A COMPARATIVE STUDY OF HR POLICES OF ICICI COMPANY LTD

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A COMPARATIVE STUDY OF HR PRACTICES AND POLICES OF ICICI COMPANY LTD

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A COMPARATIVE STUDY OF HR POLICES OF ICICI COMPANY LTD

  1. 1. SAAB MARFIN MBAA COMPARATIVE STUDY OF HR PRACTICES ANDPOLICES OF ICICI PRUDENTIAL LIFE INSURANCE COMPANY LTD 1A COMPARATIVE STUDY OF HR PRACTICES AND POLICES OF ICICI COMPANY LTD
  2. 2. SAAB MARFIN MBA TABLE OF CONTENTChapter. No CONTENTS Page No. EXECUTIVE SUMMARY 11. INTRODUCTION 22. INSURANCE INDUSTRY 193. PROFILE OF ICICI PRUDENTIAL LIFE INSURANCE CO.LTD. 334. IMPLEMENTING HR PRACTICES AND POLICES IN ICICI 51 PRUDENTIAL LIFE INSURANCE CO.LTD5. RESEARCH OBJECTIVES 656. RESEARCH METHODOLOGY 667. DATA ANALYSIS AND INTERPRETATION 688. SUGGESTION 839. CONCLUSION 9210. LIMITATIONS 9311. BIBLIOGRAPHY12. ANNEXTURE 2 A COMPARATIVE STUDY OF HR PRACTICES AND POLICES OF ICICI COMPANY LTD
  3. 3. SAAB MARFIN MBA EXECUTIVE SUMMARY ICICI Prudential Life Insurance Life Insurance is one of the largestInsurance networks in the country, and 2nd Life Insurance Company inIndia. The ICICI Group has been in existence since 1955 when ICICI Ltd.,was created. ICICI Prudential Life Insurance started in 2002 as subsidiaryof ICICI Ltd., Today ICICI Life Insurance has a customer base of 4 millionwith total assets exceeding Rs.1, 00,000 Cr. making it the 2nd largest lifeinsurance company in the country, next only to LIC. The Insurance sector, after the opening up, provides greateropportunities. Several global players have emerged and the market haschanged significantly. In the changed scenario, the expectation is that thelow Insurance premium as a percentage of GDP prevailing in India willimprove and will offer better opportunities to the insurance players. Life Insurance sector is one of the key areas where enormousbusiness potential exists. In India currently the life insurance premium asa percentage of GDP is 1.3 per cent against 5.2 per cent in the US, but inthe liberalized scenario, the life insurancepremiums were projected to grow at around 18% to 20% from Rs 215billion in 1998- 99 to Rs 592 billion in 2004-05 and to Rs 1450 billion by2009-10. Corporate non-life premium was projected to grow from Rs 84billion in 1998-99 to Rs 386 billion in 2009-10 and personal line 3A COMPARATIVE STUDY OF HR PRACTICES AND POLICES OF ICICI COMPANY LTD
  4. 4. SAAB MARFIN MBAnon-life from Rs 4 billion to Rs 51 billion. In the life Insurance segment the Life Insurance Corporation ofIndia (LIC) is the major player. The LIC has 2050 branches. It isconstituted in to seven Zones. Currently there are 5, 60,000 LIC agents inIndia. General Insurance is another segment, which has been growing at afaster pace. Though it all can happen with good HR policies and practices thathas been a part of ICICI Prudential Life Insurance. 4A COMPARATIVE STUDY OF HR PRACTICES AND POLICES OF ICICI COMPANY LTD
  5. 5. SAAB MARFIN MBA1. INTRODUCTIONThe role of Human Resources is changing as fast as technology and theglobal marketplace. Historically, the HR Department was viewed asadministration, kept personal files and other records, managed the hiringprocess, and provided other administrative support to the business.Those times have changed.The positive result of these changes is that HR professionals have theopportunity to play a more strategic role in the business. The challengefor HR managers is to keep up to date with the latest HRinnovations—technological, legal, and otherwise.This special report will discuss the best practices in HR management for2010—in other words, how HR managers can anticipate and addresssome of the most challenging HR issues this year. This report will giveyou the information you need to know about these current HR challengesand how to most effectively manage them in your workplace.Human resources is an increasingly broadening term with which anorganization, or other human system describes the combination oftraditionally administrative personnel functions with acquisition andapplication of skills, knowledge and experience, Employee Relations andresource planning at various levels. The field draws upon conceptsdeveloped in Industrial/Organizational Psychology and System Theory.Human resources has at least two related interpretations depending on 5A COMPARATIVE STUDY OF HR PRACTICES AND POLICES OF ICICI COMPANY LTD
  6. 6. SAAB MARFIN MBAcontext. The original usage derives from political economy andeconomics, where it was traditionally called labor, one of four factors ofproduction although this perspective is changing as a function of newand ongoing research into more strategic approaches at national levels.This first usage is used more in terms of `human resources development,and can go beyond just organizations to the level of nations. The moretraditional usage within corporations and businesses refers to theindividuals within a firm or agency, and to the portion of the organizationthat deals with hiring, firing, training, and other personnel issues,typically referred to as `human resources management. This articleaddresses both definitions.The objective of human resource’s development (the `s is important inhuman resource`s in that it underscores indiduality/variability) is tofoster human resourcefulness through enlightened and cohesive policiesin education, training, health and employment at all levels, fromcorporate to national (Lawrence 2000) Human resource managementsobjective, on the other hand, is to maximize the return on investmentfrom the organizations human capital and minimize financial risk. It isthe responsibility of human resource managers in a corporate context toconduct these activities in an effective, legal, fair, and consistent manner.Human resource management serves these key functions: 1. Recruitment & Selection 2. Training and Development 3. Performance Evaluation and Management 4. Promotions 6A COMPARATIVE STUDY OF HR PRACTICES AND POLICES OF ICICI COMPANY LTD
  7. 7. SAAB MARFIN MBA 5. Redundancy 6. Industrial and Employee Relations 7. Record keeping of all personal data. 8. Compensation, pensions, bonuses etc in liaison with Payroll 9. Confidential advice to internal customers in relation to problems at work 10. Career developmentModern analysis emphasizes that human beings are not "commodities" or"resources", but are creative and social beings in a productive enterprise.The 2000 revision of ISO 9001 in contrast requires to identify theprocesses, their sequence and interaction, and to define andcommunicate responsibilities and authorities. In general, heavilyunionized nations such as France and Germany have adopted andencouraged such job descriptions especially within trade unions. TheInternational Labour Organization also in 2001 decided to revisit, andrevise its 1975 Recommendation 150 on Human Resources Development.One view of these trends is that a strong social consensus on politicaleconomy and a good social welfare system facilitates labor mobility andtends to make the entire economy more productive, as labor can developskills and experience in various ways, and move from one enterprise toanother with little controversy or difficulty in adapting. Another view isthat governments should become more aware of their national role infacilitating human resources development across all sectors.An important controversy regarding labor mobility illustrates the broaderphilosophical issue with usage of the phrase "human resources": 7A COMPARATIVE STUDY OF HR PRACTICES AND POLICES OF ICICI COMPANY LTD
  8. 8. SAAB MARFIN MBAgovernments of developing nations often regard developed nations thatencourage immigration or "guest workers" as appropriating humancapital that is rightfully part of the developing nation and required tofurther its growth as a civilization. They argue that this appropriation issimilar to colonial commodity fiat wherein a colonizing European powerwould define an arbitrary price for natural resources, extracting whichdiminished national natural capital.The debate regarding "human resources" versus human capital thus inmany ways echoes the debate regarding natural resources versus naturalcapital. Over time the United Nations have come to more generallysupport the developing nations point of view, and have requestedsignificant offsetting "foreign aid" contributions so that a developingnation losing human capital does not lose the capacity to continue totrain new people in trades, professions, and the arts.An extreme version of this view is that historical inequities such asAfrican slavery must be compensated by current developed nations,which benefited from stolen "human resources" as they were developing.This is an extremely controversial view, but it echoes the general themeof converting human capital to "human resources" and thus greatlydiminishing its value to the host society, i.e. "Africa", as it is put tonarrow imitative use as "labor" in the using society.In a series of reports of the UN Secretary-General to the GeneralAssembly, a broad inter-sectoral approach to developing humanresourcefulness has been outlined as a priority for socio-economicdevelopment and particularly anti-poverty strategies. This calls for 8A COMPARATIVE STUDY OF HR PRACTICES AND POLICES OF ICICI COMPANY LTD
  9. 9. SAAB MARFIN MBAstrategic and integrated public policies, for example in education, health,and employment sectors that promote occupational skills, knowledge andperformance enhancement (Lawrence, J.E.S. 2000).In the very narrow context of corporate "human resources" management,there is a contrasting pull to reflect and require workplace diversity thatechoes the diversity of a global customer base. Foreign language andculture skills, ingenuity, humor, and careful listening, are examples oftraits that such programs typically require. It would appear that theseevidence a general shift through the human capital point of view to anacknowledgment that human beings do contribute much more to aproductive enterprise than "work": they bring their character, their ethics,their creativity, their social connections, and in some cases even theirpets and children, and alter the character of a workplace. The termcorporate culture is used to characterize such processes at theorganizational level.The traditional but extremely narrow context of hiring, firing, and jobdescription is considered a 20th century anachronism. Most corporateorganizations that compete in the modern global economy have adopteda view of human capital that mirrors the modern consensus as above.Some of these, in turn, deprecate the term "human resources" as useless.Yet the term survives, and if related to `resourcefulness, has continuedand emerging relevance to public policy.In general the abstractions of macro-economics treat it this way - as itcharacterizes no mechanisms to represent choice or ingenuity. So oneinterpretation is that "firm-specific human capital" as defined in 9A COMPARATIVE STUDY OF HR PRACTICES AND POLICES OF ICICI COMPANY LTD
  10. 10. SAAB MARFIN MBAmacro-economics is the modern and correct definition of "humanresources" - and that this is inadequate to represent the contributions of"human resources" in any modern theory of political economy.1.1 HUMAN RESOURCES DEVELOPMENTIn organizations, in terms of sex and selection it is important to considercarrying out a thorough job analysis to determine the level ofskills/technical abilities, competencies, flexibility of the employeerequired etc. At this point it is important to consider both the internaland external factors that can have an effect on the recruitment ofemployees. The external factors are those out-with the powers of theorganization and include issues such as current and future trends of thelabor market e.g. skills, education level, government investment intoindustries etc. On the other hand internal influences are easier to control,predict and monitor, for example management styles or even theorganizational culture.In order to know the business environment in which any organizationoperates, three major trends should be considered: Demographics – the characteristics of a population/workforce, for example, age, gender or social class. This type of trend may have an effect in relation to pension offerings, insurance packages etc. Diversity – the variation within the population/workplace. Changes in society now mean that a larger proportion of organizations are made up of "baby-boomers" or older employees in comparison to thirty years ago. Traditional advocates of "workplace diversity" 10A COMPARATIVE STUDY OF HR PRACTICES AND POLICES OF ICICI COMPANY LTD
  11. 11. SAAB MARFIN MBA simply advocate an employee base that is a mirror reflection of the make-up of society insofar as race, gender, sexual orientation, etc. Skills and qualifications – as industries move from manual to a more managerial professions so does the need for more highly skilled graduates. If the market is "tight" (i.e. not enough staff for the jobs), employers will have to compete for employees by offering financial rewards, community investment, etc.In regard to how individuals respond to the changes in a labour marketthe following should be understood: Geographical spread – how far is the job from the individual? The distance to travel to work should be in line with the pay offered by the organization and the transportation and infrastructure of the area will also be an influencing factor in deciding who will apply for a post. Occupational structure – the norms and values of the different careers within an organization. Mahoney 1989 developed 3 different types of occupational structure namely craft (loyalty to the profession), organization career (promotion through the firm) and unstructured (lower/unskilled workers who work when needed). Generational difference –different age categories of employees have certain characteristics, for example their behavior and their expectations of the organization.While recruitment methods are wide and varied, it is important that thejob is described correctly and that any personal specifications are stated.Job recruitment methods can be through job centres, employment 11A COMPARATIVE STUDY OF HR PRACTICES AND POLICES OF ICICI COMPANY LTD
  12. 12. SAAB MARFIN MBAagencies/consultants, headhunting, and local/national newspapers. It isimportant that the correct media is chosen to ensure an appropriateresponse to the advertised post.Human Resources Development is a framework for the expansion ofhuman capital within an organization or (in new approaches) amunicipalty, region, or nation. Human Resources Development is acombination of Training and Education, in a broad context of adequatehealth and employment policies, that ensures the continual improvementand growth of both the individual, the organisation, and the nationalhuman resourcefulnes. Adam Smith states,“The capacities of individualsdepended on their access to education”.Kelly D, 2001Human ResourcesDevelopment is the medium that drives the process between training andlearning in a broadly fostering environment. Human ResourcesDevelopment is not a defined object, but a series of organised processes,“with a specific learning objective” (Nadler,1984) Within a nationalcontext, it becoms a strategic approach to intersectoral linkages betweenhealth, education and employment Human Resources Development is thestructure that allows for individual development, potentially satisfying theorganization’s, or the nations goals. The development of the individualwill benefit both the individual, the organization, or the nation and itscitizens. In the corporate vision, the Human Resources Developmentframework views employees, as an asset to the enterprise whose valuewill be enhanced by development, “Its primary focus is on growth andemployee development…it emphasises developing individual potentialand skills” (Elwood, olton and Trott 1996) Human Resources Developmentin this treatment can be in-room group training, tertiary or vocational 12A COMPARATIVE STUDY OF HR PRACTICES AND POLICES OF ICICI COMPANY LTD
  13. 13. SAAB MARFIN MBAcourses or mentoring and coaching by senior employees with the aim fora desired outcome that will develop the individual’s performance. At thelevel of a national strategy, it can be a broad intersectoral approach tofostering creative contributions to national productivityAt the organizational level, a successful Human Resources Developmentprogram will prepare the individual to undertake a higher level of work,“organized learning over a given period of time, to provide the possibilityof performance change” (Nadler 1984). In these settings, HumanResources Development is the framework that focuses on theorganizations competencies at the first stage, training, and thendeveloping the employee, through education, to satisfy the organizationslong-term needs and the individuals’ career goals and employee value totheir present and future employers. Human Resources Development canbe defined simply as developing the most important section of anybusiness its human resource by, “attaining or upgrading the skills andattitudes of employees at all levels in order to maximize the effectivenessof the enterprise” (Kelly 2001). The people within an organization are itshuman resource. Human Resources Development from a businessperspective is not entirely focused on the individual’s growth anddevelopment, “development occurs to enhance the organizations value,not solely for individual improvement. Individual education anddevelopment is a tool and a means to an end, not the end goal itself”.(Elwood F. Holton II, James W. Trott Jr). The broader concept of nationaland more strategic attention to the development of human resources isbeginning to emerge as newly independent countries face strongcompetition for their skilled professionals and the accompanying 13A COMPARATIVE STUDY OF HR PRACTICES AND POLICES OF ICICI COMPANY LTD
  14. 14. SAAB MARFIN MBAbrain-drain they experience.1.2 MODERN CONCEPT OF HUMAN RESOURCESThough human resources have been part of business and organizationssince the first days of agriculture, the modern concept of humanresources began in reaction to the efficiency focus of Taylorism in theearly 1900s. By 1920, psychologists and employment experts in theUnited States started the human relations movement, which viewedworkers in terms of their psychology and fit with companies, rather thanas interchangeable parts. This movement grew throughout the middle ofthe 20th century, placing emphasis on how leadership, cohesion, andloyalty played important roles in organizational success. Although thisview was increasingly challenged by more quantitatively rigorous and less"soft" management techniques in the 1960s and beyond, humanresources development had gained a permanent role within organizations,agencies and nations, increasingly as not only an academic discipline, butas a central theme in development policy.Human resource policies are systems of codified decisions, establishedby an organization, to support administrative personnel functions,performance management, employee relations and resource planning.Each company has a different set of circumstances, and so develops anindividual set of human resource policies. 14A COMPARATIVE STUDY OF HR PRACTICES AND POLICES OF ICICI COMPANY LTD
  15. 15. SAAB MARFIN MBAPurposesHR policies allow an organization to be clear with employees on: The nature of the organization What they should expect from the company What the company expects of them How policies and procedures work at your company What is acceptable and unacceptable behaviour The consequences of unacceptable behaviourThe establishment of policies can help an organization demonstrate, bothinternally and externally, that it meets requirements for diversity, ethicsand training as well as its commitments in relation to regulation andcorporate governance. For example, in order to dismiss an employee inaccordance with employment law requirements, amongst otherconsiderations, it will normally be necessary to meet provisions withinemployment contracts and collective bargaining agreements. Theestablishment of an HR Policy which sets out obligations, standards ofbehaviour and document displinary procedures, is now the standardapproach to meeting these obligations.Developing the HR PoliciesHR policies provide an organization with a mechanism to manage risk bystaying up to date with current trends in employment standards andlegislation. 15A COMPARATIVE STUDY OF HR PRACTICES AND POLICES OF ICICI COMPANY LTD
  16. 16. SAAB MARFIN MBA1.3 HR POLICIES AND PROCEDURESThis factsheet gives introductory guidance. It: highlights the main policies and procedures that organizations need to consider looks at formatting a policy and sources of informationIntroducing HR policies and procedures gives organizations theopportunity to offer a fair and consistent approach to managing theirstaff. For more on why HR policies are introduced, see our factsheet HRpolicies and procedures: why introduce them?11 policy or practice areas those are crucial to effective peoplemanagement and development: recruitment and selection training and learning/development career opportunities communication employee involvement team working performance appraisal pay satisfaction job security job challenge/job autonomy Work-life balance. 16A COMPARATIVE STUDY OF HR PRACTICES AND POLICES OF ICICI COMPANY LTD
  17. 17. SAAB MARFIN MBANot all policies and procedures will be relevant to all organizations, andsome policies are required by law while others are to promote goodpractice.The following paragraphs indicate the range of possible policies whichapply during the employment life cycle - more detailed information andthe legal requirements on each of these areas is included.Beginning employmentRecruitment and selectionSuccessful recruitment depends on finding people with the necessaryskills, expertise and qualifications to deliver organizational objectives andwho have the ability to make a positive contribution to the values andaims of the organization. A diverse workforce that reflects customergroups in the local community should be encouraged.Elements to consider when forming a recruitment policy: job profile/person specification dealing with job applications - whether to use hard copy and/or online forms; confidentiality recruitment advertising - discrimination pitfalls selection techniques - training and validation interviews references medical examinations asylum and immigration 17A COMPARATIVE STUDY OF HR PRACTICES AND POLICES OF ICICI COMPANY LTD
  18. 18. SAAB MARFIN MBA documentation job analysis equal opportunities monitoring return on investment (ROI)/cost.Theres more information on the website via our Recruitment and talentmanagement subject pages.InductionDesigning an appropriate and cost-effective induction programme is acomplex task. The programme has to find a balance between providingall the information new employees need without overwhelming ordiverting them from integrating into the team.The length and nature of the induction process will depend on thecomplexity of the job and the background of the new employee.Elements of an induction policy: organization information - background and structure; departments; products and services; physical layout terms and conditions - hours of work; holidays, travel policy financial - pay; bonuses; overtime; pensions culture and values - communication rules and procedures - data protection; email and Internet usage; equal opportunities; use of mobile phones health and safety - first aid; smoking; environmental aspects training 18A COMPARATIVE STUDY OF HR PRACTICES AND POLICES OF ICICI COMPANY LTD
  19. 19. SAAB MARFIN MBA trade unions welfare, benefits and facilities - alcohol and drugs; employee assistance programmes.Organizations may find it useful to have checklists that cover thepre-employment period, the first day, the first week, the first month andthe end of the probationary period (if applicable) to make sure everythinghas been explained.Theres more information on the website via our Induction subject page.During employmentEmployee relations look at the partnership between employee andemployer, covering areas such as communication, grievances anddiscipline. It is equally important in both union and non-union situations.While employment law is closely linked with managing employee relations,a successful organization wont just base its actions on compliance withthe law - exploring the concept of the psychological contract, based ontrust between employee and employer, may also be useful.Policies and procedures that organizations may introduce include: health and safety disciplinary and grievance maternity and paternity leave and pay redundancy absence whistle blowing 19A COMPARATIVE STUDY OF HR PRACTICES AND POLICES OF ICICI COMPANY LTD
  20. 20. SAAB MARFIN MBA performance management recognition agreements (union and other) time off and leave for trade union activities, holidays, secondment, volunteering, eldercare, childcare, bereavement communication and involvement, including employee voice harassment and bullying.Theres more information on many of these issues on the website via ourHR practice, Health, safety and wellbeing and Employment lawsubject pages.Managing diversityDiversity runs through all aspects of an organization’s policies. Managingand valuing diversity is central to good people management and makesgood business sense, so it also makes sense for diversity to be integralwithin all policies. A diversity policy sets out the organisations vision andvalues in relation to diversity. It will often include the remit of polices, theprocesses for taking action, who is responsible and the training available.The basic premise is that people should be valued as individuals and forreasons related to business interests, as well as for moral and socialreasons. A more diverse workforce is likely to offer a wider range of skillsand experiences and greater flexibility to meet business challenges.Elements of a diversity policy: 20A COMPARATIVE STUDY OF HR PRACTICES AND POLICES OF ICICI COMPANY LTD
  21. 21. SAAB MARFIN MBA gender/sex equality race equality sexual orientation religion age appearance/accent formats and accessibility of policies and procedures.Learning, training and developmentRoles and responsibilities are constantly changing, so employees willneed to continually renew and refresh their skills and competencesthrough training. This can happen in the course of normal working(on-the-job training) or away from the workplace (off-the-job training).Some training is mandatory to comply with legal requirements, such ashealth and safety or finance.Elements of a learning and development policy: the organization’s vision for learning and development opportunities available, including secondment, career breaks, courses, coaching, mentoring who to ask to get authorization for training support given for learning opportunities development reviews and personal development plans payment of professional fees 21A COMPARATIVE STUDY OF HR PRACTICES AND POLICES OF ICICI COMPANY LTD
  22. 22. SAAB MARFIN MBA training available for peripheral workers ie contractors, temporary staff record-keeping and administration continuing professional development and personal development allowances (if these are not part of the employee benefits statement) follow-up actions and transfer of learning to work.RewardEffective reward practices and procedures can underpin activities inrecruitment, retention, turnover and engagement. Effectiveimplementation and communication are essential for initiatives tosucceed.Reward policies should be clear and simple so that employees knowwhats expected of them and what they can expect to receive in return.Elements of a reward policy: the organization’s vision for reward, including market rates, extra responsibility allowances how jobs are graded or evaluated pensions/additional voluntary contributions permanent health insurance/critical illness cover bonuses and incentive pay benefits and non-cash recognition company cars 22A COMPARATIVE STUDY OF HR PRACTICES AND POLICES OF ICICI COMPANY LTD
  23. 23. SAAB MARFIN MBA sick pay pay reviews equal pay.Complementary policiesOther policies that organizations may want to consider in relation toemployment include: a mission or values statement parental leave work-life balance/family-friendly work practices disability well-being and wellness green/sustainable development the employment of relatives/friends conflict of interest, including personal relationships second jobs confidentiality bad weather/climate conditions relocation suggestion schemes. 23A COMPARATIVE STUDY OF HR PRACTICES AND POLICES OF ICICI COMPANY LTD
  24. 24. SAAB MARFIN MBAEnding employmentThere are many reasons why employment ceases, from voluntaryresignation to dismissal or redundancy.Areas to consider for ending employment include: dismissal redundancy voluntary resignation retirement - retirement age; pre-retirement courses; phased retirement options end of a short-term contract end of a probationary period death in service.Exit surveys can record information about why employees say they areleaving. But the data is not always reliable. Another way to discover thereasons why is through opinion surveys during employment.Formatting a policyPolicies should be written in plain English, so that they are user-friendlyand easily understood by all employees.The culture of the organization and the complexity of the policies willdictate the format. Options include: separate manager and employee manuals 24A COMPARATIVE STUDY OF HR PRACTICES AND POLICES OF ICICI COMPANY LTD
  25. 25. SAAB MARFIN MBA all policies available on an intranet key policies on notice boards.Policies should also indicate who to go to with queries about the contentand who is responsible for updating and reviewing them.Sourcing informationWhen developing policies and procedures there are many sources ofinformation available. The following list gives an indication of furtherhelp but is not an exhaustive list. 25A COMPARATIVE STUDY OF HR PRACTICES AND POLICES OF ICICI COMPANY LTD
  26. 26. SAAB MARFIN MBA2. INSURANCE INDUSTRY ‘INSURANCE’ is basically a sharing device. The losses to assistresulting from natural calamities like fire, flood, earthquake, accidents,etc. are not met out of common pool contributed by large number ofpersons who are exposed to similar risks. This contribution of many isused to pay the losses suffered by the few. However the basic principle isthat loss should occur as a result of natural calamities or unexpectedevents, which are beyond the human control. Secondly insured personshould not make any gains out of insurance.It is natural to think of insurance of physical assets such as motorcarinsurance or fire insurance but often we forget that creator of all theseassets is human being whose efforts have gone a long way in building upthe assets. In that sense, human life is a unique income-generating asset.Unlike the physical assets, which decrease in value with the passage oftime, the individual becomes more experienced and more matured as headvances in age. This raises his earning capacity and the purpose of lifeinsurance is to protect the income of individual and provide financialsecurity to his family, which is dependent on his income in the event ofhis premature death. The individual himself also needs financial securityfor the old age or on his becoming permanently disabled when hisincome will stop. Insurance also has an element of savings in certaincases. Insurance is related to the protection of the economic value of theasset. Every asset has a value .The asset would have been created 26A COMPARATIVE STUDY OF HR PRACTICES AND POLICES OF ICICI COMPANY LTD
  27. 27. SAAB MARFIN MBAthrough the effort of the owner, in the expectation that, either throughthe income generated there from or some other output, some of hisneeds would be met. In the case of the factor or a cow, the production issold and income generated. In the case of a motorcar, it provides comfortand convenience in transportation. There is no direct income. There isnormally expected life time for the asset during which time it is expectedto perform. the owner, aware of this , can so manage his affairs that bythe end of that life time, a substitute is made available to ensure that thevalue, or income is not lost, however , if the asset get lost earlier, beingdestroyed or made non functional, through an accident or otherunfortunate event, the owner and those deriving benefits thereforesuffer. Insurance is a mechanism that helps to reduce such adverseconsequences.Objectives of life InsuranceThere are many reasons for investing in life insurance policies, such as: 1. Protection for the Family The most important objective of life insurance is to provide financial protection for the family in case of an unexpected and premature death of its breadwinner. The purpose is to protect the dependents against the loss of earning power of the insured through death or disability. Those who have insured their lives for an adequate sum can live in peace and comfort, free of the gnawing worry of what would happen to their families in the event of their sudden and premature death. Life insurance has long been recognized as a necessary and essential element in a familys total financial program. 27A COMPARATIVE STUDY OF HR PRACTICES AND POLICES OF ICICI COMPANY LTD
  28. 28. SAAB MARFIN MBA2. Regular Savings Saving is not a physical need, unlike hunger or sleep. Many of us maynot save unless there is compulsion to do so. For such people, lifeinsurance is a compulsory, regular savings scheme, especially themonthly salary savings schemes.Even if you do not subscribe to the salary savings scheme, you can issuestanding instructions to your bankers to pay the premium regularlywithout reference to you. The element of savings in a life insurance contract should be understoodin a proper perspective. Typically, life insurance is made available on thebasis of equated periodical payments. In the initial years, you tend to paymore compared to the risk factor. Strictly, speaking, the savings aspectin a life insurance policy should not be compared with other pure savingsmedia.3. Tax BenefitsThere is a tax rebate under Section 88 on life insurance premium. Manyinvestors, especially those in higher tax brackets, used to buy lifeinsurance mainly to take advantage of these tax benefits. Additional taxbenefits are available under Section 80DD and Section 80CCC applicableto specific schemes. Hence, attractiveness from the tax angle has comedown.4. Housing FinanceOne of the easier ways of acquiring a house property is through a loanunder the various scheme of ICICI pru life, under which a life insurance 28A COMPARATIVE STUDY OF HR PRACTICES AND POLICES OF ICICI COMPANY LTD
  29. 29. SAAB MARFIN MBApolicy is accepted as a collateral security. The proceeds of the policy canbe adjusted towards the housing loan. To enjoy this loan facility, manypeople even go in for additional life insurance. However, with the adventof HDFC and various other housing finance schemes, you havealternatives to choose from.Advantages of Life Insurance Protection against risk of untimely death. Protection during old age Forced savings Educational requirements and charity Nomination and assignment Marketability and suitability for borrowing. Loans from the Insurance Company Tax benefits Protection to wife and children2.1 IMPORTANCE OF INSURANCEA) Beneficial to an individual:1) Insurance provides security and safety. In case of life insurancepayment is made when death occurs or the term of insurance is expired.2.) Insurance affords peace of mind. A sense of security removes alltensions and fears. It stimulate to more and better work. By means ofinsurance much of the uncertainty that centers round the modern life 29A COMPARATIVE STUDY OF HR PRACTICES AND POLICES OF ICICI COMPANY LTD
  30. 30. SAAB MARFIN MBAmay be eliminated. 3) Insurance eliminates dependency. The insuranceprovides adequate amount to the dependents at the early death of theproperty owner to pay off the unpaid loan.4.) Insurance eliminated dependency. In the event of death of the breadwinner of the family or destruction of property, the family suffers a lot.The insurance assists the family and provides adequate amount at thetime of need.5) Life Insurance encourages saving. Systematic saving is possible because regular premium are required to be compulsorily paid. Unlike bank deposits the deposited insurance premiums can not be withdrawn. Life Insurance is the best media of saving.6) Life Insurance provides profitable investment. The elements of investment i.e. regular saving capital formation and return of the capital are observed in life insurance. In India in insurance policies carry the exemption from the income tax and estate duty.7.) Life Insurance fulfills the needs of a person. The need of a person maybe divided into (I) Family needs, (ii) old age needs, (iii) re-adjustmentneeds and(iv) special needs including needs for education, marriagesettlement of children etc. (v) clean up funds for ritual ceremonies,payment of taxes etc. Insurance comes to help for meeting requirements.(b) Beneficial to Business:Insurance has been useful of the business society in more than one way.(i) It reduces uncertainty of business losses. As a huge number ofproperties are employed in commerce and industry equally great risks areinvolved in day to day functioning. The owner of the business might 30A COMPARATIVE STUDY OF HR PRACTICES AND POLICES OF ICICI COMPANY LTD
  31. 31. SAAB MARFIN MBAforeseecontingencies that would bring great loss. By purchasing a policy he canbesured of his earnings.(ii) Business efficiency is increased with insurance. A businessman getsfree from unnecessary botherations and can devote more care and energytomaximize his profits.(iii)Keyman indemnification. Persons having expertise, experience,ability to control the business are most important for the employers.Death of such persons proves a more serious loss then that by fire. Thecompensation to the dependents of such employers requires adequateprovision which can be met by purchasing life policies.(iv) Addition in credit. The business can obtained loan by pledging thepolicy as collateral security for the loan. As the assets are insuredtherefore, in the event of loss the compensation can be paid. (v)BusinessContinuation. The partnership business may be discontinued at thedeath of a partner. The insurance policy provide adequate funds at thetime of death therefore, the legal representative can be paid easily.(vi)Employee Welfare. Provision for welfare for employees can be madeby the life insurance in case of accident or sickness benefit and pensions.(c) Beneficial to Society:(i) Wealth of society is protected. Insurance provides loss of humanwealth. Loss of damage of property can also be indemnified by theinsurance company. 31A COMPARATIVE STUDY OF HR PRACTICES AND POLICES OF ICICI COMPANY LTD
  32. 32. SAAB MARFIN MBA(ii) Economic growth of the company. As insurance provides protectionagainst loss of property thus, if any such damage arise the assets can bereplaced without loss of production thus, Economic development of thecountry is not effected.(iii) Accelerate the production growth. Adequate capital from Insurancecompany can accelerate production circle in the country. Economicgrowthof the country is not only assured but the process of growth isacceleratedwhich is more essential in a country like India where the population isincreasing very fast.(iv) Reduction in inflation. The insurance company in the form ofpremiumget lot of money supply from the public which insurance corporation putinto production thus the money which would have come into circulationmight have gone for productive purposes.2.2 TYPES OF PLANS OR POLICIESOn the basis of insurance objective, basic plans offered by insurers canbe classified under three broad categories: Pure insurance products (termplan), pure investment products (pension plan) andinvestment-cum-insurance products (endowment, money-back,whole-life and unit-linked insurance plans). Increasingly, insurers arelaunching hybrid variants of these plain-vanilla plans. 1. Term plan Term plans are the purest from of insurance. These are no-frills policies that cover only the risk of your dying. In the event of 32A COMPARATIVE STUDY OF HR PRACTICES AND POLICES OF ICICI COMPANY LTD
  33. 33. SAAB MARFIN MBA death during the policy term, your nominees receive the cover amount—in insurance parlance, the sum assured; you get no benefits if you survive the policy term. Since the entire premium paid by you ---the cost of buying insurance cover---on term policies goes towards covering the risk of your life, insurers offer you this cover at the least cost. 2. Endowment plans While term plans covers just the risk of death, endowment plans also offer some return on the premium is paid by you. So, if you die during the policy term, your nominee gets the sum assured plus some returns; if you survive the policy term, you still get back the sum assured and returns. As much as this "money if you die, money if you live” philosophy is an enticing proposition, it comes at a price; high premiums, which drag down the returns from endowment plans, to barely 4-6 per cent a year. In an endowment plan, you pay premiums for a pre-defined tenure and sum assured. The premium will depend upon your age, the sum assured, the plans tenure and the nature of returns. A portion of the premium paid by you is invested by the insures on your behalf. Another portion goes towards your cover and a third towards meeting the insurers administrative expenses, which lowers the effective yield on your investment in endowment plans.3. Money back plansMoney back plans are variant of endowment plans, with one basicdifference: unlike endowment plans, where the survival benefits aredistributed at the end of the policy term, the pay back in money -back 33A COMPARATIVE STUDY OF HR PRACTICES AND POLICES OF ICICI COMPANY LTD
  34. 34. SAAB MARFIN MBAplans is staggered through the policy term. Typically, a part of the sumassured is returned to you at periodic intervals through the policy tenure.4. Whole-life planThe three categories of insurance plans mentioned above provide you lifecover for a defined period, up to a certain age (generally, 70 years),Whole-life plan, on other hand, provide you cover through yourlifetime---the only class of insurance policies to do so. Typically,whole-life plan are structured such that the policyholder has the optionto pay premium up to a certain age (referred to as the maturity agewhich is generally 80-100 years) or for a specified period. On reachingmaturity age, the insurer gives you the option to either continue with thecover through the lifetime (for which no further premiums will have to bepaid) or encash the maturity benefits (sum assured plus bonuses). Someinsurers do give the option to encash the bonus during the term per itself, which can serve as a useful income stream during your later years, ifyou so desire.5. Unit-linked insurance plansIn insurance-cum investment plans of the kind listed above, you havelittle say in where your money is invested. Your insurer too is governedby certain investment restrictions: it can invest just 10 per cent of thepremium paid by you in equities; the greater chunk of 90 percent has tobe invested in debt paper. While such restrictions are intended to insuresafety of your investment, they also lead to rigidity in investment are reinin your returns to low single digits. Unit-linked insurance plans getaround such restrictions, by giving you greater control over where your 34A COMPARATIVE STUDY OF HR PRACTICES AND POLICES OF ICICI COMPANY LTD
  35. 35. SAAB MARFIN MBApremium is invested.Think of them as insurance plans that double as mutual funds. Theannual premium you pay on unit-linked plans is linked to the sumassured and the policy tenure. You can switch from one plan to anotherfree of cost once a year (a nominal amount is charged for additionalswitches). So, if you think stocks are going cheap, you can move to thegrowth plan; or, if you think stocks are overvalued, you can move yourmoney to the income plan. You can switch from one plan to another freeof cost once a year (a nominal amount is charged for additional switches).So, if you think stocks are going cheap, you can move to the growth plan;or, if you think stocks are overvalued, you can move your money to theincome plan.6. Pension planPension plan differ from the five types of the insurance plan mentionedabove in the fundamental way; not all of them of life over. So, why we aretalking about them here?Because pension plan feature among the bevy of products offered byinsurers and are pitched as retirement planning a schemes, similar toother investment-based insurance plans. Pension plans are investmentoptions that let you set up an income stream in your post-retirementyears by routing your savings through an insurer, who invests it on yourbehalf for a free. The precise returns you will get depend upon severalfactors: your age begin when you investing, the contribution you make,your investment preferences based on your risk profile, the age at whichyou want the money to start coming back to you, and the number ofyears for which you want the returns. 35A COMPARATIVE STUDY OF HR PRACTICES AND POLICES OF ICICI COMPANY LTD
  36. 36. SAAB MARFIN MBA2.3 FUNCTIONS OF INSURANCEa) Primary Functions(I) Certainty of Compensation of Loss: Insurance provides certainty of payment at the uncertainty of loss. The element of uncertainty is reduced by better planning and administration. The insurer charges premium for providing certainty. Life is always full of risks. Life without risks and uncertainties is unthinkable. Man has always encountered risks of various types since the inception of civilization. Minor risks can be ignored but the major risks cannot be ignored and their avoidance is desirable. One of the ways or techniques of meeting the risks loss prevention and insurance. Insurance removes all uncertainties and the assured is given certainty of payment of loss. The insurer charges premium for providing the said certainty.(ii) Insurance provides protection: The risk will occur or not, when willoccur, how much loss will be there? There are uncertainties ofhappenings oftime and amount of loss. The main function of the insurance is to provideprotection against the probable chances of loss. The insurance cannotcheck the happening of risk. The insurer gives certainty of payment ofloss to the assured by charging premium. 36A COMPARATIVE STUDY OF HR PRACTICES AND POLICES OF ICICI COMPANY LTD
  37. 37. SAAB MARFIN MBA(iii)Risk sharing: Risk is uncertain and therefore, the arising from the riskis also uncertain. All business concerns face the problem of risk and ifthe concern is big enough the handling of risk become a specializedfunction. Risk and insurance are interwoven with each other. Insurance,as a device is the outcome of the existence of various risks in our day today life. It does not eliminate risks but it reduce the financial loss causedby risks. Insurance speeds the whole loss over the large number ofpersons who are exposed by a particular risk.(b) Secondary Function(I) Prevention of loss: Prevention is always better than cure. Preventionof loss is by far the best solution to the problem of risk. It is the mosteffective and cheapest method to avoid the unfortunate consequences. Byhaving the fire resistant construction, observing safety instructions,installation of automatic sparker system etc. fore can be prevented.Similarly better roads, better lights and better traffic regulationsautomobile accidents can be prolonged. But some times prevention ofprotection is not always possible and effective. When prevention failsother methods must be adopted. The insurance joins hands with thoseinstitutions which are actively engaged in preventing the losses of thesociety. Reduction in loss causes lesser payment to the assured and somore saving is possible which will assist in reducing the premium. Lesserpremium invites more business and more business in its turn results inlesser share to the assured. Reduced premiums stimulate more businessand more and better protection to the insured(ii) It provides capital: It provides capital to the society. For planneddevelopment of a country there is great need for huge amount of 37A COMPARATIVE STUDY OF HR PRACTICES AND POLICES OF ICICI COMPANY LTD
  38. 38. SAAB MARFIN MBATheaccumulated funds are invested in providing proper infrastructure and ininvesting in productive channel. Now a day, the insurance companies arerendering positive help in the development of trade, commerce andindustries of a country through different scheme of investment. Acountrysnatural resources can be exploited with long term and huge amount ofinvestment by the insurance companies.(iii) Adequate Financial cover: The need of insurance is largely felt togivea cover to the rural areas and to the socially and economically backwardclasses with a view to reach all insurable person in the country andprovidethem adequate financial cover against death at a reasonable cost.(iv) Mobilization of Savings: In insurance the savings of masses iscollectedby insurance corporations.(v)Investment: When funds are invested the interest of the community iskept in mind.2.4 CONTRACT OF INSURANCE1. Life Insurance can be defined as a contract, where for stipulatedconsiderations called the premium the insurer agrees to pay the insuredor a beneficiary, a defined amount upon the occurrence of death or someother specified event.2. A contract of insurance is a contract of utmost good faith, technicallyknown as Ubermiea fides. The doctrine of disclosing all material facts is 38A COMPARATIVE STUDY OF HR PRACTICES AND POLICES OF ICICI COMPANY LTD
  39. 39. SAAB MARFIN MBAembodied in this important principle, which applies to all forms ofinsurance.3. The Proposer, who is one of the parties of the contract, is presumed tohave means of knowledge, which are not accessible to the Company, whois the other party to contract. Therefore, the Proposer is bound to tell theinsurer everything, which might affect the judgments of the insurer, nomatter how unimportant it may seem to him. In all the contracts ofinsurance, the Proposer is bound to make full disclosure of all materialfacts and not merely those, which he thinks material.4. Misrepresentation, non-disclosure or fraud in any document leading tothe acceptance of the risk automatically discharges the Company from allliability under the contract the client loses out.Insurable Interest An Insurable interest is one of the most basic of all requirements in insurance & it must be met for an insurance contract to be valid. The Principle of Indemnity cannot be applied & does not apply to a Life Insurance contract because of the difficulty of putting a monetary value on the human life. However, here also Insurable Interest must be present to distinguish the contract from a mere gamble. The Insurable Interest must: Be definite Be capable of valuation Be legally valid & subsisting 39A COMPARATIVE STUDY OF HR PRACTICES AND POLICES OF ICICI COMPANY LTD
  40. 40. SAAB MARFIN MBA Involve a loss of a legal right2.5 INSURANCE SECTOR REFORMSIn 1993, Malhotra Committee- headed by former Finance Secretary andRBI Governor R.N. Malhotra- was formed to evaluate the Indian insuranceindustry and recommend its future direction. The Malhotra committeewas set up with the objective of complementing the reforms initiated inthe financial sector. The reforms were aimed at creating a more efficientand competitive financial system suitable for the requirements of theeconomy keeping in mind the structural changes currently underway andrecognizing that insurance is an important part of the overall financialsystem where it was necessary to address the need for similar reforms. In1994, the committee submitted the report and some of the keyrecommendations 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 these subsidiaries can act as independent corporations. All the insurance companies should be given greater freedom to operate.II) COMPETITION 40A COMPARATIVE STUDY OF HR PRACTICES AND POLICES OF ICICI COMPANY LTD
  41. 41. SAAB MARFIN MBA > Private Companies with a minimum paid up capital of Rs.1bn should be allowed to enter the sector. 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 the domestic companies. Postal Life Insurance should be allowed to operate in the rural market. Only one State Level Life Insurance Company should be allowed to operate in each state.III) REGULATORY BODY The Insurance Act should be changed. An Insurance Regulatory body should be set up. Controller of Insurance- a part of the Finance Ministry- should be made independentIV) INVESTMENTS Mandatory Investments of LIC Life Fund in government securities to be reduced from 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) 41A COMPARATIVE STUDY OF HR PRACTICES AND POLICES OF ICICI COMPANY LTD
  42. 42. SAAB MARFIN MBAV) CUSTOMER SERVICE LIC should pay interest on delays in payments beyond 30 days. Insurance companies must be encouraged to set up unit linked pension plans. > Computerization of operations and updating of technology to be carried out in the insurance industry.The committee emphasized that in order to improve the customerservices and increase the coverage of insurance policies, industry shouldbe opened up to competition. But at the same time, the committee feltthe need to exercise caution as any failure on the part of new playerscould ruin the public confidence in the industry.Hence, it was decided to allow competition in a limited way by stipulatingthe minimum capital requirement of Rs.100 crores. The committee feltthe need to provide greater autonomy to insurance companies in order toimprove their performance and enable them to act as independentcompanies with economic motives. For this purpose, it had proposedsetting up an independent regulatory body2.6 INSURANCE REGULATORY AND DEVELOPMENTAUTHORITY.Reforms in the Insurance sector were initiated with the passage of theIRDA Bill in Parliament in December 1999. The IRDA since itsincorporation as a statutory body in April 2000 has fastidiously stuck toits schedule of framing regulations and registering the private sector 42A COMPARATIVE STUDY OF HR PRACTICES AND POLICES OF ICICI COMPANY LTD
  43. 43. SAAB MARFIN MBAinsurance companies. Since being set up as an independent statutorybody the IRDA has put in a framework of globally compatible regulations.The other decision taken simultaneously to provide the supportingsystems to the insurance sector and in particular the life insurancecompanies was the launch of the IRDA online service for issue andrenewal of licenses to agents. The approval ofinstitutions for imparting training to agents has also ensured that theinsurance companies would have a trained workforce of insurance agentsin place to sell their products which are expected to be introduced byearly next year. Since being set up as an independent statutory body theIRDA has put in a framework of globally compatible regulations. In theprivate sector 151ife insurance and 15 non-life insurance companieshave been registered.2.7 ENTRY OF PRIVATE PLAYERSThe introduction of private players in the industry has added to the colorsin the dull industry. The initiatives taken by the private players are verycompetitive and have given immense competition to the on timemonopoly of the market LlC. Since the advent of the private players in themarket the industry has seen new and innovative steps taken by theplayers in this sector. The new players have improved the service qualityof the insurance. The following companies are present in the LifeInsurance Industry in India. Bajaj Allianz Life Insurance Company Limited. Birla Sun Life Insurance Co. Ltd HDFC Standard Life Insurance Co. Ltd 43A COMPARATIVE STUDY OF HR PRACTICES AND POLICES OF ICICI COMPANY LTD
  44. 44. SAAB MARFIN MBA ICICI Prudential Life Insurance Life Insurance Co. Ltd ING Vysya Life Insurance Company Pvt. Ltd. Life Insurance Corporation. of India Max New York Life Insurance Co. Ltd Met Life India Insurance Company Pvt. Ltd. Kotak Mahindra Old Mutual Life Insurance Limited SBI Life Insurance Co. Ltd Tata AIG Life Insurance Company Limited Reliance Life Insurance Company Limited. Aviva Life Insurance Co. India Pvt. Ltd. Sahara India Life Insurance Co, Ltd. Shriram Life Insurance Co, Ltd. Bharti AXA Life Insurance Company Ltd. 44A COMPARATIVE STUDY OF HR PRACTICES AND POLICES OF ICICI COMPANY LTD
  45. 45. SAAB MARFIN MBA3. COMPANY PROFILE ICICI Prudential Life Insurance Life Insurance Company is a jointventure between ICICI Bank, a premier financial powerhouse, andPrudential plc, a leading international financial services groupheadquartered in the United Kingdom. ICICI Prudential Life Insurance wasamongst the first private sector insurance companies to begin operationsin December 2000 after receiving approval from Insurance RegulatoryDevelopment Authority (IRDA). ICICI Prudential Life Insurances equity base stands at Rs. 675 crorewith ICICI Bank and Prudential plc holding 55% and 45% stake respectively.In the quarter ended June 30, 2004, the company issued over 100,000policies, for a total sum assured of over Rs 3,753 crore and had a newbusiness premium income of Rs. 242 crore. Today the company is the #1private life insurers in the country.3.1 GROWTH PATTERNICICI Prudential Life Insurance has one of the largest distributionnetworks amongst private life insurers in India, having commencedoperations in 62 cities and towns in India. These are: Agra, 45A COMPARATIVE STUDY OF HR PRACTICES AND POLICES OF ICICI COMPANY LTD
  46. 46. SAAB MARFIN MBAAjmer, Allahabad, Amritsar, Aurangabad, Bangalore, Bareilly, Bhatinda,Bhopal, Bhubhaneshwar, Chandigarh, Chennai, Coimbatore, Dehradun,Goa, Guntur, Gurgaon, Gwalior, Hyderabad, Hubli, Indore, Jaipur,Jalandhar, Jamnagar, Jamshedpur, Jodhpur, Kanpur, Karnal, Kochi, Kolkata,Kolhapur, Kota, Kottayam, Kozhikode, Lucknow, Ludhiana, Madurai,Mangalore, Meerut, Mumbai, Nagpur, Nasik, Noida, New Delhi, Patiala,Pune, Raipur, Rajkot, Ranchi, Rourkela, Siliguri, Surat, Thane, Thrissur,Trichy, Trivandrum, Udaipur, Vadodara, Vashi, Vijayawada and Vizag.The company has ten bancassurance tie-ups, having agreements withICICI Bank, Federal Bank, South Indian Bank, Bank of India, Lord KrishnaBank, as well as some co-operative banks and corporate agents. It hasalso tied up with organizations like Dhan for distribution of SalaamZindagi, a policy for the socially and economically underprivilegedsections of society.ICICI Prudential Life Insurance has recruited and trained over 36,000insurance agents to interface with and advice customers. Further, itleverages its state-of-the-art IT infrastructure to provide superior qualityof service to customers. ICICI Pru in the News ICICI Pru has 40% of private life insurance market The Economic Times: March 1, 2004 46A COMPARATIVE STUDY OF HR PRACTICES AND POLICES OF ICICI COMPANY LTD
  47. 47. SAAB MARFIN MBA Prudential seeks to replicate ICICI Pru success The Economic Times: March 13, 2004 Best Life Insurer Award Outlook Money: March 15, 2004 ICICI Prudential Life Insurance Life hikes capital to Rs 675 cr The Economic Times: March 17, 2004 ICICI Pru tops premium income chart Business Standard: April 15, 20043.2 ORGANIZATIONAL STRUCTUREBoard of DirectorsThe ICICI Prudential Life Insurance Life Insurance Company Limited Boardcomprises reputed people from the finance industry both from India andabroad.Mr. Ajay SrinivasanMs. Shikha SharmaMr. N. S kannan.Mr. K. S. Mehta 47A COMPARATIVE STUDY OF HR PRACTICES AND POLICES OF ICICI COMPANY LTD
  48. 48. SAAB MARFIN MBAMr. Dadi EngineerMr. Pradip P. ShahDr. (Mrs.) Swati A. PiramalMr. Pankaj RazdanManagement TeamMs. Shikha Sharma, Managing DirectorMr. Sandeep Batra, Chief Financial Officer & Company SecretaryMr. Shubhro J. Mitra, Chief - Human ResourcesMr. Puneet Nanda, Head - InvestmentsMs. Anita Pai, Chief - Customer Service and OperationsMr. V. Rajagopalan, Appointed ActuaryMr. Shridhar Sethuram, Chief - Strategy3.3 STRUCTURE AND GROWTH OF INVESTMENTICICI and Prudential came together in 1993 to form Prudential ICICI AssetManagement Company, which has today emerged as one of the leadingmutual funds in India. The two companies bring together two of thestrongest financial service brands in Asia, known for theirprofessionalism, excellent quality of service and long term commitmentto YOU. Riding on the success of this relationship, the two companiesjoined hands once more in 2000, to form ICICI Prudential Life InsuranceLife Insurance, with a commitment to provide leading-edge life insurancesolutions. 48A COMPARATIVE STUDY OF HR PRACTICES AND POLICES OF ICICI COMPANY LTD
  49. 49. SAAB MARFIN MBAICICI Bank has 45% stake in the company, and Prudential plc has 55%.ICICI BankICICI Bank (NYSE:IBN) is Indias second largest bank with an asset base ofRs. 106812 crore. ICICI Bank provides a broad spectrum of financialservices to individuals and companies. This includes mortgages, car andpersonal loans, credit and debit cards, corporate and agricultural finance.The Bank services a growing customer base of more than 7 millioncustomer accounts and 5 million bondholders’ accounts through amulti-channel access network. This includes about 450 branches andextension counters, 1675 ATMs, call centre and Internet banking(www.icicibank.com). ICICI Bank posted a net profit of Rs.1, 206 crore forthe year ended March 31, 2003. ICICI Bank is the only Indian company tobe rated above the country rating by the international rating agencyMoodys and the only Indian company to be awarded an investmentgrade international credit rating. The Bank enjoys the highest AAA (orequivalent) rating from all leading Indian rating agencies.Prudential plcEstablished in 1848, Prudential plc is a leading international financialservices company in the UK, with around US$250 billion funds under 49A COMPARATIVE STUDY OF HR PRACTICES AND POLICES OF ICICI COMPANY LTD
  50. 50. SAAB MARFIN MBAmanagement and more than 16 million customers worldwide. Prudentialhas brought to market an integrated range of financial services productsthat now includes life assurance, pensions, mutual funds, banking,investment management and general insurance. In Asia, Prudential isUKs largest life insurance company with a vast network of 22 life andmutual fund operations in twelve countries - China, Hong Kong, India,Indonesia, Japan, Korea, Malaysia, the Philippines, Singapore, Taiwan,Thailand and Vietnam. Since 1923, Prudential has championedcustomer-centric products and services, supported by over 60,000 staffand agents across the region. UnderwritingUnderwriting at ICICI Prudential Life Insurance is designed to ensure thatthe best lives are taken in the risk pool and at the same time assist salesin getting more policies.Underwriting at ICICI Prudential Life Insurance is divided into thefollowing categories: 1. Non-Medical underwriting or jet underwriting 2. Standard Medical underwriting 3. Medical underwriting 4. Female underwritingNon-Medical Underwriting or Jet UnderwritingDefinition: 1. Educated life earning regular income through employment 50A COMPARATIVE STUDY OF HR PRACTICES AND POLICES OF ICICI COMPANY LTD
  51. 51. SAAB MARFIN MBA 2. Professionally qualified life earning regular income through practice 3. Businessmen with gross income of Rs. 2 lakh as proved by ITR for the last financial yearMaximum age at entry: 45 yearsMaximum Premium Ceasing age: 65 yearsMinimum service:Employed with the government defense, PSU’s, Public or Private Ltd. Co.’sonly.Employees of partnership firms and proprietorship firms will not qualify.Qualifying Documents:For Employed: - 1. Salary certificate / slip (authentication by employer not necessary) 2. Appointment letter given by employer 3. Tax returns for last one year (last financial year) 4. Form 16For Professionals: - 1. Copy of degree certificate signed by the life assured 2. self declaration by professional on his printed letter head mentioning the year and place of obtaining the professional degree and years of practice 3. Tax returns for last 1 year (last financial year end) 51A COMPARATIVE STUDY OF HR PRACTICES AND POLICES OF ICICI COMPANY LTD
  52. 52. SAAB MARFIN MBAFor Businessmen: - 1. Tax returns for last 1 year (last financial year end) showing income above 2 lakhs Plans allowed: All plans other than Lifeguard series Riders Allowed: All Maximum limit for eligible plan SA+ Rider SA (duly rated up but not including non-medical plans) 18 to 35 years: Rs. 10 lakhs death risk 36 to 45 years: Rs. 5 lakhs death riskStandard Medical UnderwritingCases that do not fall under jet i.e., non medical – such cases go throughmedical. The simplest medical examination is called as SME- Standardmedical examination and a majority or policies sold fall under thiscategory.Medical underwritingFor cases that have high sum assure and high ages or the underwriterfeels that their needs to be more security before issuance-certain medicaltests are conductedFemale underwritingFemale underwriting is divided into three groups. Special underwritingnorms are required for female lives because of health profile, pregnancyrelated issues and the varied socio-economic profile 52A COMPARATIVE STUDY OF HR PRACTICES AND POLICES OF ICICI COMPANY LTD
  53. 53. SAAB MARFIN MBA3.4 APPLICATION FORM & LOG- IN PROCESSThere are lot of processes & activities that take place while the proposalpack is converted into the policy. The process that takes place is calledthe sales process. At the very outset, it may be said that there are threebasic stages, which are as follows: -The Advisor customer Interface: This is the stage where after theAdvisor has offered a solution using our company’s products, he has theapplication form filled up by the client. Along with this, the otherdocuments that comprise the proposal pack are also collected.The Advisor Branch Interface: In this second stage, the Advisor submitthe proposal to the branch office of the company, where after checkingfor the completeness of the proposal pack, the acknowledgement slip ishanded over to the advisor, along with the medical slips.Business process: Here we are referring to the actual processing of theapplications. This would happens once more as one of the threeprocesses – 1. Process for Jet Cases 2. Process for Standard Medical cases 3. Process for Medical casesAdvisor confidential Report: 53A COMPARATIVE STUDY OF HR PRACTICES AND POLICES OF ICICI COMPANY LTD
  54. 54. SAAB MARFIN MBAHere are the guidelines to be followed while filling up the AdvisorConfidential Report – a. Do fill up the information on the identity of life Assured b. Mention the purpose of insurance for client c. Provide details as available on the occupation of life assured d. Do mention his relation with the life assured or proposer e. Mention about income & assets details f. Details about other insurance policies would be disclosed g. The general risk factors would help us to know if there are some hobbies or financial or social position or personal habits that would impact the risk profile of the life to be assured.Proposal Pack:Here are the documents that comprises a proposal pack – Completed application form. Proof of age Computer generated Quotation Slip, which is included in proposal pack Benefit illustration of the products First Premium Deposit cheque, / Demand draft / bank pay order. Ensure that the application no. is written behind the cheque, DD Income Proof Advisor’s confidential Report Client Confidential Report 54A COMPARATIVE STUDY OF HR PRACTICES AND POLICES OF ICICI COMPANY LTD
  55. 55. SAAB MARFIN MBAApplication form: The client should countersign all cuttings, overwriting All the fields in the application form should be filled Ensure that the application form is filled with same colour inkAge proof (standard) Date of birth / name match with that on form If the life assured is married woman, a marriage certificate or maiden name declaration should be disclosed The information provided in the age proof should be legible.Age proof (Non-standard) Date of birth / name does not match with that on form Document provided is not legible Document provided is not valid The death risk exceeds Rs. 3 lakh The cover ceasing age for the person is more than 60 years.Quotation slip1. Details on the computerized quotation slip does not match with those mentioned on the Application form2. For Non –Standard Age proof, extra premium charged not included in the Quotation slipPayments details1. The first premium amount is lesser than Rs. 800 55A COMPARATIVE STUDY OF HR PRACTICES AND POLICES OF ICICI COMPANY LTD
  56. 56. SAAB MARFIN MBA2. For monthly mode of premium payment, the cheque is enclosed for one month3. Unacceptable if third party issued cheque4. For monthly mode of payment, the ECS form is not attachedOther Documents1. Jet documents not attested by life assured2. In case of student life, copy of recent ID card/ mark sheet not enclosed.3. Income proof not enclosed as per requirements.Certain Pointers The advisor must not accept cash payments from the client. Cash will be accepted only by sales officer at the branch. See that the form has been filled in the capitals and in legible handwriting & dark ink The application number should be written behind the cheque Take the appointment with the doctor as per the doctor list on the behalf of the client and inform as to what medical test he/ she will need to undergo Give to the client both the copies of Medical examination slip. The advisor code should be mentioned on the Application form.3.5 PERFORMANCE & PRODUCTS OF ICICI PRUDENTIAL LIFEINSURANCEInsurance Solutions for Individuals 56A COMPARATIVE STUDY OF HR PRACTICES AND POLICES OF ICICI COMPANY LTD
  57. 57. SAAB MARFIN MBAICICI Prudential Life Insurance Life Insurance offers a range of innovative,customer-centric products that meet the needs of customers at every lifestage. Its 19 products can be enhanced with up to 6 riders, to create acustomized solution for each policyholder.Savings Solutions SecurePlus is a transparent and feature-packed savings plan that offers 3 levels of protection. CashPlus is a transparent, feature-packed savings plan that offers 3 levels of protection as well as liquidity options. SavenProtect is a traditional endowment savings plan that offers life protection along with adequate returns. CashBak is an anticipated endowment policy ideal for meeting milestone expenses like a childs marriage, expenses for a childs higher education or purchase of an asset.Protection Solutions LifeGuard is a protection plan, which offers life cover at very low cost. It is available in 3 options - level term assurance, level term assurance with return of premium and single premium.Child Plans SmartKid education plans provide guaranteed educational benefits to a child along with life insurance cover for the parent who purchases the policy. The policy is designed to provide money at 57A COMPARATIVE STUDY OF HR PRACTICES AND POLICES OF ICICI COMPANY LTD
  58. 58. SAAB MARFIN MBA important milestones in the childs life. SmartKid plans are also available in unit-linked form - both single premium and regular premium.Market-linked Solutions LifeLink II is a single premium Market Linked Insurance Plan which combines life insurance cover with the opportunity to stay invested in the stock market. LifeTime II offers customers the flexibility and control to customize the policy to meet the changing needs at different life stages. It offers 4 fund options - Preserver, Protector, Balancer and Maximiser. Premier Life is a limited premium paying plan that offers customers life insurance cover till the age of 75.Retirement Solutions ForeverLife is a retirement product targeted at individuals in their thirties. SecurePlus Pension is a flexible pension plan that allows one to select between 3 levels of cover.Market-linked retirement products LifeTime PensionII is a regular premium market-linked pension plan 58A COMPARATIVE STUDY OF HR PRACTICES AND POLICES OF ICICI COMPANY LTD
  59. 59. SAAB MARFIN MBA LifeLink Pension II is a single premium market-linked pension plan.ICICI Prudential Life Insurance also launched Salaam Zindagi, a socialsector group insurance policy targeted at the economicallyunderprivileged sections of the society.Group Insurance SolutionsICICI Prudential Life Insurance also offers Group Insurance Solutions forcompanies seeking to enhance benefits to their employees. ICICI Pru Group Gratuity Plan: ICICI Prus group gratuity plan helps employers fund their statutory gratuity obligation in a scientific manner. The plan can also be customized to structure schemes that can provide benefits beyond the statutory obligations. ICICI Pru Group Superannuation Plan: ICICI Pru offers a flexible defined contribution superannuation scheme to provide a retirement kitty for each member of the group. Employees have the option of choosing from various annuity options or opting for a partial commutation of the annuity at the time of retirement. ICICI Pru Group Term Plan: ICICI Prus flexible group term solution helps provide affordable cover to members of a group. The cover could be uniform or based on designation/rank or a multiple of salary. The benefit under the policy is paid to the beneficiary nominated by the member on his/her death. 59A COMPARATIVE STUDY OF HR PRACTICES AND POLICES OF ICICI COMPANY LTD
  60. 60. SAAB MARFIN MBA TERMINOLOGIES 1. DB: Death benefit: Benefit paid in a life insurance policy or an annuity plan with live cover in the event of the life assured passing away during the term 2. LA: Life assured: Person who is insured under the plan. 3. SA: Sum Assured: Amount of money for which the insurance is taken. 4. VB: Vested Bonus: Bonuses that have accrued over the term of the plan in with profits plans. 5. PP: Purchase Price: The accumulation of the money in a deferred annuity plan. 6. GA: Guaranteed Additions: Guaranteed return that the insurer adds to the sum assured. 7. Prospect: Individual that has the potential to purchase a life insurance policy –i.e. age, health and money. 8. Prosper: The person who buys the policy-prosper and life assured can be the same person or different-but should fulfill the principle of insurable interest. 9. Annuitant: The policyholder who has pension / annuity plan. 10. Nominee: The custodian to the claim-may or may not be the rightful owner to the claim money. 11. Claimant: The person who makes the claim. 12. Beneficiary: The rightful successor to the claim. 60A COMPARATIVE STUDY OF HR PRACTICES AND POLICES OF ICICI COMPANY LTD
  61. 61. SAAB MARFIN MBA3.6 DIFFERENT PRODUCTS SAVE ‘N’ PROTECTSave‘n’protect is a with profits endowment plan with FREE extended lifecover.The prospect has to choose the term & a sum assured for this plan. Theplan provides plan cover during the term of the plan. After the term isover, on maturity the policyholder is paid the sum assured (SA) along withthe bonuses that have accrued on the policy.After maturity the policyholder is provided with free cover for 50% of thebasic sum assured that have been taken for next 5 years. Thus this planis of a great advantage when it comes to providing protection. Theunique benefits provided is known as Extended Life Cover (ELC)GENERAL FEATURESSurrender: The plan can be surrendered after three policy years has beencompleted.Loans: Are available on the policy and can be taken after the policyacquires the surrender value. Rate of interest changed will depend uponthe interest rate as of that time.Paid-up: The policy can acquire a paid up value after a period of threeyears. 61A COMPARATIVE STUDY OF HR PRACTICES AND POLICES OF ICICI COMPANY LTD
  62. 62. SAAB MARFIN MBATax benefits: The plan carries the Sec 88 on the premium paid and Sec10(10) d benefit on death and maturity claim. The tax benefits aresubjects to tax laws and are not an integral features of Save’n’ Protect. SAVE’N’PROTECT AT A GLANCEMinimum sum assured Rs 50,000Maximum sum assured Rs 1,00,00,000Minimum Premium Yearly- Rs 6,000 Half yearly-Rs 3,000 Monthly- Rs 500Minimum age at entry 0 YearsMaximum age at entry 60 YearsMinimum maturity age 18 YearsMaximum maturity age 70 YearsMinimum term 10 YearsMaximum term 30 YearsSum assured in Rs 1,000/-multiples ofPremium payment Yearly, half –Yearly, &frequencies monthly. 62A COMPARATIVE STUDY OF HR PRACTICES AND POLICES OF ICICI COMPANY LTD
  63. 63. SAAB MARFIN MBAPremium payment Entire term of the planperiodBenefit coverage period Entire term of the policy+ 5 Years after maturity(50%of sum assured under ELC )Death benefit ---------Age<7years Premiums paid will be refunded.Age>7years ----------ELC period 50% of sum assured in case CASH BAK the policy holder dies during the 5 Years Extended Term. CashBak isMaturity benefits S.A +G.A @ 3.5% with profits compounded annually (for the anticipated first 4 Years)+V.B(if any & endowment after 4 Years). plan. ThisSurrender/Paid up After 3 full years premiums plan provides have been paid. liquidity at the regularLoans Allowed after the surrender intervals of value period. time and alsohelp in saving money. 63A COMPARATIVE STUDY OF HR PRACTICES AND POLICES OF ICICI COMPANY LTD
  64. 64. SAAB MARFIN MBAGeneral featuresSurrender: The plan can be surrendered after three policy years havebeen completed.Loans: The Company in CashBak provides no loans as regular payouts areavailable to policyholdersPaid-up: The policy can acquire a paid-up value after a period of threeyears.Tax benefits: The plan carries the sec 88 on the premium paid and sec10(10) d benefit on death and maturity claim. The tax benefits are subjectto tax laws and are not an integral feature of CashBak.Target market1. Young people of the age group 20-30 years who have just started acareer and family. 64A COMPARATIVE STUDY OF HR PRACTICES AND POLICES OF ICICI COMPANY LTD
  65. 65. Minimum sum assured Rs 75,000Maximum sum assuredSAAB MARFIN MBA Rs 1,00,00,000Minimum Premium Yearly- Rs 6,000 Half yearly-Rs 3,000 Monthly- Rs 500Minimum age at entry 16 YearsMaximum age at entry 55 YearsMinimum maturity age Not ApplicableMaximum maturity age 70 YearsMinimum term 15 YearsMaximum term 20 YearsSum assured in multiples of Rs 1,000/-Premium payment frequencies Yearly, half –Yearly, & monthly.Premium payment period Entire term of the planBenefit coverage period Entire term of the policy.Death benefit during the term of S.A+G.A@3.5%+Vested bonus (if any)the policyMaturity benefits 50% of Sum assured @ 3.5%G.A compo annually (for the first 4 Years)+V.B (if a after 4 Years).Surrender/Paid up After 3 full years premiums have beenLoans No LoansRiders Allowed Critical Illness Benefit Rider (CIBR) Major Surgical Assistance Rider (MSAR)2. Income group of minimum Rs 10,000 per month. 65 Accident & Disability Benefit Rider (ADB A COMPARATIVE STUDY OF HR PRACTICES AND Accident Benefit Rider) POLICES OF ICICI COMPANY LTD
  66. 66. SAAB MARFIN MBA3. Middle-aged professionals, service holders and businessmen.CASHBAK AT A GLANCE LIFE GUARDLife Guard is the term insurance solutions from ICICI Prudential LifeInsurance. These plans provide with optimum financial protection in casedeath. These plans are extremely reasonable and are so cost effectivethat you just can’t afford not to have one.In this group of term insurance solutions there are three variants: 1. LifeGuard – Return of Premium (ROP) 2. LifeGuard – Without Return of Premium (WROP) 3. LifeGuard – Singe Premium (SP)Life Guard – ROPIn this variant the premiums that are paid by the policyholder arereturned at the end of the term i.e., on maturity to the policyholder.Thus this plan serves to provide life protection and at the end of term themoney paid which accumulates to be a substantial amount is received onmaturity.Moreover, this plan provides with the facility of FREE Extended Life Coverafter maturity – which adds to the protection that LifeGuard ROP soexcellently provides. 66A COMPARATIVE STUDY OF HR PRACTICES AND POLICES OF ICICI COMPANY LTD
  67. 67. SAAB MARFIN MBAGeneral featuresSurrender: The plan can be surrendered after three policy years havebeen completed.Loans: No loans are availablePaid-up: The policy can acquire a paid up value after a period of threeyears.Tax benefits: The plan carries the sec 88 on the premium paid and sec10(10) d benefit on death and maturity claim. The tax benefits are subjectto tax laws and are not an integral feature of LifeGuard ROP 67A COMPARATIVE STUDY OF HR PRACTICES AND POLICES OF ICICI COMPANY LTD

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