children married and even retire comfortably. Life insurance is a contract that pledges payment of an amount to the personassured (or his nominee) on the happening of the event insured against.The contract is valid for payment of the insured amount during: 31
  32. 32. RELIANCE LIFE INSURANCE, KOPPAL The date of maturity, or Specified dates at periodic intervals, or Unfortunate death, if it occurs earlierThe functions of Insurance can be bifurcated into two parts:1. Primary Functions2. Secondary Functions3. Other FunctionsThe primary functions of insurance include the following:Provide Protection - The primary function of insurance is to provide protection againstfuture risk, accidents and uncertainty. Insurance cannot check the happening of the risk,but can certainly provide for the losses of risk. Insurance is actually a protection againsteconomic loss, by sharing the risk with others.Collective bearing of risk - Insurance is a device to share the financial loss of fewamong many others. Insurance is a mean by which few losses are shared among largernumber of people. All the insured contribute the premiums towards a fund and out ofwhich the persons exposed to a particular risk is paid.Assessment of risk - Insurance determines the probable volume of risk by evaluatingvarious factors that give rise to risk. Risk is the basis for determining the premium ratealsoProvide Certainty - Insurance is a device, which helps to change from uncertainty tocertainty. Insurance is device whereby the uncertain risks may be made more certain. 32
  33. 33. RELIANCE LIFE INSURANCE, KOPPALThe secondary functions of insurance include the following:Prevention of Losses - Insurance cautions individuals and businessmen to adopt suitabledevice to prevent unfortunate consequences of risk by observing safety instructions;installation of automatic sparkler or alarm systems, etc. Prevention of losses cause lesserpayment to the assured by the insurer and this will encourage for more savings by way ofpremium. Reduced rate of premiums stimulate for more business and better protection tothe insured.Small capital to cover larger risks - Insurance relieves the businessmen from securityinvestments, by paying small amount of premium against larger risks and uncertainty.Contributes towards the development of larger industries - Insurance providesdevelopment opportunity to those larger industries having more risks in their setting up.Even the financial institutions may be prepared to give credit to sick industrial unitswhich have insured their assets including plant and machinery.THE OTHER FUNCTIONS OF INSURANCE INCLUDE THE FOLLOWING:Means of savings and investment - Insurance serves as savings and investment,insurance is a compulsory way of savings and it restricts the unnecessary expenses by theinsureds For the purpose of availing income-tax exemptions also, people invest ininsurance.Source of earning foreign exchange - Insurance is an international business. Thecountry can earn foreign exchange by way of issue of marine insurance policies andvarious other ways.Risk Free trade - Insurance promotes exports insurance, which makes the foreign traderisk free with the help of different types of policies under marine insurance cover. 33
  34. 34. RELIANCE LIFE INSURANCE, KOPPALNeed for Life Insurance Today, there is no shortage of investment options for a person to choose from.Modern day investments include gold, property, fixed income instruments, mutual fundsand of course, life insurance. Given the plethora of choices, it becomes imperative tomake the right choice when investing your hard-earned money. Life insurance is a uniqueinvestment that helps you to meet your dual needs - saving for lifes important goals, andprotecting your assets.LET US LOOK AT THESE UNIQUE BENEFITS OF LIFE INSURANCE IN DETAIL.Asset Protection From an investors point of view, an investment can play two roles - assetappreciation or asset protection. While most financial instruments have the underlyingbenefit of asset appreciation, life insurance is unique in that it gives the customer thereassurance of asset protection, along with a strong element of asset appreciation. The core benefit of life insurance is that the financial interests of one‘s familyremain protected from circumstances such as loss of income due to critical illness ordeath of the policyholder. Simultaneously, insurance products also have a strong inbuiltwealth creation proposition. The customer therefore benefits on two counts and lifeinsurance occupies a unique space in the landscape of investment options available to acustomer.Goal based savings Each of us has some goals in life for which we need to save. For a young, newlymarried couple, it could be buying a house. Once, they decide to start a family, the goalchanges to planning for the education or marriage of their children. As one grows older,planning for ones retirement will begin to take precedence. Clearly, as your life stage and therefore your financial goals change, theinstrument in which you invest should offer corresponding benefits pertinent to the newlife stage. 34
  35. 35. RELIANCE LIFE INSURANCE, KOPPALLife insurance is the only investment option that offers specific products tailor-made fordifferent life stages. It thus ensures that the benefits offered to the customer reflect theneeds of the customer at that particular life stage, and hence ensures that the financialgoals of that life stage are met.The table below gives a general guide to the plans that are appropriate for different lifestages. Life Insurance Life Stage Primary Need Product Young & Asset creation Wealth creation plans Single Young & Wealth creation and Asset creation & mortgage protection Just married protection plans Childrens Married education, Education insurance, mortgage protection & With kids Asset creation wealth creation plans and protection Middle aged Planning for Retirement solutions & with grown up retirement & mortgage protection kids asset protection Across all lif- Health plans Health Insurance stages 35
  36. 36. RELIANCE LIFE INSURANCE, KOPPALInsurance Life V/S Other SavingsContract of Insurance: A contract of insurance is a contract of utmost good faith technically known asuberrima fides. The doctrine of disclosing all material facts is embodied in this importantprinciple, which applies to all forms of insurance. At the time of taking a policy, policyholder should ensure that all questions in theproposal form are correctly answered. Any misrepresentation, non-disclosure or fraud inany document leading to the acceptance of the risk would render the insurance contractnull and void.Protection: Savings through life insurance guarantee full protection against risk of death ofthe saver. Also, in case of demise, life insurance assures payment of the entire amountassured (with bonuses wherever applicable) whereas in other savings schemes, only theamount saved (with interest) is payable.Aid to Thrift: Life insurance encourages thrift. It allows long-term savings since payments canbe made effortlessly because of the easy installment facility built into the scheme.(Premium payment for insurance is monthly, quarterly, half yearly or yearly).For example: The Salary Saving Scheme popularly known as SSS provides a convenientmethod of paying premium each month by deduction from ones salary.In this case the employer directly pays the deducted premium to LIC. The Salary SavingScheme is ideal for any institution or establishment subject to specified terms andconditions.Liquidity: In case of insurance, it is easy to acquire loans on the sole security of any policythat has acquired loan value. Besides, a life insurance policy is also generally accepted as 36
  37. 37. RELIANCE LIFE INSURANCE, KOPPALsecurity, even for a commercial loan.Tax Relief: Life Insurance is the best way to enjoy tax deductions on income tax and wealthtax. This is available for amounts paid by way of premium for life insurance subject toincome tax rates in force.Assesses can also avail of provisions in the law for tax relief. In such cases the assured ineffect pays a lower premium for insurance than otherwise.Money When You Need It: A policy that has a suitable insurance plan or a combination of different plans canbe effectively used to meet certain monetary needs that may arise from time-to-time.Childrens education, start-in-life or marriage provision or even periodical needs for cashover a stretch of time can be less stressful with the help of these policies.Alternatively, policy money can be made available at the time of ones retirement fromservice and used for any specific purpose, such as, purchase of a house or for otherinvestments. Also, loans are granted to policyholders for house building or for purchaseof flats (subject to certain conditions) .Who Can Buy A Policy? Any person who has attained majority and is eligible to enter into a valid contractcan insure himself/herself and those in whom he/she has insurable interest. Policies can also be taken, subject to certain conditions, on the life of ones spouseor children. While underwriting proposals, certain factors such as the policyholder‘s stateof health, the proponents income and other relevant factors are considered by theCorporation. 37
  38. 38. RELIANCE LIFE INSURANCE, KOPPALInsurance For Women Prior to nationalization (1956), many private insurance companies would offerinsurance to female lives with some extra premium or on restrictive conditions. However,after nationalization of life insurance, the terms under which life insurance is granted tofemale lives have been reviewed from time-to-time. At present, women who work and earn an income are treated at par with men. Inother cases, a restrictive clause is imposed, only if the age of the female is up to 30 yearsand if she does not have an income attracting Income Tax.Medical And Non-Medical Schemes Life insurance is normally offered after a medical examination of the life to beassured. However, to facilitate greater spread of insurance and also to avoidinconvenience, LIC has been extending insurance cover without any medicalexamination, subject to certain conditions.With Profit And Without Profit Plans An insurance policy can be with or without profit. In the former, bonusesdisclosed, if any, after periodical valuations are allotted to the policy and are payablealong with the contracted amount. In without profit plan the contracted amount is paid without any addition. Thepremium rate charged for a with profit policy is therefore higher than for a withoutprofit policy.Key man Insurance Key man insurance is taken by a business firm on the life of key employee(s) toprotect the firm against financial losses, which may occur due to the premature demise ofthe Key man 38
  39. 39. RELIANCE LIFE INSURANCE, KOPPALPRINCIPLES OF INSURANCE Insurance is a specialized type of contract. Apart from the usual essentials of avalid contract, insurance contracts are subject to some additional principles. Theseprinciples provide the framework within which the product and all the contracts ofinsurance operate.  Principle of cooperation: A device to share risk & uncertainties collectively, one for all and all for one‘‘  Principle of probability: Important determinant of insurance premium, Rate of premium depends on quantum of risk & probability of risk  Principle of Insurable Interest: Interest of such a nature that the possessor would be financially injured by the occurrence of the event insured against, `` LA to be more valuable alive then dead  Principle of utmost good faith: The parties to the contract (insurer and insured) are legally bound to reveal each other all information about the subject matter, which would influence each other‘s decision.  Principal of warranties: A warranty is an undertaking by assured that some conditions shall be fulfilled, or a certain thing shall be or shall not be done. A warranty may be Express or Implied  Principle of Cause Proximal: In order to make the Insurer liable for loss, such loss must have been proximately caused by the Peril insured against. E.g. ADBR. These 6 principles are applicable to all the products, both life and Non-Life. These principles provide the framework within which the products and all the contracts of Life Insurance operate. 39
  40. 40. RELIANCE LIFE INSURANCE, KOPPAL HISTORY OF INDIAN INSURANCE INDUSTRY The insurance sector in India has come a full circle from being an open competitive market to nationalization and back to a liberalized market again. Tracing the developments in the Indian insurance sector reveals the 360-degree turn witnessed over a period of almost 190 years. The business of life insurance in India in its existing form started in India in the year 1818 with the establishment of the Oriental Life Insurance Company in Calcutta. Some of the important milestones in the life insurance business in India are 1912 - The Indian Life Assurance Companies Act enacted as the first statute to regulate the life insurance business. 1928 - The Indian Insurance Companies Act enacted to enable the government to collect statistical information about both life and non-life insurance businesses. 1938 - Earlier legislation consolidated and amended to by the Insurance Act with the objective of protecting the interests of the insuring public. 1956 - 245 Indian and foreign insurers and provident societies taken over by the central government and nationalized. LIC formed by an Act of Parliament, viz. LIC Act, 1956, with a capital contribution of Rs. 5 crore from the Government of India.The General insurance business in India, on the other hand, can trace its roots to theTriton Insurance Company Ltd., the first general insurance company established in theyear 1850 in Calcutta by the British. 40
  41. 41. RELIANCE LIFE INSURANCE, KOPPALSome of the important milestones in the general insurance business in India are: 1907 - The Indian Mercantile Insurance Ltd. set up, the first company to transactall classes of general insurance business. 1957 - General Insurance Council, a wing of the Insurance Association of India,frames a code of conduct for ensuring fair conduct and sound business practices. 1968 - The Insurance Act amended to regulate investments and set minimumsolvency margins and the Tariff Advisory Committee set up. 1972 - The General Insurance Business (Nationalization) Act, 1972 nationalizedthe general insurance business in India with effect from 1st January 1973. 107 insurers amalgamated and grouped into four companies viz. the NationalInsurance Company Ltd., the New India Assurance Company Ltd., the Oriental InsuranceCompany Ltd. and the United India Insurance Company Ltd. GIC incorporated as acompany. Before insurance sector was opened to the private sector Life InsuranceCorporation (LIC) was the only insurance company in India. After the opening up ofInsurance sector in India there has been a glut of insurance companies in India. Thesecompanies have come up with innovative and flexible insurance policies to cater tovarying needs of the individual. Opening up of the Insurance sector has also forced theLIC to tighten up its belt and deliver better service. All in all it has been a bonanza for theconsumer. The life insurance business in India started since 1818. Till 1956, theinsurance business was mixed and decentralized. In 1956, the life insurance businessof all companies was nationalized and a single monolithic organization, the LifeInsurance Corporation of India (LIC), was set up. The Insurance Regulatory and 41
  42. 42. RELIANCE LIFE INSURANCE, KOPPALDevelopment Authority (IRDA) Bill was passed by Indian parliament in December1999. The IRDA become a statutory body in April 2000 and has been framingregulations and restrictions the private sector insurance companies. The insurance sector was opened up to the private sector in August 2000.Consequently, some Indian and foreign private companies have entered the insurancebusiness. There are about 16 life insurance companies operating in the private sector inIndia. The insurance sector in India has come a full circle from being an opencompetitive market to nationalization and back to a liberalized market again. Tracing thedevelopments in the Indian insurance sector reveals the 360 degree turn witnessed over aperiod of almost two centuries. 42
  43. 43. RELIANCE LIFE INSURANCE, KOPPALABOUT THE INDUSTRY: With an annual growth rate of 15-20% and the largest number of life insurancepolicies in force, the potential of the Indian insurance industry is huge. Total value of theIndian insurance market (2004-05) is estimated at Rs. 450 billion (US$10 billion).According to government sources, the insurance and banking services contribution to thecountrys gross domestic product (GDP) is 7% out of which the gross premium collectionforms a significant part. The funds available with the state-owned Life InsuranceCorporation (LIC) for investments are 8% of GDP. Till date, only 20% of the total insurable population of India is covered undervarious life insurance schemes, the penetration rates of health and other non-lifeinsurances in India is also well below the international level. These facts indicate the ofimmense growth potential of the insurance sector. The year 1999 saw a revolution in the Indian insurance sector, as major structuralchanges took place with the ending of government monopoly and the passage of theInsurance Regulatory and Development Authority (IRDA) Bill, lifting all entryrestrictions for private players and allowing foreign players to enter the market with somelimits on direct foreign ownership. Though, the existing rule says that a foreign partner can hold 26% equity in aninsurance company, a proposal to increase this limit to 49% is pending with thegovernment. Since opening up of the insurance sector in 1999, foreign investments of Rs.8.7 billion have poured into the Indian market and 21 private companies have beengranted licenses.Innovative products, smart marketing, and aggressive distribution have enabled fledgling 43
  44. 44. RELIANCE LIFE INSURANCE, KOPPALprivate insurance companies to sign up Indian customers faster than anyone expected.Indians, who had always seen life insurance as a tax saving device, are now suddenlyturning to the private sector and snapping up the new innovative products on offer.The life insurance industry in India grew by an impressive 36%, with premium incomefrom new business at Rs. 253.43 billion during the fiscal year 2004-2005, braving stiffcompetition from private insurers. This report "Indian Insurance Industry: New Avenuesfor Growth 2012", finds that the market share of the state behemoth, LIC, has clocked21.87% growth in business at Rs.197.86 billion by selling 2.4 billion new policies in2004-05. But this was still not enough to arrest the fall in its market share, as privateplayers grew by 129% to mop up Rs. 55.57 billion in 2004-05 from Rs. 24.29 billion in2003-04 Though the total volume of LICs business increased in the last fiscal year (2004-2005) compared to the previous one, its market share came down from 87.04 to 78.07%.The 14 private insurers increased their market share from about 13% to about 22% in ayears time. The figures for the first two months of the fiscal year 2005-06 also speak ofthe growing share of the private insurers. The share of LIC for this period has furthercome down to 75 percent, while the private players have grabbed over 24 percent. There are presently 12 general insurance companies with four public sectorcompanies and eight private insurers. According to estimates, private insurancecompanies collectively have a 10% share of the non-life insurance market. 44
  45. 45. RELIANCE LIFE INSURANCE, KOPPALIndian Insurance Industry Forecast (2007-2009) The market research report ―Indian Insurance Industry Forecast (2007-2009)‖gives an in-depth analysis of the present and future of the Indian Insurance Industry. Themarket research report looks in to the details as well as gives an overview of the Indianinsurance market with focus on the performance of the key players. With the initiation of the deregulation in the Indian insurance market, themonopoly of big public sector companies in life insurance as well as general (non-lifeinsurance) market has been broken. New private players have entered the market andwith their innovative approaches and better use of distribution channels and technology,they are eating in to the shares of established public sector companies in Indian InsuranceMarket. Since the deregulations have been put in to place, the market share of LIC hascome down to 71.4% in life insurance market while the private players have capturedaround 17% market in the general insurance segment. It is said that, public sectorinsurance companies such as LIC and New India Assurance are registered impressivedouble-digit growths, which reflects on the overall health of the Indian insurance sector. 45
  46. 46. RELIANCE LIFE INSURANCE, KOPPALIndian Insurance Sector The Insurance sector in India governed by Insurance Act, 1938, the Life InsuranceCorporation Act, 1956 and General Insurance Business (Nationalization) Act, 1972,Insurance Regulatory and Development Authority (IRDA) Act, 1999 and other relatedActs.Life Insurance Corporation of India (LIC): Life Insurance Corporation of India (LIC) was formed in September, 1956 by anAct of Parliament, viz., Life Insurance Corporation Act, 1956, with capital contributionfrom the Government of India. Then the Finance Minister, Shri C.D. Deshmukh, whilepiloting the bill, outlined the objectives of LIC thus: to conduct the business with theutmost economy, in a spirit of trusteeship; to charge premium no higher than warrantedby strict actuarial considerations; to invest the funds for obtaining maximum yield for thepolicy holders consistent with safety of the capital; to render prompt and efficient serviceto policy holders, thereby making insurance widely popular. Since nationalization, LIC has built up a vast network of 2,048 branches, 100divisions and 7 zonal offices spread over the country. The Life Insurance Corporation ofIndia also transacts business abroad and has offices in Fiji, Mauritius and UnitedKingdom. LIC is associated with joint ventures abroad in the field of insurance, namely,Ken-India Assurance Company Limited, Nairobi; United Oriental Assurance CompanyLimited, Kuala Lumpur and Life Insurance Corporation (International) E.C. Bahrain. TheCorporation has registered a joint venture company in 26th December, 2000 inKathmandu, Nepal by the name of Life Insurance Corporation (Nepal) Limited incollaboration with Vishal Group Limited, a local industrial Group. An off-shore companyL.I.C. (Mauritius) Off-shore Limited has also been set up in 2001 to tap the Africaninsurance market. 46
  47. 47. RELIANCE LIFE INSURANCE, KOPPALGeneral Insurance: General insurance business in the country was nationalized with effect from 1stJanuary 1973 by the General Insurance Business (Nationalization) Act, 1972. More than100 non-life insurance companies including branches of foreign companies operatingwithin the country were amalgamated and grouped into four companies, viz., the NationalInsurance Company Ltd., the New India Assurance Company Ltd., the Oriental InsuranceCompany Ltd., and the United India Insurance Company Ltd. with head offices atCalcutta, Bombay, New Delhi and Madras, respectively. General Insurance Corporation(GIC) which was the holding company of the four public sector general insurancecompanies has since been de-linked from the later and has been approved as the "IndianReinsure" since 3rd November 2000. The share capital of GIC and that of the fourcompanies are held by the Government of India. All the five entities are Governmentcompanies registered under the Companies Act. The general insurance business has grown in spread and volume afternationalization. The four companies have 2699 branch offices, 1360 divisional officesand 92 regional offices spread all over the country. GIC and its subsidiaries haverepresentation either directly through branches or agencies in 16 countries and throughassociate/ locally incorporated subsidiary companies in 14 other countries. A wholly-owned subsidiary company of GIC, i.e. Indian International Pvt Ltd. is operating inSingapore and there is a joint venture company, viz. Ken India Assurance Ltd. in Kenya.A new wholly owned subsidiary called New India International Ltd., UK has also beenregistered. 47
  48. 48. RELIANCE LIFE INSURANCE, KOPPALInsurance sector reforms In 1993, Malhotra Committee, headed by former Finance Secretary and RBIGovernor R.N. Malhotra, was formed to evaluate the Indian insurance industry andrecommend its future direction. The Malhotra committee was set up with the objective ofcomplementing the reforms initiated in the financial sector. The reforms were aimed at―creating a more efficient and competitive financial system suitable for the requirementsof the economy keeping in mind the structural changes currently underway andrecognizing that insurance is an important part of the overall financial system where itwas necessary to address the need for similar reforms…‖.In 1994, the committeesubmitted the report and some of the key recommendations included:i) Structure: Government stake in the insurance Companies to be brought down to 50%Government should take over the holdings of GIC and its subsidiaries so that thesesubsidiaries can act as independent corporations. All the insurance companies should begiven greater freedom to operateii) Competition: Private Companies with a minimum paid up capital of Rs.1bn should be allowed toenter the industry No Company should deal in both Life and General Insurance through a single Entity.Foreign companies may be allowed to enter the industry in collaboration with thedomestic companies. Postal Life Insurance should be allowed to operate in the ruralmarket. Only one State Level Life Insurance Company should be allowed to operate ineach state. 48
  49. 49. RELIANCE LIFE INSURANCE, KOPPALiii) Regulatory Body: The Insurance Act should be changed. An Insurance Regulatory body should beset up. Controller of Insurance (Currently a part from the Finance Ministry) should bemade independent.iv) Investments: Mandatory Investments of LIC Life Fund in government securities to be reducedfrom 75% to 50%. GIC and its subsidiaries are not to hold more than 5% in any company(There current holdings to be brought down to this level over a period of time)v) Customer Service LIC should pay interest on delays in payments beyond 30 days. Insurancecompanies must be encouraged to set up unit linked pension plans. Computerization ofoperations and updating of technology to be carried out in the insurance industry. Thecommittee emphasized that in order to improve the customer services and increase thecoverage of the insurance industry should be opened up to competition. But at the sametime, the committee felt the need to exercise caution as any failure on the part of newplayers could ruin the public confidence in the industry. Hence, it was decided to allow competition in a limited way by stipulating theminimum capital requirement of Rs.100 crore. The committee felt the need to providegreater autonomy to insurance companies in order to improve their performance andenable them to act as independent companies with economic motives. For this purpose, ithad proposed setting up an independent regulatory body. 49
  50. 50. RELIANCE LIFE INSURANCE, KOPPALThe Insurance Regulatory and Development Authority Reforms in the Insurance sector were initiated with the passage of the IRDA Billin Parliament in December 1999. The IRDA since its incorporation as a statutory body inApril 2000 has fastidiously stuck to its schedule of framing regulations and registeringthe private sector insurance companies. The other decisions taken simultaneously to provide the supporting systems to theinsurance sector and in particular the life insurance companies were the launch of theIRDA‘s online service for issue and renewal of licenses to agents. The approval ofinstitutions for imparting training to agents has also ensured that the insurance companieswould have a trained workforce of insurance agents in place to sell their products, whichare expected to be introduced by early next year. Since being set up as an independent statutory body the IRDA has put in aframework of globally compatible regulations. In the private sector 12 life insurance and6 general insurance companies have been registered.Duties, Powers and Functions of IRDASection 14 IRDA Act, 1999 lays down the duties, powers and functions of IRDA 1. The Authority has the duty to regulate, promote and ensure orderly growth of the Insurance business and re- insurance business. 2. This Include - a) Issue to the applicant a certificate of registration, renew, modify, Withdraw, suspend or cancel such registration b) Protection of interests of the policy holders in matter concerning assigning Of policy, nomination by policyholders, insurable interest, settlement of insurance claim, surrender value of policy and condition of contracts of insurance. 50
  51. 51. RELIANCE LIFE INSURANCE, KOPPAL c) Specifying the code of conduct and practical training For intermediary 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 f) Promoting and regulating professional organization connected with insurance and reinsurance business. g) Levying fees and other charges for carrying out the purposes of this act. h) Calling from information from, undertaking inspection of, conducting enquiries and investigation including audit of the insurers, intermediaries and other organization connected with the insurance business i) Control and regulation of the rates, advantages, terms and condition j) Specifying the form and manner in which books of accounts shall be maintained and statement of account shall be rendered by insurers and other intermediaries. k) Regulating investment of funds by insurance companies. l) Regulating maintenance of margin of solvency. m) Adjudication of disputes between Insurers and intermediaries or insurance intermediaries. n) Supervising the functioning of the Tariff Advisory Committee. o) Specifying the % of Premium, Income of the insurer to finance schemes for promoting and regulating professional organizations Specifying the % of Life Insurance Business and general Insurance Business to beundertaken by the Insurer in the rural or social sectorInsurers Insurance industry, as on 1.4.2000, comprised mainly two players: the stateinsurers 51
  52. 52. RELIANCE LIFE INSURANCE, KOPPALLife Insurers Life Insurance Corporation of India (LIC)General Insurers General Insurance Corporation of India (GIC) (with effect from Dec2000, a National Reinsure)GIC had four subsidiary companies, namely: 1. The Oriental Insurance Company Limited 2. The New India Assurance Company Limited, 3. National Insurance Company Limited 4. United India Insurance Company Limited. With effect from Dec2000, these subsidiaries have been de-linked from the parentcompany and made as independent insurance companies.Yr:2000-2001: (From 2nd April 2000 to 31st December2001)In the year 2000-2001, Insurance industry had 16 new entrants(private), namely: 52
  53. 53. RELIANCE LIFE INSURANCE, KOPPAL Life Insurance: Major Players Name of Company Public Sector LIFE INSURANCE CORPORATION Private Sector ICICI Prudential Bajaj Allianz Birla Sun Life HDFC Standard Life Tata AIG Private Sector ICICI Lombard Bajaj Allianz IFFCO Tokio Tata AIG 53
  54. 54. RELIANCE LIFE INSURANCE, KOPPAL IMPACT OF FOREIGN INSURERS ENTERING INDIA:LIBERALIZATION For a long period after Independence, Indian business was characterized bygovernment regulations-- the ‗license raj‘. The government not only exercised controlover industrial growth and expansion, but also ran monopoly undertakings and took overloss-making industries on the grounds of mismanagement. Then, in 1985, the late MrRajiv Gandhi initiated the first set of economic reforms. After so many years ofdevelopmental effort they had not been able to eradicate poverty, remove inequalities orestablish an egalitarian society. The resultant disillusionment came out in the open whenthe socialist economies collapsed. As the Indian economy got further integrated with theworld‘s, the necessity for globalization increased. This introduced a new buzzword--Liberalization. The term is used for a more ‗outward-oriented‘ policy, which includes theelimination of anti-export biases, lowering high import tariffs, reducing and phasing outQuantitative Restrictions (QRs) on inputs and switching to tariff-related measures.However, the government would not completely abandon all forms of control and placethe entire economy at the mercy of MNCs. Liberalization and globalization would mainlyremove certain imbalances and restrictions that hamper the free flow of trade. The goalsof liberalization were to motivate Indian manufacturers to prefer updated technology andto deliver the better products at lower costs. This would increase competition and provideincentives to deliver world-class goods and services at affordable prices, which leads toquality assurance. 54
  55. 55. RELIANCE LIFE INSURANCE, KOPPAL Customer Relationship Management Customer Relationship Management focuses on acquiring, developing andcreating satisfied loyal customer; achieving profitable growth; and creating economicvalue in company‘s brand. Customer Relationship Management strives to improve the customer‘s experienceof how they interact with the company and produce high customer equity .the more loyalcustomer, the higher are the customer equity. Recently CRM has taken a center stage in the business world with businessesconcentrating on saving money and increasing profits by redefining internal processesand procedures. It costs a company dramatically less to retain and grow an existingclient, than it does to court new ones. It is said that ―It is seven times more expensive toacquire a new customer than to keep an existing one”, therefore the value of customerinformation and management should never be underestimatedCustomer equity comprises of three drives Value equity Brand equity Relationship equity CRM (Customer Relationship Management) is something that is not restricted to anycountry or culture. Wherever customers are there, business cannot afford to keep themunhappy; and that is where CRM comes in as a strong requirement. In India, the trend is positive. When compared to about twenty years ago , peoplehave more choice and every company knows it can‘t take customer for granted .May bethe movement is slow ,but we see a steady progress towards an increased focus on thecustomer rather than merely on the products and price . 55
  56. 56. RELIANCE LIFE INSURANCE, KOPPAL Today‘s era is of service because customers are ultimate base line for any business tosustain in this competitative world For example: Banks started providing ‗gold‘, ‗silver‘ cards to its valued customer,depending on their needs the customer get faster services. The concept of CRM is relatively simple and familiar to insurers. The two points ofthe concept are: Understand your customers unique requirements. Offer them the services and products over their lifetime that will maintain or increase their profitability and retain them as your customers. These are the some supporting strategies that implement these concepts to yieldsignificantly greater results and a true competitive advantage. These supporting strategies generally fall into three groupings: analytical,marketing and operational. The analytical path focuses on mining the data you have onyour existing customers, and marrying that data with external data when possible todevelop a scoring index. This index can then be reliably applied to individual customersto indicate their level of profitability, tendency to remain a customer, and propensity toacquire other products and services.The current trends in corm followed by insurance companies While the CRM market in India is still nascent, bigger players such as ICICIPrudential Life Insurance Company are adopting it in a big way. The company wasearlier using Gold Mines (a sales and marketing tool) and HEAT (an operational CRMsolution) from Front Range Solutions. Last year it took a decision to invest in CM3 fromTera data and SAS‘s statistical tool for BI. Anil Tikoo, head-IT at ICICI Prudential LifeInsurance Company says, ―As a forward looking company, we see CRM playing asignificant role in acquiring new customers. CRM lets us obtain granular details aboutour customers, helping us to design better products, improve service levels and reduceoperational costs.‖ CRM has helped ICICI Prudential Life capture five lack customersthrough effective event-based marketing and lead tracking to cross- and up-sell products. 56
  57. 57. RELIANCE LIFE INSURANCE, KOPPALBusiness drivers for CRM Margins are under pressure: A couple of years ago, LIC dominated the insurancemarket with the help of its sales force and channels and margins were reasonably high.Today, there are close to 20 companies offering both life and general insurance products.All of them have equally strong international and local partners; all are focusing uponsimilar geographies and target audiences. The new firms selling life insurance and non-life insurance [pensions, insurance as saving, etc] have failed to emulate the LIC modelbecause margins are getting squeezed. There are several pain areas that new insurancefirms face—acquiring new customers, retaining them, cross-selling products andcontrolling rising costs while providing comprehensive support. Insurers have added a variety of products and services to their kitty. These rangefrom insurance as an investment option to pension plans. They target the youngergeneration in the 20 to 30 years age group. ―The convergence of four factors—protection,saving (investment option), loans and pension—have compelled insurance companies toalign with banks in reaching out to a larger audience,‖ says Tikoo. This trend has led toanother—insurance companies are joining hands with banks by becoming channelpartners for insurance. Tata AIG has a marketing alliance with HSBC, Birla Sun Life hasone with Citibank and IDBI and LIC ally with Corporation Bank, while Kotak LifeInsurance has an arrangement with Kotak Bank. This strategy helps insurance firmsincrease their footprint to cover a larger part of the customer base in the 20-30 yearsdemographic. CRM helps connect a bank‘s high net worth customers with insurancefirms. 57
  58. 58. RELIANCE LIFE INSURANCE, KOPPALWhere to begin—operational CRM or analytical CRM? The choice between operational and analytical CRM as a starting point dependsupon the insurer‘s needs. Gartner says that insurance companies with multiple financialproducts and a big customer base, such as integrated insurance solution providers, willleverage their customer base to cross- and up-sell different financial products, includinginsurance. Such providers will benefit from adopting analytical CRM. Marketsegmentation, campaign management and data mining applications will benefit them inmany ways. Call center text mining: This tool can help improve the customer experience by resolving complaints rapidly. Insurers are using these tools to mine text from call center transcripts to identify issues faced by customers. Text mining tools also help detect and capture other useful pieces of information around a customer‘s life stage, financial needs and product interests. These can be used to generate leads and trigger cross-selling. However, to be fully effective, customer service representatives must be trained to probe for information that will help in cross selling during the text-mining phase. Text mining tools are leading edge today, but are predicted to take off quickly. Event-triggering and profiling: ―Insurers can use event triggers to generate leads that can be acted upon quickly, usually within 24 hours,‖ says Tikoo. Event- triggering tools monitor incoming transaction and contact data in near-real-time to recognize changes in a customer‘s behavior or profile to trigger actions or alerts. Lead management gets sophisticated: Often the ability of an insurer to generate leadsby means of event-triggering, re-engineered touch points and cross line-of-businessreferral can outstrip their ability to manage said leads. In such a situation, though thenumber of leads generated rises, the conversion rate does not. It may even drop. CRMcan help provide sales representatives with a mechanism to prioritize and manage leads. 58
  59. 59. RELIANCE LIFE INSURANCE, KOPPALChanging customer behavior in insurance buying In insurance buying, most customers would probably describe their level ofunderstanding of insurance contracts in the above manner. Customers know generallywhat a policy covers; they also know that there are several fine prints in insurancecontracts, which they do not know, or perhaps care to know, at the time of buying. Andthey also seem to generally conclude that when it comes to making a claim under aninsurance policy, there could be several issues of which they are just unaware at the timeof buying the policy in the first place.Changing expectations A remarkable trend in the insurance industry in the last three years is the rapidchange in the knowledge level as well as expectations of the customers. A studyconducted last year by Forte, a collaborative effort between FICCI and ING VysyaInsurance Co. about the consumer behavior in the pre and post liberalization days of theindustry had revealed stunning changes in consumer expectations. It looks as though the docile, uninformed, insurance consumer has suddenly beentransformed into an aggressive and highly demanding species. While the fresh air ofcompetition in every sector of the economy brings in major changes in consumerexpectations (witness the sea change in the attitude of automobile buyers in India in thelast five years), the insurance industry has witnessed a few unique aspects, such asregulation-inspired efforts to educate insurance buyers, and a vast change in the skills andcapabilities of the intermediaries involved in distribution.Motivating factors In respect of life insurance, potential buyers are driven to buying a policy for oneor more of three major reasons: security of the money invested, saving for one or more 59
  60. 60. RELIANCE LIFE INSURANCE, KOPPALspecific purposes, and the availability of tax benefit. Customers are increasingly knownto place less reliance on the tax benefit factor, and stress more on the security aspect andthe end-use objective. The challenge of the insurance companies is to address themotivating factors imaginatively and come up with genuine solutions. Take for example,the consumer‘s objective of taking a policy to save money for higher education of a child.This has been a driving force in the sale of new insurance contracts in several othercountries too, notably in Asia. A potential buyer primarily expects that the saving should be a painless processand that the money saved should be absolutely safe. The challenge is to provide not onlyconvenient payment options, but also mechanisms that could offer some measure ofprotection and relief to the customer if he is forced to disrupt the payment arrangementfor unforeseen reasons. On the issue of the consumers‘ perception of security of the money invested, thereare two important aspects. One is how the features of the insurance contract are putacross to the buyer (whether it is a unit-linked policy or endowment oriented). The second is how to address more effectively the question about thedependability of the new generation companies that potential new insurance buyers raiseduring sales calls especially outside metros and in small towns (referred to in publicityjargon as buyers in the SEC B and C categories). Both insurance companies and theRegulator need to address this behavioral challenge more actively.Consumer’s experience There has been a vast change in the approach of the insurance agent from the pre-liberalization days. While the agent in the past established informal contacts withpotential buyers and often depended on referrals from friends and family members, thenew age companies insist on a professional, and often aggressive stance on the part of the 60
  61. 61. RELIANCE LIFE INSURANCE, KOPPALsales staff. Customer expectations in this regard revolve around two key aspects: first,whether the customer is getting truthful advice from the agent, or if he is pushing aproduct that yields him the highest commission rate. Invariably, the customers todayexpect the insurance agent (and other intermediaries such as the banc assurance salesstaff) to provide a ready comparison of competitors‘ products and how the product theagent is suggesting is superior to the others. How far is the need-based analysis ofinsurance requirement, that the new age sales staff are trained to offer, found to berelevant and useful to potential insurance buyers? The answer varies from the metro citiesand small towns. However outside metro cities, customers tend to take a clear view thatsaving-oriented policies are more needed. There is also marked reluctance to disclose thetrue personal financial status and the corresponding insurance needs to insurancesalespersons. The second aspect of customers‘ perception about the new generation ofinsurance agents is the level of continuing commitment of the agent to arrange post-saleservice. Potential insurance buyers are unsure that they would continue to deal with thesame agent who sold the policy throughout the term. They would tend to place more reliance on the company‘s general promises ofservice and commitment. This is an important message for the insurance companies. Asinsurance customers increasingly make arrangements to pay periodical premiums directlythrough the electronic medium, or though automatic transfers from their bank accounts,thereby bypassing the need for regular post-sale service by the agents, customers wouldtend to place more reliance on the direct standard of service from the companyconcerned. Instances of customers requiring agents to arrange for loans against theirpolicies, or change nominations etc. are rare. Therefore companies need to gearthemselves to provide high service standards directly. 61
  62. 62. RELIANCE LIFE INSURANCE, KOPPALPremium shopping Is pricing or the premium rate for a policy, a deciding factor for buyinginsurance? It is indeed so in a price sensitive market such as ours. In several forums,customers have voiced the general feeling that as insurance products become morecomplex, and they get bundled with several riders, it is becoming impossible to makeprice comparisons between different companies. An increasingly larger segment of customers now questions why the premium rateshould be the same for a policy if bought direct from the company over Internet, orthrough a channel considered simpler, such as the banc assurance channel. There is logicin the insurance companies passing on the cost saving to customers in such cases. It is time the Regulator seriously considered the customer expectations ofdifferential premium rates for the same policy bought through different channels andallowed the practice. It should therefore be conceivable to offer premium rebate toinsurance buyers who consciously decide to approach the company directly for buying apolicy (after presumably taking the trouble of educating themselves about the productfeatures and other aspects), and choose to deal with the company directly for futureservicing needs.High expectations One aspect of customer service from new age insurance companies that a remainsto be tested widely is the claim payment record. While consumers seem to be satisfiedthat the survival benefits under a life insurance policy would get paid rather promptlyfrom the tech-savvy new companies, obviating the need for interlocution by the insuranceagent, insurance buyers are not yet convinced about hassle-free payment in the event of a 62
  63. 63. RELIANCE LIFE INSURANCE, KOPPALclaim, whether under a life policy or a general insurance policy. This is especially so inrespect of rider benefits such as critical illness or hospitalization benefits. The level of consumer skepticism on claim payment is markedly high in respectof non-life insurance products, such as Householders‘ Package or Medicaid policies.There is considerable work to be done to boost the level of confidence both by insurancecompanies and the Regulator. By the time a company completes the development of astrategy and makes investments to pursue the strategy, the opportunity often ceases toexist. It is therefore important that the new age insurance companies become ‗kinetic‘enterprises, which can take advantage of unpredictable customer demands andunexpected market events immediately. This is vastly relevant for the Indian marketwhere the insurance consumers are rapidly coming of age. 63
  64. 64. RELIANCE LIFE INSURANCE, KOPPAL RESEARCH METHODOLOGYThe research based will be Descriptive Research.Type of data1.Primary data2.Secondary dataPrimary dataThe primary or the first hand data will be collected with the help of handing out thequestionnaire to the customers &employees.Secondary dataThe major source of secondary or supporting data will be internet .Using this data measurement technique, information was collected by personalinterviews.Secondary data was collected through company websites, discussions with companyguide.The collected data was processed through S.P.S.S. Package.Sampling Design The research was mainly opted on customer‘s survey, adviser‘s survey as well assales officer‘s survey. The sample selected for survey was stratified sample. Sample size is 50Customers, 10 Sales officers and 50 advisers. 64