Project Report_Ribu_Dm-10-037

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A Project Report on
“Brand Awareness of IDBI Federal Life Insurance Co
Ltd.”
A Summer Internship Project Report
Submitted to
AURORA’S BUSINESS SCHOOL
In Partial Fulfilment of the summer internship programme of
Post Graduate Diploma in Management (PGDM)
By
Ribu Abraham Varghese
DM-10-037

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Aurora’s Business School,
Near NIMS, Punjagutta, Hyderabad. - 500 482
Tel: 040 2335 1891/92, 2335 0061/692 URL: www.absi.edu.in e-mail us: info@absi.edu.in
Certificate
This is to certify that the project work entitled
“Brand Awareness of IDBI Federal Life Insurance Co Ltd.”
is the bona-fide work done by
DM-10-037
As a part of their curriculum of
Post Graduate Diploma in Management (PGDM),
Aurora’s Business School, Hyderabad.
Internal Guide SIP Co-ordinator
Director

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Aurora’s Business School, Near NIMS, Punjagutta, Hyderabad. - 500 482
Tel: 040 2335 1891/92, 2335 0062/692 URL: www.absi.edu.in e-mail us:
info@absi.edu.in

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DECLARATION
This is to inform that I, have completed a project work on “Brand Awareness of
IDBI Federal Life Insurance Co Ltd.” while pursuing PGDM in Aurora’s Business
School.
I hereby declare that this project report is the original work carried out by me as part
of my academic course and has not been submitted to any other University or
Institution for the award of any degree or diploma.
Name : Ribu Abraham Varghese
Roll No. : DM-10-037 Signature

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ACKNOWLEDGEMENT
I would like to thank everyone who is involved in assisting me in producing this
project report by bringing out creativeness in this project.
I would like to take this opportunity to thank my company guide Mr Chandu
Sudheer Kumar Manager Distribution at IDBI Federal Life Insurance Co Ltd,
Project guide Mr N.V.Ramana Director and Mr Sunil Zephaniah faculty, Aurora’s
Business school, for their undeterred guidance for the completion of the report.
I would also like to thank all the staff of IDBI FEDERAL, who in spite of his busy
schedule has co-operated with me continuously and indeed, his valuable
contribution and guidance have been certainly indispensable for my project work
My parents need special mention here for their constant support and love in my life. I
also thank my friends and well-wishers who have provided their whole hearted
support to me in this exercise. I believe that this effort has prepared me for taking up
new challenging opportunities in future.
I hope that I can build upon the experience and knowledge that I have gained and
make a valuable contribution towards this industry.
With Regards and Gratitude

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Table of Contents
A Brief on Insurance Sector........................................................................................................8
Introduction to Project............................................................................................................... 9
Brand Awareness of IDBI Federal Life Insurance ....................................................................9
Executive Summary................................................................................................................ 84
Objective of Study:................................................................................................................... 85
Scope of Study: ........................................................................................................................ 85
Methodology of Study........................................................................................................... 86
List of Tables
Table No. 1............................................................................................................................. 28
Table No. 2............................................................................................................................. 29
Table No. 3............................................................................................................................. 30
Table No. 4............................................................................................................................. 31
Table No. 5............................................................................................................................. 32
Table No. 6............................................................................................................................. 33
Table No. 7............................................................................................................................. 34
Table No. 8............................................................................................................................. 35
Table No. 9............................................................................................................................. 36
Table No. 10........................................................................................................................... 37
Table No. 11........................................................................................................................... 38
Table No. 12........................................................................................................................... 39
Table No. 13........................................................................................................................... 40

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List of Figures
Figure No. 1 ........................................................................................................................... 28
Figure No. 2 ........................................................................................................................... 29
Figure No. 3 ........................................................................................................................... 30
Figure No. 4 ........................................................................................................................... 31
Figure No. 5 ........................................................................................................................... 32
Figure No. 6 ........................................................................................................................... 33
Figure No. 7 ........................................................................................................................... 34
Figure No. 8 ........................................................................................................................... 35
Figure No. 9 ........................................................................................................................... 36
Figure No. 10 ......................................................................................................................... 37
Figure No. 11 ......................................................................................................................... 38
Figure No. 12 ......................................................................................................................... 39
Figure No. 13 ......................................................................................................................... 40

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A Brief on Insurance Sector
In one form or another, we all own insurance. Whether its auto, medical,
liability, disability or life, insurance serves as an excellent risk-management and
wealth-preservation tool. Having the right kind of insurance is a critical component
of any good financial plan.
Insurance is a form of risk management in which the insured transfers the
cost of potential loss to another entity in exchange for monetary compensation
known as the premium.
Everyone that wants to protect themselves or someone else against financial
hardship should consider insurance. This may include:
 Protecting family after one's death from loss of income
 Ensuring debt repayment after death
 Covering contingent liabilities
 Protecting against the death of a key employee or person in your
business
 Buying out a partner or co-shareholder after his or her death
 Protecting your business from business interruption and loss of
income
 Protecting yourself against unforeseeable health expenses
 Protecting your home against theft, fire, flood and other hazards
 Protecting yourself against lawsuits
 Protecting yourself in the event of disability
 Protecting your car against theft or losses incurred because of
accidents
and many more.

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Introduction to Project
Brand Awareness of IDBI Federal Life Insurance
Brand awareness is the consumers’ ability to recognize or recall (identify) the brand
within a given product category in sufficient detail to make a purchase decision. This
also means that the consumers can propose, recommend, choose, or use the brand.
The objectives of most advertising campaign are to create and maintain brand
preference. The first step is to make potential consumers aware of a brands’
existence. One of the prominent goals of any business should be to build brand
image and awareness of its product, albeit in as cost – effective manner as possible.
Consumer tends to make purchasing decision based on peer recommendation and
direct experience, as well traditional advertising methods.
IMPORTANCE OF BRAND AWARENESS:
A brand is the meaning behind your company's name, logo, symbols and slogans.
Having a unique and memorable brand helps you build brand awareness and create
a long-term position in the marketplace. Brand awareness is a measure of how well
your brand is known within its target markets.
Therefore the product that maintains the highest brand awareness compared to its
competitors will usually get the most sales. Having knowledge of the existence of a
brand because brand awareness is considered the first step in the sale, the primary
goal of some advertising campaigns is simply to make the target market aware that a
particular brand exists. Often, this effort alone will sell the product (or service).

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INTRODUCTION
An Insurance is a contract (policy) in which an individual or
entity receives financial protection or reimbursement against losses from an
insurance company. The company pools clients' risks to make payments more
affordable for the insured. An Insurance is an arrangement by which a company or
the state undertakes to provide a guarantee of compensation for specified loss,
damage, illness, or death in return for payment of a specified premium. Insurance is
the equitable transfer of the risk of a loss, from one entity to another in exchange for
payment. It is a form of risk management primarily used to hedge against the risk of
a contingent, uncertain loss. An insurer, or insurance carrier, is selling the insurance;
the insured, or policyholder, is the person or entity buying the insurance policy. The
amount of money to be charged for a certain amount of insurance coverage is called
the premium. Risk management, the practice of appraising and controlling risk, has
evolved as a discrete field of study and practice. The transaction involves the insured
assuming a guaranteed and known relatively small loss in the form of payment to the
insurer in exchange for the insurer's promise to compensate (indemnify) the insured
in the case of a financial (personal) loss. The insured receives a contract, called the
insurance policy, which details the conditions and circumstances under which the
insured will be financially compensated.
IMPORTANCE OF INSURANCE:
Insurance has evolved as a process of safeguarding the interest of people from loss
and uncertainty. It may be described as a social device to reduce or eliminate risk of
loss to life and property.
Insurance contributes a lot to the general economic growth of the society by
provides stability to the functioning of process. The insurance industries develop
financial institutions and reduce uncertainties by improving financial resources.

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• Insurance provides safety and security.
• It generates financial resources.
• Life insurance encourages savings.
• It accelerates the growth of the economy.
• It provides medical support.
• It reduces business risks and losses.
• Insurance helps to reduce inflation.
BRIEF HISTORY OF INSURANCE :
The story of insurance is probably as old as the story of mankind. The same instinct
that prompts modern businessmen today to secure themselves against loss and
disaster existed in primitive men also. They too sought to avert the evil consequences
of fire and flood and loss of life and were willing to make some sort of sacrifice in
order to achieve security. Though the concept of insurance is largely a development
of the recent past, particularly after the industrial era – past few centuries – yet its
beginnings date back almost 6000 years.
Life Insurance in its modern form came to India from England in the year 1818.
Oriental Life Insurance Company started by Europeans in Calcutta was the first life
insurance company on Indian Soil. All the insurance companies established during
that period were brought up with the purpose of looking after the needs of
European community and Indian natives were not being insured by these companies.
However, later with the efforts of eminent people like Babu Muttylal Seal, the foreign
life insurance companies started insuring Indian lives. But Indian lives were being

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treated as sub-standard lives and heavy extra premiums were being charged on
them. Bombay Mutual Life Assurance Society heralded the birth of first Indian life
insurance company in the year 1870, and covered Indian lives at normal rates.
Starting as Indian enterprise with highly patriotic motives, insurance companies came
into existence to carry the message of insurance and social security through
insurance to various sectors of society. Bharat Insurance Company (1896) was also
one of such companies inspired by nationalism. The Swadeshi movement of 1905-
1907 gave rise to more insurance companies. The United India in Madras, National
Indian and National Insurance in Calcutta and the Co-operative Assurance at Lahore
were established in 1906. In 1907, Hindustan Co-operative Insurance Company took
its birth in one of the rooms of the Jorasanko, house of the great poet Rabindranath
Tagore, in Calcutta.
The Indian Mercantile, General Assurance and Swadeshi Life (later Bombay Life) were
some of the companies established during the same period. Prior to 1912 India had
no legislation to regulate insurance business. In the year 1912, the Life Insurance
Companies Act, and the Provident Fund Act were passed. The Life Insurance
Companies Act, 1912 made it necessary that the premium rate tables and periodical
valuations of companies should be certified by an actuary. But the Act discriminated
between foreign and Indian companies on many accounts, putting the Indian
companies at a disadvantage.
The first two decades of the twentieth century saw lot of growth in insurance
business. From 44 companies with total business-in-force as Rs.22.44 crore, it rose to
176 companies with total business-in-force as Rs.298 crore in 1938. During the
mushrooming of insurance companies many financially unsound concerns were also
floated which failed miserably. The Insurance Act 1938 was the first legislation
governing not only life insurance but also non-life insurance to provide strict state
control over insurance business. The demand for nationalization of life insurance
industry was made repeatedly in the past but it gathered momentum in 1944 when a

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bill to amend the Life Insurance Act 1938 was introduced in the Legislative Assembly.
However, it was much later on the 19th of January, 1956, that life insurance in India
was nationalized. About 154 Indian insurance companies, 16 non-Indian companies
and 75 provident were operating in India at the time of nationalization.
Nationalization was accomplished in two stages; initially the management of the
companies was taken over by means of an Ordinance, and later, the ownership too
by means of a comprehensive bill. The Parliament of India passed the Life Insurance
Corporation Act on the 19th of June 1956, and the Life Insurance Corporation of
India was created on 1st September, 1956, with the objective of spreading life
insurance much more widely and in particular to the rural areas with a view to reach
all insurable persons in the country, providing them adequate financial cover at a
reasonable cost.
LIC had 5 zonal offices, 33 divisional offices and 212 branch offices, apart from its
corporate office in the year 1956. Since life insurance contracts are long term
contracts and during the currency of the policy it requires a variety of services need
was felt in the later years to expand the operations and place a branch office at each
district headquarter. Re-organization of LIC took place and large numbers of new
branch offices were opened. As a result of re-organization servicing functions were
transferred to the branches, and branches were made accounting units. It worked
wonders with the performance of the corporation.
It may be seen that from about 200.00 crores of New Business in 1957 the
corporation crossed 1000.00 crores only in the year 1969-70, and it took another 10
years for LIC to cross 2000.00 crore mark of new business. But with re-organization
happening in the early eighties, by 1985-86 LIC had already crossed 7000.00 crore
Sum Assured on new policies.
Today LIC functions with 2048 fully computerized branch offices, 109 divisional

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offices, 8 zonal offices, 992 satellite offices and the Corporate office. LIC’s Wide Area
Network covers 109 divisional offices and connects all the branches through a Metro
Area Network. LIC has tied up with some Banks and Service providers to offer on-line
premium collection facility in selected cities. LIC’s ECS and ATM premium payment
facility is an addition to customer convenience. Apart from on-line Kiosks and IVRS,
Info Centers have been commissioned at Mumbai, Ahmedabad, Bangalore, Chennai,
Hyderabad, Kolkata, New Delhi, Pune and many other cities. With a vision of
providing easy access to its policyholders, LIC has launched its SATELLITE SAMPARK
offices. The satellite offices are smaller, leaner and closer to the customer. The
digitalized records of the satellite offices will facilitate anywhere servicing and many
other conveniences in the future.
LIC continues to be the dominant life insurer even in the liberalized scenario of
Indian insurance and is moving fast on a new growth trajectory surpassing its own
past records. LIC has issued over one crore policies during the current year. It has
crossed the milestone of issuing 1,01,32,955 new policies by 15th Oct, 2005, posting
a healthy growth rate of 16.67% over the corresponding period of the previous year.
From then to now, LIC has crossed many milestones and has set unprecedented
performance records in various aspects of life insurance business. The same motives
which inspired our forefathers to bring insurance into existence in this country inspire
us at LIC to take this message of protection to light the lamps of security in as many
homes as possible and to help the people in providing security to their families.
Some of the important milestones in the life insurance business in India are:

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1818: Oriental Life Insurance Company, the first life insurance company on Indian
soil started functioning.
1870: Bombay Mutual Life Assurance Society, the first Indian life insurance company
started its business.
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 are taken over by the
central government and nationalized. LIC formed by an Act of Parliament, viz. LIC Act,
1956, with a capital contribution of Rs.5 crore from the Government of India.
The General insurance business in India, on the other hand, can trace its roots to the
Triton Insurance Company Ltd., the first general insurance company established in
the year 1850 in Calcutta by the British.
Some of the important milestones in the general insurance business in India
are:
1907: The Indian Mercantile Insurance Ltd. set up, the first company to transact all
classes of general insurance business.
1957: General Insurance Council, a wing of the Insurance Association of India, frames
a code of conduct for ensuring fair conduct and sound business practices.
1968: The Insurance Act amended to regulate investments and set minimum
solvency margins and the Tariff Advisory Committee set up.
1972: The General Insurance Business (Nationalization) Act, 1972 nationalized the

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general insurance business in India with effect from 1st January 1973.
PRINCIPLES:
Insurance involves pooling funds from many insured entities (known
as exposures) to pay for the losses that some may incur. The insured entities are
therefore protected from risk for a fee, with the fee being dependent upon the
frequency and severity of the event occurring. In order to be an insurable risk, the
risk insured against must meet certain characteristics. Insurance as a financial
intermediary is a commercial enterprise and a major part of the financial services
industry, but individual entities can also self-insure through saving money for
possible future losses.
INSURABILITY:
Risk which can be insured by private companies typically shares seven common
characteristics
1. Large number of similar exposure units: Since insurance operates through
pooling resources, the majority of insurance policies are provided for individual
members of large classes, allowing insurers to benefit from the law of large numbers
in which predicted losses are similar to the actual losses. However, all exposures will
have particular differences, which may lead to different premium rates.
2. Definite loss: The loss takes place at a known time, in a known place, and from a
known cause. The classic example is death of an insured person on a life insurance
policy. Fire, automobile accidents, and worker injuries may all easily meet this
criterion. Other types of losses may only be definite in theory. Occupational disease,
for instance, may involve prolonged exposure to injurious conditions where no
specific time, place, or cause is identifiable. Ideally, the time, place, and cause of a

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loss should be clear enough that a reasonable person, with sufficient information,
could objectively verify all three elements.
3. Accidental loss: The event that constitutes the trigger of a claim should be
fortuitous, or at least outside the control of the beneficiary of the insurance. The loss
should be pure, in the sense that it results from an event for which there is only the
opportunity for cost. Events that contain speculative elements such as ordinary
business risks or even purchasing a lottery ticket are generally not considered
insurable.
4. Large loss: The size of the loss must be meaningful from the perspective of the
insured. Insurance premiums need to cover both the expected cost of losses, plus the
cost of issuing and administering the policy, adjusting losses, and supplying the
capital needed to reasonably assure that the insurer will be able to pay claims. For
small losses, these latter costs may be several times the size of the expected cost of
losses. There is hardly any point in paying such costs unless the protection offered
has real value to a buyer.
5. Affordable premium: If the likelihood of an insured event is so high, or the cost
of the event so large, that the resulting premium is large relative to the amount of
protection offered, then it is not likely that the insurance will be purchased, even if on
offer. Furthermore, as the accounting profession formally recognizes in financial
accounting standards, the premium cannot be so large that there is not a reasonable
chance of a significant loss to the insurer. If there is no such chance of loss, then the
transaction may have the form of insurance, but not the substance.
6. Calculable loss: There are two elements that must be at least estimable, if not
formally calculable: the probability of loss, and the attendant cost. Probability of loss
is generally an empirical exercise, while cost has more to do with the ability of a

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reasonable person in possession of a copy of the insurance policy and a proof of loss
associated with a claim presented under that policy to make a reasonably definite
and objective evaluation of the amount of the loss recoverable as a result of the
claim.
7. Limited risk of catastrophically large losses: Insurable losses are ideally
independent and non-catastrophic, meaning that the losses do not happen all at
once and individual losses are not severe enough to bankrupt the insurer; insurers
may prefer to limit their exposure to a loss from a single event to some small portion
of their capital base. Capital constrains insurers' ability to sell earthquake insurance
as well as wind insurance in hurricane zones. In the United States, flood risk is insured
by the federal government. In commercial fire insurance, it is possible to find single
properties whose total exposed value is well in excess of any individual insurer's
capital constraint. Such properties are generally shared among several insurers, or
are insured by a single insurer who syndicates the risk into the reinsurance market.
LEGAL:
When a company insures an individual entity, there are basic legal requirements and
regulations. Several commonly cited legal principles of insurance include
1. Indemnity – the insurance company indemnifies, or compensates, the insured in
the case of certain losses only up to the insured's interest.
2. Benefit insurance – as it is stated in the study books of The Chartered Insurance
Institute, the insurance company doesn't have the right of recovery from the party
who caused the injury and is to compensate the Insured regardless of the fact that
Insured had already sued the negligent party for the damages.
3. Insurable interest – The insured typically must directly suffer from the loss.
Insurable interest must exist whether property insurance or insurance on a person is

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involved. The concept requires that the insured have a "stake" in the loss or damage
to the life or property insured.
4. Utmost good faith –The insured and the insurer are bound by a good faith bond
of honesty and fairness. Material facts must be disclosed.
5. Contribution – Insurers which have similar obligations to the insured contribute in
the indemnification.
6. Subrogation – the insurance company acquires legal rights to pursue recoveries
on behalf of the insured. The Insurers can waive their subrogation rights by using the
special clauses.
7. Cause proxima, or proximate cause – the cause of loss (the peril) must be
covered under the insuring agreement of the policy, and the dominant cause must
not be excluded.
8. Mitigation – In case of any loss or casualty, the asset owner must attempt to keep
loss to a minimum, as if the asset was not insured.
INDEMNIFICATION:
To "indemnify" means to make whole again, or to be reinstated to the position that
one was in, to the extent possible, prior to the happening of a specified event or
peril. Accordingly, life insurance is generally not considered to be indemnity
insurance, but rather "contingent" insurance. There are generally three types of
insurance contracts that seek to indemnify an insured:
1. A "reimbursement" policy

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2. A "pay on behalf" or "on behalf of" policy
3. An "indemnification" policy
Reimbursement policy - The insured can be required to pay for a loss and
then be "reimbursed" by the insurance carrier for the loss and out of pocket costs
including, with the permission of the insurer, claim expenses
Pay on behalf policy - The insurance carrier would defend and pay a claim on
behalf of the insured, who would not be out of pocket for anything. Most modern
liability insurance is written on the basis of "pay on behalf" language which enables
the insurance carrier to manage and control the claim.
Indemnification policy - The insurance carrier can generally either "reimburse"
or "pay on behalf of", whichever is more beneficial to it and the insured in the claim
handling process.
An entity seeking to transfer risk becomes the 'insured' party once risk is assumed by
an 'insurer', the insuring party, by means of a contract, called an insurance policy.
Generally, an insurance contract includes, at a minimum, the following elements:
identification of participating parties, the premium, the period of coverage, the
particular loss event covered the amount of coverage, and exclusions. An insured is
thus said to be "indemnified" against the loss covered in the policy.
When insured parties experience a loss for a specified peril, the coverage entitles the
policyholder to make a claim against the insurer for the covered amount of loss as
specified by the policy. The fee paid by the insured to the insurer for assuming the
risk is called the premium. Insurance premiums from many insured are used to fund
accounts reserved for later payment of claims – in theory for a relatively few

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claimants – and for overhead costs. So long as an insurer maintains adequate funds
set aside for anticipated losses, the remaining margin is an insurer's profit.
SOCIETAL EFFECTS:
Insurance can have various effects on society through the way that it changes who
bears the cost of losses and damage. On one hand it can increase fraud; on the other
it can help societies and individuals prepare for catastrophes and mitigate the effects
of catastrophes on both households and societies.
Insurance can influence the probability of losses through moral hazard, insurance
fraud, and preventive steps by the insurance company. Insurance scholars have
typically used moral hazard to refer to the increased loss due to unintentional
carelessness and moral hazard to refer to increased risk due to intentional
carelessness or indifference. Insurers attempt to address carelessness through
inspections, policy provisions requiring certain types of maintenance, and possible
discounts for loss mitigation efforts. While in theory insurers could encourage
investment in loss reduction, some commentators have argued that in practice
insurers had historically not aggressively pursued loss control measures particularly
to prevent disaster losses such as hurricanes because of concerns over rate
reductions and legal battles.
Methods of Insurance:

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In accordance with study books of The Chartered Insurance Institute, there are the
following types of insurance:
1. Co-Insurance – Risks shared between insurers
2. Dual Insurance – Risks having two or more policies with same coverage
3. Self-Insurance – Situations where risk is not transferred to insurance companies
and solely retained by the entities or individuals themselves
4. Reinsurance – Situations when Insurer passes some part of or all risks to another
Insurer called Reinsurer
Role of IRDA:
The Insurance Regulatory and Development Authority or IRDAI is an agency of the
Government of India, formed to supervise the country’s insurance sector. The core
mission of IRDAI is to protect the interest of policyholders, to regulate, promote and
ensure orderly growth of the insurance industry and for matters connected therewith.
It was established in 1999 as an autonomous body to specifically regulate and
develop the insurance industry in India. In April 2000, the IRDAI was incorporated as
a statutory body with the key objective to promote competition and enhance
customer satisfaction while ensuring financial security of the insurance market. IRDAI
opened up the insurance market in August 2000 with the invitation for application
for registrations. Foreign companies were allowed ownership of up to 26 per cent.
True to its title, the IRDAI has the power to frame regulations under Section 114A of
the Insurance Act, 1938 and has from 2000 onwards framed various regulations for
insurance business to protect policyholders’ interests.

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DIFFERENT TYPES OF INSURANCE PRODUCTS IN INDIA
AUTO INSURANCE:
Auto insurance protects the policyholder against financial loss in the event of an
incident involving a vehicle they own, such as in a traffic collision.
Coverage typically includes:
• Property coverage, for damage to or theft of the car
• Liability coverage, for the legal responsibility to others for bodily injury or property
damage
• Medical coverage, for the cost of treating injuries, rehabilitation and sometimes lost
wages and funeral expenses
GAP INSURANCE:
Gap insurance covers the excess amount on your auto loan in an instance where your
insurance company does not cover the entire loan. Depending on the companies
specific policies it might or might not cover the deductible as well. This coverage is
marketed for those who put low down payments, have high interest rates on their
loans, and those with 60 month or longer terms. Gap insurance is typically offered by
your finance company when you first purchase your vehicle. Most auto insurance
companies offer this coverage to consumers as well. If you are unsure if GAP
coverage had been purchased, you should check your vehicle lease or purchase
documentation.
Health Insurance :
Health insurance policies cover the cost of medical treatments. Dental insurance, like
medical insurance, protects policyholders for dental costs. In most developed

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countries, all citizens receive some health coverage from their governments, paid for
by taxation. In most countries, health insurance is often part of an employer's
benefits.
Income Protection Insurance:
Disability insurance policies provide financial support in the event of the policyholder
becoming unable to work because of disabling illness or injury. It provides monthly
support to help pay such obligations as mortgage loans and credit cards. Short-term
and long-term disability policies are available to individuals, but considering the
expense, long-term policies are generally obtained only by those with at least six-
figure incomes, such as doctors, lawyers, etc. Short-term disability insurance covers a
person for a period typically up to six months, paying a stipend each month to cover
medical bills and other necessities. Casualty Insurance
Life Insurance:
Life insurance provides a monetary benefit to a decedent's family or other
designated beneficiary, and may specifically provide for income to an insured
person's family, burial, funeral and other final expenses. Life insurance policies often
allow the option of having the proceeds paid to the beneficiary either in a lump sum
cash payment or an annuity. In most states, a person cannot purchase a policy on
another person without their knowledge.

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Burial Insurance:
Burial insurance is a very old type of life insurance which is paid out upon death to
cover final expenses, such as the cost of a funeral. The Greeks and Romans
introduced burial insurance c. 600 CE when they organized guilds called "benevolent
societies" which cared for the surviving families and paid funeral expenses of
members upon death. Guilds in the Middle Ages served a similar purpose, as did
friendly societies during Victorian times.
Property Insurance:
Property insurance provides protection against risks to property, such as fire, theft or
weather damage. This may include specialized forms of insurance such as fire
insurance, flood insurance, earthquake insurance, home insurance, inland marine
insurance or boiler insurance. The term property insurance may, like casualty
insurance, be used as a broad category of various subtypes of insurance, some of
which are listed below:.
Credit Insurance:
Credit insurance repays some or all of a loan when the borrower is insolvent.

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• Mortgage insurance insures the lender against default by the borrower. Mortgage
insurance is a form of credit insurance, although the name "credit insurance" more
often is used to refer to policies that cover other kinds of debt.
• Many credit cards offer payment protection plans which are a form of credit
insurance.
• Trade credit insurance is business insurance over the accounts receivable of the
insured. The policy pays the policy holder for covered accounts receivable if the
debtor defaults on payment.
• Collateral protection insurance (CPI) insures property (primarily vehicles) held as
collateral for loans made by lending institutions.
Other types of Insurance
• All-risk insurance is an insurance that covers a wide range of incidents and perils,
except those noted in the policy. All-risk insurance is different from peril-specific
insurance that cover losses from only those perils listed in the policy. In car insurance,
all-risk policy includes also the damages caused by the own driver.
• Bloodstock insurance covers individual horses or a number of horses under
common ownership. Coverage is typically for mortality as a result of accident, illness
or disease but may extend to include infertility, in-transit loss, veterinary fees, and
prospective foal.

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• Business interruption insurance covers the loss of income, and the expenses
incurred, after a covered peril interrupts normal business operations.
Closed community and governmental self-Insurance:
Some communities prefer to create virtual insurance amongst themselves by other
means than contractual risk transfer, which assigns explicit numerical values to risk. A
number of religious groups, including the Amish and some Muslim groups, depend
on support provided by their communities when disasters strike. The risk presented
by any given person is assumed collectively by the community who all bear the cost
of rebuilding lost property and supporting people whose needs are suddenly greater
after a loss of some kind. In supportive communities where others can be trusted to
follow community leaders, this tacit form of insurance can work. In this manner the
community can even out the extreme differences in insurability that exist among its
members. Some further justification is also provided by invoking the moral hazard of
explicit insurance contracts.

28
Role of IRDAI:
1. There are number of roles and duties that are assigned to IRDAI to ensure
awareness among policyholders and the service providers.
2. IRDAI issues a certificate of registration, renewal, modification, withdrawal,
suspension or cancellation to an applicant
3. It protects the interest of the policyholder on the terms and conditions of contracts
of insurance
4. IRDAI specifies the code of conduct and practical training for insurance
intermediaries and agents
5. Promotes efficiency and regulates professional organizations connected with the
insurance business, investment of funds by insurance companies
6. IRDAI specifies the percentage of life insurance business and general insurance
business to be undertaken by the insurer in the rural or social sector
INTRODUCTION TO LIFE INSURANCE :
Life insurance in India made its debut well over 100 years ago.
In our country, which is one of the most populated in the world, the prominence of
insurance is not as widely understood, as it ought to be. What follows is an attempt
to acquaint readers with some of the concepts of life insurance, with special
reference to LIC. It should, however, be clearly understood that the following content
is by no means an exhaustive description of the terms and conditions of an LIC policy
or its benefits or privileges. For more details, please contact our branch or divisional
office. Any LIC Agent will be glad to help you choose the life insurance plan to meet
your needs and render policy servicing.

29
What Is LifeInsurance ?
Life insurance is a contract that pledges payment of an amount to the person
assured (or his nominee) on the happening of the event insured against.
The contract is valid for payment of the insured amount during:
1. The date of maturity, or
2. Specified dates at periodic intervals, or
3. Unfortunate death, if it occurs earlier.
Among other things, the contract also provides for the payment of premium
periodically to the Corporation by the policyholder. Life insurance is universally
acknowledged to be an institution, which eliminates 'risk', substituting certainty for
uncertainty and comes to the timely aid of the family in the unfortunate event of
death of the breadwinner.
By and large, life insurance is civilization’s partial solution to the problems caused by
death. Life insurance, in short, is concerned with two hazards that stand across the
life-path of every person:

30
1. That of dying prematurely leaving a dependent family to fend for itself.
2. That of living till old age without visible means of support.
PRINCIPLES OF LIFE INSURANCE:
1. Spread Life Insurance widely and in particular to the rural areas and to the socially
and economically backward classes with a view to reaching all insurable persons in
the country and providing them adequate financial cover against death at a
reasonable cost.
2. Maximize mobilization of people's savings by making insurance-linked savings
adequately attractive.
3. Bear in mind, in the investment of funds, the primary obligation to its
policyholders, whose money it holds in trust, without losing sight of the interest of
the community as a whole; the funds to be deployed to the best advantage of the
investors as well as the community as a whole, keeping in view national priorities and
obligations of attractive return.
4. Conduct business with utmost economy and with the full realization that the
moneys belong to the policyholders.
5. Act as trustees of the insured public in their individual and collective capacities.
6. Meet the various life insurance needs of the community that would arise in the
changing social and economic environment.

31
7. Involve all people working in the Corporation to the best of their capability in
furthering the interests of the insured public by providing efficient service with
courtesy.
8. Promote amongst all agents and employees of the Corporation a sense of
participation, pride and job satisfaction through discharge of their duties with
dedication towards achievement of Corporate Objective.
BENEFITS OF LIFE INSURANCE:
1. Risk Cover - Life today is full of uncertainties; in this scenario Life Insurance
ensures that your loved ones continue to enjoy a good quality of life against any
unforeseen event.
2. Planning for life stage needs - Life Insurance not only provides for financial
support in the event of untimely death but also acts as a long term investment. You
can meet your goals, be it your children's education, their marriage, building your
dream home or planning a relaxed retired life, according to your life stage and risk
appetite. Traditional life insurance policies i.e. traditional endowment plans, offer in-
built guarantees and defined maturity benefits through variety of product options
such as Money Back, Guaranteed Cash Values, Guaranteed Maturity Values.

32
3. Protection against rising health expenses - Life Insurers through riders or
standalone health insurance plans offer the benefits of protection against critical
diseases and hospitalization expenses. This benefit has assumed critical importance
given the increasing incidence of lifestyle diseases and escalating medical costs.
4. Builds the habit of thrift - Life Insurance is a long-term contract whereas
policyholder, you have to pay a fixed amount at a defined periodicity. This builds the
habit of long-term savings. Regular savings over a long period ensures that a decent
corpus is built to meet financial needs at various life stages.
5. Safe and profitable long-term investment - Life Insurance is a highly regulated
sector. IRDA of India, the regulatory body, through various rules and regulations
ensures that the safety of the policyholder's money is the primary responsibility of all
stakeholders. Life Insurance being a long-term savings instrument, also ensures that
the life insurers focus on returns over a long-term and do not take risky investment
decisions for short term gains.
6. Assured income through annuities - Life Insurance is one of the best
instruments for retirement planning. The money saved during the earning life span is
utilized to provide a steady source of income during the retired phase of life.
7. Protection plus savings over a long term - Since traditional policies are viewed
both by the distributors as well as the customers as a long term commitment; these
policies help the policyholders meet the dual need of protection and long term
wealth creation efficiently.

33
8. Growth through dividends - Traditional policies offer an opportunity to
participate in the economic growth without taking the investment risk. The
investment income is distributed among the policyholders through annual
announcement of dividends/bonus.
9. Facility of loans without affecting the policy benefits - Policyholders have the
option of taking loan against the policy. This helps you meet your unplanned life
stage needs without adversely affecting the benefits of the policy they have bought.
10. Tax Benefits-Insurance plans provide attractive tax-benefits for both at the time
of entry and exit under most of the plans.
11. Mortgage Redemption- Insurance acts as an effective tool to cover mortgages
and loans taken by the policyholders so that, in case of any unforeseen event, the
burden of repayment does not fall on the bereaved family.
TYPES OF PRODUCTS:
1. Whole life plan
2. Endowment plan

34
3. Pure term plan
4. Pension plan
WHOLE LIFE PLAN:
This plan is mainly devised to create an estate for the heirs of the policyholder as the
plan basically provides for payment of sum assured plus bonuses on the death of the
policyholder. However, considering the increased longevity of the Indian population,
the Corporation has amended the above provision, thereby providing for payment of
sum assured plus bonuses in the form of maturity claim on completion of age 80
years or on expiry of term of 40 years from date of commencement of the policy
whichever is later.
The premiums under the policy are payable up to age 80 years of the policyholder or
for a term of 35 years whichever is later.
If the payment of premium ceases after 3 years, a paid-up policy for such reduced
sum assured will be automatically secured provided the reduced sum assured
exclusive of any attached bonus is not less than Rs.250/-. Such reduced paid-up
policy is not entitled to participate in the bonus declared thereafter but the bonuses
already declared on the policy will remain attach, provided the policy is converted in
to a paid-up policy after the premiums are paid for 5 years.
Suitable For:
This policy is suitable for people of all ages who wish to protect their families from
financial crises that may occur owing to the policyholder’s premature death.

35
ENDOWMENT PLAN:
An endowment policy is a life insurance contract designed to pay a lump sum after
a specific term (on its 'maturity') or on death. Typical maturities are ten, fifteen or
twenty years up to a certain age limit. Some policies also pay out in the case of
critical illness.
Policies are typically traditional with-profits or unit-linked.
Endowments can be cashed in early (or surrendered) and the holder then receives
the surrender value which is determined by the insurance company depending on
how long the policy has been running and how much has been paid into it
PURE TERM PLANS:
Term life insurance or term assurance is life insurance which provides coverage at a
fixed rate of payments for a limited period of time, the relevant term. After that
period expires, coverage at the previous rate of premiums is no longer guaranteed
and the client must either forgo coverage or potentially obtain further coverage with
different payments or conditions. If the life insured dies during the term, the death
benefit will be paid to the beneficiary. Term insurance is the least expensive way to
purchase a substantial death benefit on a coverage amount per premium dollar basis
over a specific period of time.
Term life insurance can be contrasted to permanent life insurance such as whole life,
universal life, and variable universal life, which guarantee coverage at fixed premiums
for the lifetime of the covered individual unless the policy owner allows the policy to
lapse. Term insurance is not generally used for estate planning needs or charitable
giving strategies but is used for pure income replacement needs for an individual.
Term insurance functions in a manner similar to most other types of insurance in that

36
it satisfies claims against what is insured if the premiums are up to date and the
contract has not expired, and does not provide for a return of premium dollars if no
claims are filed. As an example, auto insurance will satisfy claims against the insured
in the event of an accident and a home owner policy will satisfy claims against the
home if it is damaged or destroyed This is purely risk protection.
PENSION PLAN:
Pension Plans are Individual Plans that gaze into your future and foresee financial
stability during your old age. These policies are most suited for senior citizens and
those planning a secure future, so that you never give up on the best things in life.
ULIPS vs. TRADITIONAL METHOD:
ULIP means a “Unit Linked Insurance Plan.” It combines the characteristics of a
mutual fund and life insurance product. Part of the premium goes into buying life
insurance cover while the remaining part of the premium is invested in an asset class
(Equity/Debt), based on one’s choice. Asset class investment is made after deduction
of known charges.
Traditional Plan–Money Back Plan/Endowment Plan/Term Plans. Before the
advent of ULIP’s, these were the instruments of choice, for Insurance and Investment.
However, they offered no option to choose between various asset classes and the
investments were made solely at the discretion of the insurance company. Traditional
plans provided returns in the form of sum insured plus bonus (if and when declared).
The amount of bonus depends upon profits made by the insurance company and the
declaration of the bonus at the sole discretion of the life insurance company.

37
Since traditional plans offer assured returns, a major portion of the premium is
required to be invested in risk-free securities, as per Insurance Regulatory and
Development Authority (IRDA) mandate.
Investments:
In ULIP, at the time of buying a life insurance plan, the policyholder has the option of
choosing the type of fund depending upon the asset class (equity/debt) and the
investment strategy of the policyholder.
Further, the policyholder can also switch the units between the available funds in a
unit-linked life insurance product based on prevailing market conditions. In a
Traditional life insurance plan, the investment decisions are made by the life
insurance companies, where the investment is done in primarily in Government
Securities and Corporate Bonds.
Transparency:
In a unit-linked life insurance product, before investing an individual should know the
various charges upfront, namely:
• Premium Allocation Charge
• Fund Management Charge
• Mortality Charge

38
• Policy Administration Charge
• Surrender/Discontinuance Charge
• Switching Charge
• Redirection Charge
• Partial Withdrawal Charge
The amount after deduction of applicable charges called “Residual Amount” is finally
invested in the fund chosen by the policyholder. Also, the current investment value of
the funds invested is readily available to the policyholders in form of Net Asset Value
(NAV), as this is declared regularly by an insurance company.
Nature:
Traditional life insurance plans are aimed primarily to encourage savings and have
adequate protection or life cover for the policyholder. Traditional policies are
considered risk-free, as they provide fixed returns in case of death or maturity of the
term. ULIPs in addition to providing protection cover are seen as tool for wealth
generation because of the options of investing the policyholder‘s funds in various
fund types depending upon the investment strategy and risk appetite -, therefore
provide opportunities of higher returns. However, one must note that unlike the
traditional life insurance plans the ULIPs are subject to the investment risks
associated with the capital markets. In addition, a ULIP investor has the flexibility to

39
switch funds, determine the amount of investment and withdraw funds partially or
systematically.
Decision Maker:
The choice of investments in ULIP lies with the policyholder/investor. Therefore,
depending upon the risk appetite, an individual can choose either a traditional life
insurance plan or a unit-linked life insurance plan. ULIP is the instrument of choice
for an “Active Investor.”
For “Passive Investors,” whose priority is savings and security along with protection
cover, a traditional life insurance policy may be better suited.
The age of an individual and number of dependents is also directly proportional to
his/her risk taking ability. The risk appetite is higher for younger people considering
the larger amount of time they have to remain invested to average out market
fluctuation.
THE PLAYERS IN THE MARKET IN INSURANCE SECTOR
General insurance companies

40
Public Sector:
1. United India Insurance Comp. Ltd.123
2. New India Assurance comp. Ltd.
3. National Insurance Company
4. The Oriental Insurance Company Ltd
Private Sector:
1. Cholamandalam MS General Insurance Company
2. ICICI Lombard
3. IFFCO Tokyo
4. Liberty Videocon General Insurance Co Ltd
5. Reliance General Insurance
6. Tata AIG General
7. Bajaj Allianz General Insurance
8. HDFC ERGO General Insurance Co Ltd

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Export credit guarantee insurance companies
Public Sector
1. Export Credit Guarantee Corporation of India
Life insurance companies:
Public Sector
1. Life Insurance Corporation of India
Private Sector
1. AEGON Religare Life Insurance
2. Aviva India
3. Bajaj Allianz Life Insurance
4. Birla SunLife Insurance
5. HDFC Standard Life Insurance Company Limited
6. ICICI Prudential Life Insurance
7. IDBI Federal Life Insurance
8. India First Life Insurance Company
9. Max Life Insurance
10. Reliance Life Insurance
11. Star Union Dai-ichi Life Insurance
12. Kotak Life Insurance
13. Tata AIA Life Insurance

42
Health insurance companies
1. Cigna TTK
2. ICICI Lombard
3. Max Bupa Health Insurance Company
4. Star Health and Allied Insurance
DIFFERENT TYPES OF INSURANCE PRODUCTS IN INDIA
Auto Insurance:
Auto insurance protects the policyholder against financial loss in the event of an
incident involving a vehicle they own, such as in a traffic collision. Coverage typically
includes:
• Property coverage, for damage to or theft of the car
• Liability coverage, for the legal responsibility to others for bodily injury or property
damage
• Medical coverage, for the cost of treating injuries, rehabilitation and sometimes lost
wages and funeral expenses
Gap Insurance:
Gap insurance covers the excess amount on your auto loan in an instance where your
insurance company does not cover the entire loan. Depending on the companies
specific policies it might or might not cover the deductible as well. This coverage is
marketed for those who put low down payments, have high interest rates on their

43
loans, and those with 60 month or longer terms. Gap insurance is typically offered by
your finance company when you first purchase your vehicle. Most auto insurance
companies offer this coverage to consumers as well. If you are unsure if GAP
coverage had been purchased, you should check your vehicle lease or purchase
documentation.
Health Insurance:
Health insurance policies cover the cost of medical treatments. Dental insurance, like
medical insurance, protects policyholders for dental costs. In most developed
countries, all citizens receive some health coverage from their governments, paid for
by taxation. In most countries, health insurance is often part of an employer's
benefits.
Income Protection Insurance:
Disability insurance policies provide financial support in the event of the policyholder
becoming unable to work because of disabling illness or injury. It provides monthly
support to help pay such obligations as mortgage loans and credit cards. Short-term
and long-term disability policies are available to individuals, but considering the
expense, long-term policies are generally obtained only by those with at least six-
figure incomes, such as doctors, lawyers, etc. Short-term disability insurance covers a
person for a period typically up to six months, paying a stipend each month to cover
medical bills and other necessities. Casualty Insurance
Casualty insurance insures against accidents, not necessarily tied to any specific
property. It is a broad spectrum of insurance that a number of other types of
insurance could be classified, such as auto, workers compensation, and some liability
insurances.

44
Life Insurance:
Life insurance provides a monetary benefit to a decedent's family or other
designated beneficiary, and may specifically provide for income to an insured
person's family, burial, funeral and other final expenses. Life insurance policies often
allow the option of having the proceeds paid to the beneficiary either in a lump sum
cash payment or an annuity. In most states, a person cannot purchase a policy on
another person without their knowledge.
Annuities provide a stream of payments and are generally classified as insurance
because they are issued by insurance companies, are regulated as insurance, and
require the same kinds of actuarial and investment management expertise that life
insurance requires. Annuities and pensions that pay a benefit for life are sometimes
regarded as insurance against the possibility that a retiree will outlive his or her
financial resources. In that sense, they are the complement of life insurance and, from
an underwriting perspective, are the mirror image of life insurance.
Burial Insurance:
Burial insurance is a very old type of life insurance which is paid out upon death to
cover final expenses, such as the cost of a funeral. The Greeks and Romans
introduced burial insurance c. 600 CE when they organized guilds called "benevolent
societies" which cared for the surviving families and paid funeral expenses of
members upon death. Guilds in the middle Ages served a similar purpose, as did
friendly societies during Victorian times.

45
Property Insurance:
Property insurance provides protection against risks to property, such as fire, theft or
weather damage. This may include specialized forms of insurance such as fire
insurance, flood insurance, earthquake insurance, home insurance, inland marine
insurance or boiler insurance. The term property insurance may, like casualty
insurance, be used as a broad category of various subtypes of insurance, some of
which are listed below:
• Aviation insurance protects aircraft hulls and spares, and associated liability risks,
such as passenger and third-party liability. Airports may also appear under this
subcategory, including air traffic control and re fuelling operations for international
airports through to smaller domestic exposures.
• Boiler insurance (also known as boiler and machinery insurance, or equipment
breakdown insurance) insures against accidental physical damage to boilers,
equipment or machinery.
• Builder's risk insurance insures against the risk of physical loss or damage to
property during construction. Builder's risk insurance is typically written on an "all
risk" basis covering damage arising from any cause (including the negligence of the
insured) not otherwise expressly excluded. Builder's risk insurance is coverage that
protects a person's or organization's insurable interest in materials, fixtures and/or
equipment being used in the construction or renovation of a building or structure

46
should those items sustain physical loss or damage from an insured peril Liability
Insurance
Credit Insurance:
Credit insurance repays some or all of a loan when the borrower is insolvent.
• Mortgage insurance insures the lender against default by the borrower. Mortgage
insurance is a form of credit insurance, although the name "credit insurance" more
often is used to refer to policies that cover other kinds of debt.
• Many credit cards offer payment protection plans which are a form of credit
insurance.
• Trade credit insurance is business insurance over the accounts receivable of the
insured. The policy pays the policy holder for covered accounts receivable if the
debtor defaults on payment.
• Collateral protection insurance (CPI) insures property (primarily vehicles) held as
collateral for loans made by lending institutions.
Other types of Insurance
• All-risk insurance is an insurance that covers a wide range of incidents and perils,

47
except those noted in the policy. All-risk insurance is different from peril-specific
insurance that cover losses from only those perils listed in the policy. In car insurance,
all-risk policy includes also the damages caused by the own driver.
• Bloodstock insurance covers individual horses or a number of horses under
common ownership. Coverage is typically for mortality as a result of accident, illness
or disease but may extend to include infertility, in-transit loss, veterinary fees, and
prospective foal.
• Business interruption insurance covers the loss of income, and the expenses
incurred, after a covered peril interrupts normal business operations.
• Defence Base Act (DBA) insurance provides coverage for civilian workers hired by
the government to perform contracts outside the United States and Canada. DBA is
required for all U.S. citizens, U.S. residents, U.S. Green Card holders, and all
employees or subcontractors hired on overseas government contracts. Depending on
the country, foreign nationals must also be covered under DBA. This coverage
typically includes expenses related to medical treatment and loss of wages, as well as
disability and death benefits. Insurance financing vehicles
• Fraternal insurance is provided on a cooperative basis by fraternal benefit societies
or other social organizations.

48
• No-fault insurance is a type of insurance policy (typically automobile insurance)
where insured are indemnified by their own insurer regardless of fault in the incident.
• Protected self-insurance is an alternative risk financing mechanism in which an
organization retains the mathematically calculated cost of risk within the
organization and transfers the catastrophic risk with specific and aggregate limits to
an insurer so the maximum total cost of the program is known. A properly designed
and underwritten Protected Self-Insurance Program reduces and stabilizes the cost of
insurance and provides valuable risk management information.
Closed community and governmental self-Insurance:
Some communities prefer to create virtual insurance amongst themselves by other
means than contractual risk transfer, which assigns explicit numerical values to risk. A
number of religious groups, including the Amish and some Muslim groups, depend
on support provided by their communities when disasters strike. The risk presented
by any given person is assumed collectively by the community who all bear the cost
of rebuilding lost property and supporting people whose needs are suddenly greater
after a loss of some kind. In supportive communities where others can be trusted to
follow community leaders, this tacit form of insurance can work. In this manner the
community can even out the extreme differences in insurability that exist among its
members. Some further justification is also provided by invoking the moral hazard of
explicit insurance contracts.

49
1) Overview of Insurance Sector in India:-
Insurance has a long history in India. The business
of life insurance started in India in the year 1818 with the establishment of the
Oriental Life Insurance Company in Calcutta.
(a) Pre Nationalisation
(b) Nationalisation and
(c) Post Nationalisation.
Insurance Sector
Life Insurance was the first to be nationalized in 1956. General Insurance followed
suit and was nationalized in 1973. After the report submitted by Malhotra Committee
in 1994, Insurance Regulatory Development Act was passed in 1999 which gave an
entry to private insurance companies. The goals of the IRDA are to safeguard the
interests of insurance policyholders, as well as to initiate different policy measures to
help sustain growth in the Indian insurance sector.
The life insurance sector transformed since it was thrown open to private sector
participation in 2000. Life Insurance Corporation of India (LIC) was formed in
September, 1956 by an Act of Parliament, with capital contribution from the
Government of India. Even today, Life Insurance Corporation of India dominates
Indian insurance sector.

50
The introduction of private players in the industry has added value to the insurance
industry. The initiatives taken by the private players were very competitive and have
given immense competition to the on time monopoly of the market LIC. Since the
advent of the private players in the insurance market it has seen new and innovative
steps by the players in this sector. The new players have improved the service quality
of the insurance.
2) Purpose and Need of Insurance:-
Insurance is all about managing risk and providing financial compensation
in the event of a loss. Generally, the risks people face fall into the following
categories:
a) Personal risk:-
People are their own greatest asset. Financial loss will almost
always accompany the loss of one’s health or life.
b) Property risk:-
People will incur a financial loss when owned property is
destroyed or damaged.
c) Liability risk:-
When people’s action result in injury or damage to others, the
law generally provides that they be held financially responsible.
Basic Concepts of Insurance:-
a) PERILS AND HAZARD:-
 PERIL :-
A peril is an immediate, specific event, causing a loss and giving rise to
risk.An accident or illness is a peril.

51
 HAZARD :-
A hazard is a condition that gives rise to a peril.
THREE TYPES OF HAZARDS :-
1. Physical hazards are characteristics of the individual that increase or reduce the
chance of peril. Examples are body structure (height related to weight), blood
pressure, sugar levels, cholesterol levels, etc.
2. Moral Hazards are habits or activities that increase risk, such as drug or alcohol
use. These have social, as well as, personal effects.
3. Morale Hazards are individual activities that arise from a state of mind, such as
the casual indifference toward one's body as exhibited by individuals with hazardous
hobbies, such as jumping horses or flying ultra-light aircraft.
Certain occupations are also morale hazards, such as professional, industrial diving or
bridge painting.
b) LAW OF LARGE NUMBERS:-
The law of large numbers is a
statistical concept that relates to probability. It is one of the factors insurance
companies use to determine their rates.
Larger the pool, more predictable the amount of
losses in a given period. Since not all members of the pool are the same age or in the
same health condition, we can assume not all of them will be making a claim at the
same time.
c) ADVERSE SELECTION:-
Adverse selection is a phenomenon wherein the
insurer is confronted with the probability of loss due to risk not factored in at the
time of sale.

52
1. The tendency of those in dangerous jobs or high risk lifestyles to get life insurance.
2. A situation where sellers have information that buyers don't (or vice versa) about
some aspect of product quality
d) INSURABLE RISK:-
A risk that conforms to the norms and specifications of the insurance
policy in such a way that the criterion for insurance is fulfilled is called insurable risk.
There are various essential conditions that need to be
fulfilled before acceptance of insurability of any risk. In case of a scenario where the
loss is too huge that no insurer would want to pay for it, the risk is said to be
uninsurable.
A risk may not be termed as insurable if it is immeasurable, very large, certain or not
definable.
e) SELF INSURANCE:-
A method of managing risk by setting aside a
pool of money to be used if an unexpected loss occurs. Theoretically, one can self-
insure against any type of loss. However, in practice, most people choose to buy
insurance against potentially large, infrequent losses. For example, at minimum, most
people carry auto insurance and health insurance.
INSURANCE AND RISK:-
1. Meaning of Risk:-

53
The probability or threat of quantifiable damage, injury,
liability, loss, or any other negative occurrence that is caused by external or internal
vulnerabilities, and that may be avoided through preemptive action. A situation
involving exposure to danger, harm or loss.
2. Types Of Pure Risk :-
Pure risk creates great financial insecurity fir individual and
society. The major types of pure risk are.
 Personal Risks
 property Risks
 Liability Risks
a) Personal Risks :-
The risks that directly affect an individual are known as personal risks.
They involve the possibility of the complete loss are reduction of earned income,
extra, expense and the depletion of financial assets. There are four major personal
risks.
 Risk of premature death
 Risk of insufficient Income after Retirement
 Risk of Poor Health:
 Risks of Unemployment:
b) Property Risks :-
All non-living things owned by persons are property. Real state
land and building, vehicles machines and equipment’s goods raw materials furniture
etc. are the common examples of property damaged or lost from numerous causes.
Real estate and personal property can be damaged by fire lightening tornadoes,

54
windstorms, earthquakes floods etc. There are two major types of loss associated
with the destruction or theft or property.
c) Liability Risks :-
Most people in the society face liability risk. The law imposes
on us a duty of care to our neighbour and to ensure that we do not inflict bodily
injury on them. If anyone breaches this duty of care, the law would punish him
accordingly. For example, if you injure your neighbour or damage his property, the
law would impose fines on you and you may have to pay heavy damages.
3. The Principle Of Pooling Of Risk:-
To offset the possible effect of a loss, all those at risk can contribute a
relatively small sum of money (premium) to fund (pool) operated by an insurance
company. The many small sums of money people pay in premiums form a large pool
of money. when a contributor to the pool suffers a loss there is enough money to
compensate (indemnify) them.
The result of co-operating with others in this way is that risks are 'spread' or 'shared'
between the many people and organizations that have contributed to the insurance
pool. For this reason insurance is sometimes said to be the 'pooling of risks'.
4. Methods Of Handling Risk:-
Risk is the possibility of a loss, people, organizations, and
society usually try to avoid risk, or, if not avoidable, then to manage it somehow.
There are 5 major methods of handling risk:
 Avoidance,
 Loss Control,
 Retention,
 Noninsurance Transfers,
 Insurance.

55
RISK MANAGEMENT
a) Meaning and Objectives Of Risk Management:-
The process of identification, analysis and either acceptance or
mitigation of uncertainty in investment decision-making. Essentially, risk
management occurs anytime an investor or fund manager analyses and attempts to
quantify the potential for losses in an investment and then takes the appropriate
action (or inaction) given their investment objectives and risk tolerance. Inadequate
risk management can result in severe consequences for companies as well as
individuals.
For example, a fixed deposit is considered a less risky investment. On the other hand,
investment in equity is considered a risky venture. While practicing risk management,
equity investors and fund managers tend to diversify their portfolio so as to minimize
the exposure to risk.
b) Steps in Personal Risk Management: -
The objective of risk management is
to choose efficiently among methods to handle risk so as to avoid catastrophic
losses. Risk management includes insurance management, but it should be used to
measure both insurable and non-insurable risks.
The process of risk management has six distinct steps:
STEP 1 - Identify risk management goals and objectives
STEP 2 - Gather pertinent data to determine the risk exposure
STEP 3 - Analyse and evaluate the client's status
STEP 4 - Develop and Present risk management recommendations
STEP 5 - Implementation
STEP 6 - On-going Monitoring

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c) Risk Control and Risk financing:-
The method by which firms evaluate potential losses
and take action to reduce or eliminate such threats. Risk control is a technique that
utilizes findings from risk assessments (identifying potential risk factors in a firm's
operations, such as technical and non-technical aspects of the business, financial
policies, and other policies that may impact the well-being of the firm), and
implementing changes to reduce risk in these areas.
The determination of how an organization will pay for loss events
in the most effective and least costly way possible. Risk financing involves the
identification of risks, determining how to finance the risk, and monitoring the
effectiveness of the financing technique that is chosen.
INSURANCE PRICING AND PREMIUM CALCULATION :-
An insurance premium is the money charged by
insurance companies for coverage. Insurance premiums for services differ from
company to company, so it is advisable that individuals shop around for insurance
premiums. However, it is important to note that, sometimes, insurance premiums
quoted are slightly different from the premiums charged. The difference between the
quote and the actual charge can be attributed to the way the insurance premium is
calculated. The amount of insurance premiums charged by the insurance companies
is determined by statistics and mathematical calculations done by the underwriting
department of the insurance company.
The level of insurance premium charged to a
customer depends on statistical data that exists about life history, age and health. For
example, an 18-year-old man who drives a red sports car is more likely to pay a
higher insurance premium than a 50-year-old man who drives a four-door sedan.
Every customer that applies for insurance goes through the underwriting process.
The underwriting process involves investigation into familial diseases, analysis of
reports like medical information bureau and motor vehicle reports. After the
information is gathered and analysed, they are typically analysed by a statistician,
called actuaries, hired by the insurance companies. After analysing the data, the

57
actuary tries to predict how likely the insurance applicant will make a claim on their
policy. The higher the probability of a claim, the higher the premiums usually are.
The actuaries are also responsible for studying mathematical data and compiling
"mortality and sickness" tables, which are used to predict prospective losses due to
death and sicknesses. The mortality and sickness tables are basically tables that
assign probability to gender and ages about the likelihood to get sick or die. The
actuaries use these tables to develop models that determine how likely it is for a
particular individual to get sick or die at a particular time, based on the data
gathered for that individual. Based on the results of the analysis of data and the
information generated from the mortality and sickness tables, a premium is assigned
or charges to the client.
1. Objectives of rate making/rating:-
Rate making has several objectives
under regulatory requirements regulated by the states and business objectives due
to the goal of profitability. The goal of insurance regulation is to protect the public
and three regulatory objectives are placed to meet certain standards:
a) The first regulatory requirement is that rates must be adequate; meaning the rates
the insurers charge should be able to cover expenses.
b) The second regulatory requirement is that rates must not be excessive; meaning
rates should not be so high that policyholders are paying more than the actual value
of their protection.
c) The third regulatory objective is the rates must not be unfairly discriminatory;

58
meaning exposures that are similar with respect to losses and expenses should not
be charged significantly different rates.
The business objectives are set as a guide for
insurers while designing the rating system. The rating system should meet each of
the four objectives.
 For producers to be able to quote premiums with a minimum amount of their
time and expense, the rating system should be easy to understand.
 To maintain customer satisfaction, the rates should remain stable over short
periods of time. The rapid change of rates could lead to customer
dissatisfaction.
 To meet the objective of rate adequacy, the rates should be responsive over
time in comparison with changing economic conditions and loss exposures.
 Finally, to reduce the frequency and severity of losses, the rating system
should encourage loss control activities. Loss control in important in insured’s
because it tends to keep insurance affordable.
2. Risk assessment and rating:-
Risk assessment is the process where you:
Identify hazards. Analyse or evaluate the risk associated with that hazard. Determine
appropriate ways to eliminate or control the hazard.
Once you have identified the hazards in your
business you need to rate the risk. The rating will determine whether or not it is safe
enough to continue with the work or whether you need to adopt additional Control
Measures to reduce or eliminate the risk still further.
ANALYSIS OF LIFE INSURANCE NEEDS :-
Economic value of human life:-

59
The economic value of human life involves the length of life, and the net economic
contribution that a person could be expected to make during his or her lifetime. Both
of these areas involve issues that can be established through expert testimony.
Total net economic value involves the life expectancy, the value of the person's
earnings and other economic contributions, and the valuation of the present value of
a stream of future uncertain monetary amounts.

60
COMPANY ANALYSIS
 IDBI federal sought to herald a meaningful change in the Indian life insurance
industry.
 Company has achieved break even in just 5 years of operation and declared
maiden profit of 9.24crore.
 This achievement is possible only because of commitment of the management
and the employees.
 We offer a fresh way of looking at life insurance i.e.
“A VALUABLE WAY.AN INSPIRED WAY.THE IDBI FEDERAL
WAY.”
MAKING CHANGE A CONSTANT:
 IDBI Federal Life Insurance is a joint-venture of IDBI Bank, Federal Bank and
Ageas.
 IDBI Bank is India’s premier development and commercial bank.
 Federal Bank is one of India’s leading private sector banks.
 Ageas is a multinational insurance giant based out of Europe.
 In this joint venture IDBI bank owns 48% equity while federal bank and Ageas
own 26% of equity.
 IDBI federal life insurance company having commenced operation in March
2008.
 In just five months of inception company became one of the fastest growing
life insurance companies to garner of 100 Crores in premiums.
Through continuous process of innovation in product and
service delivery IDBI federal aim is to offer
 World-class protection,
 Wealth management and
 Retirement solutions
 That provides value and convenience to the Indian customer.

61
 Company is offering services through a nationwide network of 2,186 bank
branches of IDBI Bank and Federal Bank in addition to a sizeable network of
advisors.
 As on 31 December, 2014, IDBI Federal Life Insurance issued over 6.8 lakh
policies with a sum assured of more than 39,425 crore.
Vision mission of IDBI federal life insurance:
Vision:
To be the leading provider of protection wealth management and retirement
solutions those meet the needs of our customers and add value to their lives.
Mission:
To be transparent in the way we deal with our customers and to act with
integrity.
To invest in and build quality human capital in order to achieve our mission.
Values:
 Transparency

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 Value to customers
 Rock solid and delivery on promise
 Customer-friendly
 Profit to stakeholders
BOARD OF DIRECTORS:-
Mr R .M. MALLA (Non-Executive Director)
Mr Bart De Smet (Non-Executive Director)
Mr Fillip A. L. Coremans Non-Executive Director
Mr S. Santhanakrishnan Independent (Non-Executive) Director
Mr R. K. Thapliyal Independent (Non-Executive) Director
Mr Suresh Kumar (Non-Executive Director)
Mr R. K. Bansal Non-Executive Director
Mr Gary Lee Crist Alternate Director to Mr Bart De Smet
Mr Davinder Rajpal Independent (Non-Executive) Director
Mr P. C. Cyriac Non-Executive Director
Mr Vighnesh shahane Managing Director and Chief Executive Officer
Senior Management Committee:

63
Mr Vighnesh shahane Managing Director and Chief Executive Officer
Mr Ajay Oberoi Chief People Officer & Head – Administration
Mr Aneesh Srivastava Chief Investment Officer
Mr George John Corporate Controller
Mr Hans Van Wuijckhuijse Chief Operating Officer
Mr Rajesh Ajgaonkar Head – Legal, Compliance & Company Secretary
Mr Aneesh Khanna Head – Marketing & Product Management
Mr Ashley Kennedy National Head – Agency & Alliances
Mr Hans Loozekoot Chief Financial Officer
Mr Nick Taket Chief – Actuary
Making innovation a standard:
IDBI federal with their focus on
innovation they have been able to overcome those challenges and have registered
profits and growth during toughest times.
OUR STRENTHS:
 Product leadership
 Home purchase
 Pure protection
 Wealth creation for long-term
 Children’s higher studies

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 Mortgage insurance
 Retirement planning
 Savings for wealth creation
 Mortgage insurance
 Children’s education
 Savings for child’s marriage
 Retirement provision
 Post retirement expenses
 Medical expenses
INNOVATIVE PRODUCT SUITE :
Bondsurance:
It offers life cover and guaranteed return against a one-time
payment.
Childsurance:
Childsurance offers solutions to ensure funding the life insured’s
child’s future needs like higher education, marriage, vocational training.

65
Healthsurance:
Healthsurance ensures that the life insured never lacks the funds
to obtain quality treatment in case of medical emergencies.
Homesurance:
Homesurance provides insurance cover equal to the outstanding
balance of the life insured’s home loan, thus ensuring that the life insured’s family
always enjoys living in their dream home.
Incomesurance:
Incomesurance provides guaranteed regular income along with a life
cover.
Lifesurance:
Lifesurance offers an array of participating endowment plans,
designed to provide long-term savings along with life cover.
Loansurance:
Loansurance is a cost-effective insurance plan that covers the life
insured’s outstanding debt.
Microsurance:
Microsurance has been designed to provide effective insurance for
low-income groups and promote financial inclusion for the community.

66
Retiresurance:
Retiresurance offers plans that help the life insured build a corpus
that lasts throughout his retired life to make them the best years of his life.
Termsurance:
Termsurance offers financial protection to the family of the life
insured in case of the unfortunate event of the death of the life insured.
Wealthsurance:
Wealthsurance enables the life insured to build wealth while
providing the protection of life cover.
INVESTMENT EXPERTISE:
• IDBI FEDERAL endeavour to build a quality investment portfolio which offers both
liquidity and long-term wealth creation opportunity.
• IDBI FEDERAL strength is its ability to provide strong investment performance in
both good and bad market conditions.
• Assets under Management of IDBI FEDERAL grew from 161 crores in FY 2008 to
5118.06 corers in FY 2014.

67
KEY MILESTONES:
On November 2006:
• IDBI FEDERAL started a joint venture between IDBI Bank, Fortis and Ageas.
• IDBI Bank is India’s premier development and commercial bank Federal Bank is one
of India’s leading private sector banks; Ageas is a multinational insurance giant based
out of Europe.
• In this venture, IDBI Bank owns 48% equity while Federal Bank and Ageas own 26%
equity each.
On December 2007:
• IDBI FEDERAL received license from IRDA.
On March 2008:
• IDBI FEDERAL sold its 1st policy.
On August 2008:
• IDBI FEDERAL collected its fasted 100 crore premium.
On February 2009:
• IDBI FEDERAL breaks mould with Wealthsurance cum (Sri Lanka) annual report.

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On March 2010:
• IDBI FEDERAL assets under management (AUM) which is basically the market value
of assets that an investment company manages on behalf of investors crossed 1000
crore.
On August 2010:
• IDBI Fortis Life becomes IDBI Federal Life.
On November 2012:
• IDBI FEDERAL Achieves ‘Master Brand’ status.
On March 2013:
• IDBI FEDERAL declared its Break-even & maiden profit.
On March 2014:
• IDBI FEDERAL declared profit 80.2 crores.

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AWARDS:
• IDBI Federal Life Insurance was recognised as the ‘Best Insurance Company in the
Private Sector’ at the IPE Banking Financial Services and Insurance Awards 2012-2013.
• IDBI Federal Life Insurance was recognised as the ‘Master Brand 2012-2013’ by the
CMO Council USA and CMO Asia at the World Brand Congress.
• IDBI Federal Life Insurance was conferred with ‘Golden Award for Corporate
Advertising Campaign’ by PR Council of India (PRCI) at the 7 Global Communication
Conclaves 2013.
• IDBI Federal Life was awarded ‘Golden Award for Corporate Website’ by PR Council
of India (PRCI) at the 7 Global Communication Conclave 2013.
• IDBI Federal Life Insurance was conferred with the ‘Organisation of the year’ award
by the PR Council of India (PRCI) for the year 2012-2013.
PERFORMANCE HIGHLIGHTS:
• IDBI FEDERAL premium income increased from 12 crores to 1000 crores for the FY
2008 to 2014 respectively.
• IDBI FEDERAL operating expenses ratio that is a ratio between the properties’

70
operating expense to its gross operating income reduced from 84% to 24% for the
FY 2008 to 2013 respectively.
• IDBI FEDERAL net profit gradually grew to 80.2 crores for the FY 2014 which was
initially 26 crores of rupees cash outflow for the FY 2008.
• IDBI FEDERAL Assets under Management grew from 161 crores in FY 2008 to
5118.06 corers in FY 2014.
PRODUCTS & MARKETING :
 IDBI Federal is recognized for its product innovation.
 Its innovative product suite combines financial protection and wealth creation
into distinctive product offerings that suit the varying financial and investment
needs at different stages of life.
 Tailor-made financial solutions meet the needs of customers and help them to
realize their dreams and aspirations
 Company has received various prestigious awards such as the “Promotion
Marketing Awards of Asia”.
RISK MANAGEMENT FRAMEWORK:

71
 Risk Management comprises of the development, implementation and
monitoring of financial and operational strategies for assessing, mitigating
insurance and operational risks to increase the value of IDBI Federal Life
Insurance Company Limited.
 It enhances capabilities to align risk appetite and strategy to link risk with
growth and return.
 It enables the Company to make timely risk response decisions to minimize
operational surprises and losses.
 Risk is not something that is to be avoided, because without it there can be no
return. Hence risk needs to be understood and managed.
 The risk management philosophy of IDBI Federal encompasses defining levels
of risk that are acceptable and optimizing risk for the return expected.
 The Company’s risk management governance structure involves the Board of
Directors (Board), the Risk Management Committee (RMC), the Operational
Risk Management Group (ORMG), the ALCO, the BCP Crisis Management
Team and the Product Concept Committee.
RISK MANAGEMENT ORGANISATION :
 At the top level, there is Risk Management Committee of the Board which
reviews risk management strategies, policies, standards and risk tolerance
limits.
 This committee is supported by operating level committees such as Asset
Liability Management Committee (ALCO) for Financial, Insurance and Credit
Risk and Operational Risk Management Group (ORMG) for Operational Risk.
 The responsibility includes setting up of a risk management framework,
formulation & implementation of risk management guidelines, development
of tools & methodologies for the identification, measurement, monitoring,
control and pricing of risks.
RISK MANAGEMENT PROCESS:

72
 Financial Risk is managed by putting in place fund wise strategic asset
allocation mix and various internal limits such as instrument concentration
limits, duration limits, etc.
 These limits are monitored on a daily basis by Middle Office and discussed in
ALCO in its monthly meetings.
 In case of linked portfolios with minimum guarantees, the Company hedges
the risk through duration matching/cash flow matching within the applicable
regulatory boundaries.
 The risks in Capital Guaranteed funds are managed using Portfolio Insurance
Techniques.
 Furthermore, the Company has put in place a credit review process to review
credit risk of Corporate Bonds.
 During this year Company implemented the IRDA’s guidelines on ALM system
and Stress Testing.
 Asset Liability management process was enhanced for certain products with
higher level of guarantees.
 Key Risk Indicators are used to report important operational risks to Senior
Management and Risk Management Committee of the Board.
 In order to further enhance risk management framework, Risk Management
Committee of the Board has approved a road map for the implementation of
Enterprise Risk Management framework.
SHARE CAPITAL :
 The authorized share capital of the Company is 2,500 crore.
 There was no change in the share capital of the Company and the paid-up
share capital remained at 800 crore.
DIVIDEND:
 Though the Company has made a maiden profit during the year, the Company
still has accumulated losses. Hence, the directors are unable to recommend
any dividend.
DIRECTORS:

73
 Mr. R. K. Bansal and Mr. Bart De Smet, Directors of the Company will retire by
rotation at the ensuing Annual General Meeting, and being eligible, offered
themselves for re-appointment as directors.
 Resolutions seeking their re-appointment have been proposed in the notice
convening the ensuing Annual General Meeting of the Company.
AUDITORS:
 The Company proposes re-appointment of M/s. S. P. Chopra & Co., Chartered
Accountants, New Delhi and M/s. Khandelwal Jain &Co., Chartered
Accountants, Mumbai as Joint Statutory Auditors of the Company to hold
office from the conclusion of the forthcoming Annual General Meeting until
the conclusion of the next Annual General Meeting.
CUSTOMER GRIEVANCE REDRESSAL:
 The Company implemented its Integrated Grievance Management System
(IGMS), an online grievance management mechanism linked with IRDA portal,
where a policyholder/customer can lodge his/her complaint and monitor it for
a speedy resolution.
 Customer Service Committee comprising of senior executives of the Company
reviews the grievance redressal mechanism from time to time
WHISTLEBLOWER POLICY :
 Provides a mechanism to employees and other persons dealing with the
Company to report any instance of actual or suspected fraud; raise concerns
internally about possible irregularities, governance weakness, financial
reporting issues or other such matters; to safeguard the interest of such
Employees/persons against victimization, who notice and report such practice.
RURAL AND SOCIAL BUSINESS:
The Company has covered 1,50,660 lives
under the ‘social sector’ business and issued 23,497 policies in rural areas during the
current financial year.

74
LICENSE:
The Insurance Regulatory and Development Authority (“IRDA”) has
issued its License to IDBI Federal to start the Life Insurance Business on December 19,
2007 and renewed the Certificate of Registration of IDBI Federal to sell life Insurance
products for the financial year 2013-14.
DEPOSITS:
During the year under review, the Company has not accepted any
deposits under Section 58A of the Companies Act, 1956 from the public.
PARTICULARS OF CONSERVATION OF ENERGY,
TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE
EARNINGS AND OUTGO:
 Conservation of energy: Not applicable to the Company.
 Technology Absorption: Amount spent towards implementation of various
software systems to improve overall efficiency 3.50 crore
 Foreign Exchange Earnings and Outgo: The Company recorded Foreign
Exchange Earnings – 9.22 crore and Foreign Exchange outgo11.68 crore .

75
CORPORATE GOVERNANCE REPORT:
 The philosophy of doing business through ethical, fair and transparent means
has been the foundation of IDBI Federal.
 It has been the constant endeavour of the Company to enhance the economic
value, trust and confidence of all stakeholders through good corporate
governance practices.
Board of directors :
 The Board of Directors comprises of a combination of executive and non-
executive directors.
 The total strength of the Board is nine directors which include Chief Executive
Officer & Managing Director of the Company, three independent directors,
five non-executive directors.
Roles and responsibilities of the board:
 Overall direction of the business of the Company, including projected capital
requirements, revenue streams, expenses and the profitability.
 Obligation to fully comply with the various regulations and other statutory
requirement.
 Addressing conflict of interests.
 Ensuring fair treatment of policyholders and employees.
 Ensuring information sharing with and disclosure to shareholders, including
investors, policyholders, employees, regulators,
 Consumers, financial analysts and/or rating agencies.
Meetings of the board of directors: Occur in Mumbai
During the year 2013-14, the Board of Directors held four meetings on
 April 27, 2013,
 August 14, 2013,
 December 14, 2013, and
 March 8, 2014

76
COMMITTEES OF THE BOARD:
The Board has six committees as follows:
 Audit Committee
 Investment Committee
 Risk Management Committee
 Policyholders Protection Committee
 Nomination Committee
 Business Development Committee
AUDIT COMMITTEE:
Functions:
 Overseeing the Company’s financial reporting statements and ensuring their
correctness and credibility; and reviewing the annual financials before placing
it before the Board.
 Also changes if any, accounting policies and practices and reasons for the
same
 Also responsible for recommending to the Board, the appointment and
reappointment and if required, the replacement or removal of the Statutory
Auditor(s) and the fixation of audit fees.
Members:
Consists of five non-executive directors, out of which two Independent
Directors are having adequate financial and accounting knowledge.
Chairperson:
Mr S. Santhanakrishnan, an Independent director
Invitees:
The Chief Financial Officer and the Appointed Actuary.
No. of meetings held till date: 6

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Quorum:
The quorum of the meeting is Two-third members of the committee or two
members (physically present), whichever is higher.
INVESTMENT COMMITTEE:
Functions:
 The primary function of the Investment Committee includes ensuring
adequate returns on policyholders and shareholders consistent with the
protection, safety and liquidity of such funds.
 The committee reviews various aspects of investment activity so as to ensure
complete compliance with the provisions of Insurance Act, 1938, regulations
and IRDA Guidelines and circular issued from time to time.
 Further it also scrutinizes internal and external audits of the investment
management process and to implement internal controls.
Members:
Consists of five members, which include Managing Director & CEO and
four Non-executive directors.
Chairperson:
Mr Vignesh shahane, a Non-executive director.
Invitees:

78
The CFO, the Chief Investment Officer and the Appointed Actuary
No. Of meetings held till date: 4
Quorum:
Four members shall form the necessary quorum, of which at least two
members are non-executive directors.
RISK MANAGEMENT COMMITTEE:
Functions:
 This committee is responsible for putting in place and oversight of Company’s
Risk Management Strategy.
 It assists the Board in effective operation of the risk management system by
performing analysis and quality reviews and reports details on the risk
exposures and the actions taken to manage the exposures.
 The committee oversees the formal development of risk management policies
within the Company encompassing all products and business; especially the
RMC will ensure that we have a solid product development and management
guidelines in place.
 This is achieved through proper channels of communication so that the
Board‘s policies and risk tolerances are clearly communicated and adhered to
by all levels of the organization.
Members:
Consists of four other members excluding the Chairman.

79
Chairperson:
Mr Fillip A. L. Coremans, non-executive director.
Invitees:
The Chief Financial Officer and the Appointed Actuary are invitees of the
Committee.
Quorum:
One representative of IDBI Bank Limited, The Federal Bank Limited and the
Ageas Insurance International N. V., is required. Atleast two of the members should
be physically present.
POLICYHOLDER PROTECTION COMMITTEE:
Functions:
 As required by IRDA Guidelines, the Company has formed a Policyholders
Protection Committee of the Board of Directors, with responsibility to put in
place proper procedures and effective mechanism to address complaints and
grievance of the policyholders and to ensure compliance with statutory
requirements.
 The policyholders Protection committee reviews the Grievances Redressal
Mechanism and the status of complaints at the periodic intervals.

80
Chairperson:
Mr Suresh Kumar, non-executive director
Members:
The committee consists of a four other members excluding the Chairman.
Invitees:
Chief Operating Officer/Head-Operations and the Appointed Actuary.
No. of meetings held till date: 4
Quorum:
Two-third of the members should be present in order to meet the
necessary quorum for the meeting
NOMINATION COMMITTEE:
Functions:
 The Nomination Committee was formed with an aim to review of Board
structure, size and composition; recommendations for appointment/re-
appointment of directors.

81
 Further, the Committee also reviews “fit and proper“ criteria for the
appointment of directors as laid down in the Corporate Governance
Guidelines.
Chairperson:
Vignesh shahane a Non-executive director.
Members:
Consists of three Non-executive directors and an Independent director
Quorum:
Two members or one-third of the total members of the committee,
whichever is higher
BUSINESS DEVELOPMENT COMMITTEE:
Functions:
 To review the overall business and strategy of the Company.
Members:
Comprises of four Non-Executive Directors and an independent director.
Chairperson:
Mr Vignesh shahane, Non-Executive Director.
Quorum:
Three members shall form the necessary quorum.
DISTRIBUTION OF SHARE HOLDING:
The details of Shareholding Pattern of the
Company as on March 31, 2014 are as under

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S.NO Names of shareholders No. of shares held (in crores) %
1 IDBI Bank Ltd 38.4 48%
2 Federal Bank Ltd 20.8 26%
3 Ageas Insurance international N.V 20.8 26%
Total 80 100%
Means of Communication:
- Annual & Half yearly financial results of the Company were published in two
leading newspapers one in the local language and the other in a leading English
paper.
- The Company’s website displays the vital information related to the Company,
Products, distribution network, important aspects related to policy servicing, public
disclosures etc (including disclosure of Financial Reports).
Company General Information
Date of Incorporation January 22, 2007
CIN No. U66010MH2007PLC167164
IRDA Registration No. 135
Address for Correspondence
IDBI Federal Life Insurance Co Ltd,
1st Floor, Trade view, Oasis Complex,
Kamala City, P.B. Marg, Lower Parel (W),
Mumbai – 400013, India.
Company Secretary and Compliance Officer

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Name Mr Rajesh Ajgaonkar
Address
IDBI Federal Life Insurance Co Ltd,
1st Floor, Trade view, Oasis Complex,
Kamala City, P.B. Marg, Lower Parel (W),
Mumbai – 400013, India.
Contact Telephone 022-24908109
E-mail rajesh.ajgaonkar@idbifederal.com

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Executive Summary
As part of the curriculum in our Aurora’s Business School, Punjagutta, Hyderabad, a
study has been carried out in IDBI Life Insurance Co. Ltd.
The Objective of the study is to analyse on the Brand Awareness of IDBI Federal and
the Buying Behaviour of the Customers towards the Insurance products of IDBI
federal Life Insurance Co Ltd.
The Scope of the study is two pronged, namely gathering information through
Primary and Secondary sources. The Primary source of information has been
captured through a structured questionnaire while the Secondary source of
information has been compiled from the company’s website1
.
The Methodology of the study involved administering a structured questionnaire
comprising 15 questions to the target audience of a sample size of 100 respondents
in a population from both the twin cities of Hyderabad and Secunderabad,
Telangana. The responses received from the target audience have been captured and
analysed in depth.
The Findings of the study revealed that out of the sample size cited, more than half
from 100 respondents are interested in getting insured and are familiar with
insurance products, which translates in to 74.8 % are in favour . Customers feel like
Insurance is also a type of Investment and Protection. The high premium paying
amount is also one of the major concern for many of them.
An appropriate analysis using IBM-SPSS tool has been carried out. The analysis thus
revealed has been projected in the form of tables and figures. The findings also
revealed that the policy term is too long and should be reduced.
It is concluded that the product is widely excepted by different segments be it
demographic geographic and psychographic nature. Despite the fact that there is a
price difference exists between and its competitors, the reason being brand and the
quality, both hygiene and presentability.
Based on the findings it is suggested that should increase the availability of their
product in many more retail outlets in the vicinity of the twin cities. It is strongly
recommended that augment their distribution network which will enhance the
visibility of the product and increase Sales and Revenue.

85
Objective of Study:
The objective of the study is to study and analysis
the Brand Awareness of IDBI Federal Life Insurance Co Ltd. and find out the that, how
people are aware of the insurance product of IDBI Federal Life Insurance.
Scope of Study:
Scope is two pronged.
I. Primary source
II. Secondary source
Primary source:
Primary source has been gathered from the customers by
administering a structured questionnaire.
Secondary source:
Secondary source has been taken using the company website
and various other websites.

86
Methodology of Study
Methodology of the study involved administering a structured questionnaire
comprising 15 questions to the target audience of a sample size of 100 respondents
in a population from both the twin cities.
Sample of 5 questions are placed below:-
1. How often have you heard other people talking about IDBI Federal ?
o Extremely often
o Very often
o Moderately often
o Slightly often
o Not at all
2. Where have you seen the Advertisements for our brand ?
o Billboards
o Newspaper and Magazines
o Online
o Public Transportation
o TV
o Radio
o I've never seen any advertisements for this brand
3. Are you interested to Invest in Insurance ?
o Yes
o No
4. Do you know the benefits of getting Insured through an Insurance Company
?
o Yes
o No
5. Which type of Investment do you prefer?
o Life Insurance
o Fixed Deposits
o Mutual Funds

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o Shares and Debentures
o Others

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Bibliography
 Marketing Management, Sheth Publication,
Dr.ParagAjgaonkar
 Magazines - Business World Management & Economic times.
 Marketing Management, Philip Kotler.
Webliography
 http://www.idbi.com/index.asp

Project Report_Ribu_Dm-10-037

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Project Report_Ribu_Dm-10-037