Summer Training Project Report

SUMMER TRAINING REPORT

“TO CREATE AWARENESS ABOUT HDFC STANDARD LIFE INSURANCE PRODUCT IN PUBLIC”.

HDFC STANDARD LIFE

Aditya Gupta

(96)

In partial fulfillment for the award of the degree

Master of Business Administration

University School Of Management Studies(USMS)

GURU GOBIND SINGH INDRAPRASTHA UNIVERSITY, KASHMIRI GATE, DELHI – 110006 (INDIA)

E-mail : Website ;

EXECUTIVE SUMMARY

This Project Report has been completed in Partial fulfillment of my management Program, MASTER OF BUSINESS ADMINISTRATION (MBA) in the company HDFC STANDARD LIFE INSURANCE. The objective of my project was “TO CREATE AWARENESS ABOUT HDFC STANDARD LIFE INSURANCE PRODUCT IN PUBLIC”.

HDFC STANDARD LIFE is the name which is working as one of the best private insurance company in insurance sector.

With such a large population and the untapped market of population Insurance happens to be a very big opportunity in India. Today it stands as a business growing at the rate of 15-20 per cent annually. Together with banking services, it adds about 7 per Cent to the country’s GDP .In spite of all this growth the statistics of the penetration of the insurance in the country is very poor. Nearly 80% of Indian populations are without Life insurance cover and the Health insurance. This is an indicator that growth potential for the insurance sector is immense in India.

ACKNOWLDEGEMENT

This project has been prepared as a part of an internship required during the completion of MBA program University School Of Management Studies(USMS) GURU GOBIND SINGH INDRAPRASTHA UNIVERSITY, KASHMIRI I was involved with HDFCSTANDARD LIFE INSURRANCE AsAF ALI BRANCHNEW DELHI, for a period of 2 months, and I came across a lot of people who put in their time and effort towards acclimatizing me to the workings of their organization. I express my thanks to my company guideMrs. PARUL CHOUDHARY, who was there to introduce me to the idea of Insurance business and what goes behind it. Also under him guidance and leadership I was able to enhance my marketing as well as inter-personal skills. I would also like to thank him for him immense support and guidance in the selection of the project, its study and preparation of the report.

Last, but definitely not the least, I express my gratitude to the entire staff of HDFC Standard Life Insurance.

These past 2 months were of utmost importance as they added value towards my path of knowledge. I would like to end this acknowledgement by thanking the customers, distributorpeople at large with whom I have interacted during the course of my training.

Declaration

This is to certify that I have completed the Project titled “TO CREATE AWARENESS ABOUT HDFC STANDARD LIFE INSURANCE PRODUCT IN PUBLIC” under the guidance of “Ms. Anu Singh Lather” in the partial fulfillment of the requirement for the award of the degree of “Masters in Business Administration” from “University school of management Studies.”This is an original work and I have not submitted it earlier elsewhere.

Signature:

Name: Aditya Gupta

Enrollment no.:09616603909

Signature:

Prof. Anu Singh Lather

Dean,USMS

TABLE OF CONTENTS

CONTENTS

EXECUTIVE SUMMARY.
COMPANY PROFILE.
CORPORATE PROFILE.
HDFC Ltd AND GROUP COMPANY.
INSURANCE PLAN AND COMPARATIVE STUDY.
HDFC MARKET OVERVIEW.
KEY TERMS.
COMPETITORS.
THE SELLING PROCESS
PRODUCT OF HDFC SLIC
SWOT ANALYSIS OF HDFC SL.
SUGGESTION &RECOMMENDATION.
CONCLUSION.

INTRODUCTION

HDFC STANDARD LIFE is the name which is working as one of the best private insurance company in insurance sector. HDFC Standard Life Insurance Company Ltd was incorporated on 14th August 2000.It got the certificate of registration on 23rd October.

LIFE INSURANCE IN INDIA

INTRODUCTION

A BRIEF HISTORY

The insurance came to India from UK; with the establishment of the Oriental Life Insurance Corporation in 1818.The Indian life insurance company act 1912 was the first statutory body that started to regulate the life insurance business in India. By 1956 about 154 Indian, 16 foreign and 75 provident firms were been established in India. Then the Central government took over these companies and as a result the LIC was formed. Since then LIC has worked towards spreading life insurance and building a wide network

Across the length and the breath of the country. After the liberalization the entrance offoreign players have added to the competition in the market.

3. INSURANCE SECTOR REFORMS

Prior to liberalization of Insurance industry, Life insurance was monopoly of LIC.In 1993, Malhotra Committee, headed by former Finance Secretary and RBI GovernorWas formed to evaluate the Indian insurance industry and give its recommendations. TheCommittee came up with the following major provisions

• Private Companies with a minimum paid up capital of Rs.1bn should be allowed to enter the industry.

• Foreign companies may be allowed to enter the industry in collaboration with the domestic companies.

• Only one State Level Life Insurance Company should be allowed to operate in each state.

It was after this committee came into effect the regulatory body of insurance sector was formed with the name of IRDA.

IRDA: The IRDA since its incorporation as a statutory body has been framing

Regulations and registering the private sector insurance companies. IRDA being an independent statutory body has put a framework of globally compatible regulations.

IMPACT OF LIBERALIZATION

The introduction of private players in the industry has added to the colors in the dullIndustry. The initiatives taken by the private players are very competitive and have givenImmense competition to the on time monopoly of the market LIC. Since the advent of thePrivate players in the market the industry has seen new and innovative steps taken by the players in this sector. The new players have improved the service quality of theInsurance. As a result LIC down the years have seen the declining phase in its career.The market share was distributed among the private players. Though LIC still holds the 75%of the insurance sector but the upcoming natures of these private players are enough to give more competition to LIC in the near future. LIC market share has decreased from 95% (2002-03) to 81 %( 2004-05).The following companies has the rest of the market share of the insurance industry.

NAME OF THE PLAYER / MARKET SHARE (%)
LIC / 82.3
ICICI PRUDENTIAL / 5.63
BIRLA SUN LIFE / 2.56
ING VYSYA / 0.37
BAJAJ ALLIANZ / 2.03
SBI LIFE / 1.80
HDFC STANDARD LIFE / 1.36
TATA AIG / 1.29
MAX NEW YORK LIFE / 0.9
AVIVA / 0.79
AMP SANMAR / 0.26
MET LIFE / 0.21

CURRENT SCENARIO OF THE INDUSTRY

INSURANCE MARKET IN INDIA

India with about 200 million middle class household shows a huge untapped potential for players in the insurance industry. Saturation of markets in many developed economiesHas made the Indian market even more attractive for global insurance majors. The insurance sector in India has come to a position of very high potential and competitiveness in the market.

Innovative products and aggressive distribution have become the say of the day. Indians, have always seen life insurance as a tax saving device, are now suddenly turning to the private sector that are providing them new products and variety for their choice.

Life insurance industry is waiting for a big growth as many Indian and foreign companiesAre waiting in the line for the green signal to start their operations. The Indian consumerShould be ready now because the market is going to give them an array of products,Different in price,features and benefits. How the customer is going to make his choiceWill determine the future of the industry

CUSTOMER SERVICE

Consumers remain the most important centre of the insurance sector. After the entry ofthe foreign players the industry is seeing a lot of competition and thus improvement ofThe customer service in the industry. Computerization of operations and updating ofTechnology has become imperative in the current scenario. Foreign players are bringing in international best practices in service through use of latest technologies. The one timeMonopoly of the LIC and its agents are now going through a through revision andTraining programmes to catch up with the other private players. Though lot is being doneFor the increased customer service and adding technology to it but there is a long way togo and various customer surveys indicate that the standards are still below customerexpectation levels.

DISTRIBUTION CHANNELS

Till date insurance agents still remain the main source through which insurance productsAre sold. The concept is very well established in the country like India but still theIncreasing use of other sources is imperative. It therefore makes sense to look at well-Balanced, alternative channels of distribution.

LIC has already well established and have an extensive distribution channel andPresence. New players may find it expensive and time consuming to bring up a

Distribution network to such standards. Therefore they are looking to the diverse areas Distribution channel to have an advantage. At present the distribution channels that are

Available in the market are:

• Direct selling/Retail

• Corporate agents

• Group selling

• Brokers and cooperative societies

• Bancassurance

DIRECT SELLING/RETAIL

Direct selling or retail business is carried out by Agents of the company. This is the main distribution channel due to the complexity of most insurance products (Endowment, Whole of Life, Unit Linked). This tends to be the focus of most companies due to its past success as well as its ability to deliver the right advice. However, this channel can be expensive and it is a time consuming sales process. However, the channel will remain the largest for many years to come. An agent is the public face of an Insurance company. Most of the clients of Insurance Company never get to see any one besides the agent. Hence it is important that this face is always smiling and presentable and the facts and figures at his/ her command are updated and correct. Some of the expectations from the agent by the Insurer are:

1. Contact prospects for life insurance, study their insurance needs and persuade them to buy.

2. Complete all formalities for proposal of new insurance including filling up proposal forms, collecting premium, arranging medical examination, collecting proofs (of age or income), reports and information required by the underwriter.

3. COMPLETING a policy is not the end of the job of an agent but just the beginning of a new relationship. Having sold a new insurance policy, s/he has to ensure that the Policy continues in the books of the Insurance Company and its proposed benefits are in no way compromised.

For this purpose an agent has to:

Keep in touch with the policyholder to make sure that renewal premiums are paid in time.

ensure that nominations are made or changed, if necessary, as and when it is required.

assist in collecting the claim amounts as and when they become due by helping the claimants to complete all documents and evidences.

Apart from these routine procedures, at times an insured may need a loan against his policy. The details of various situations for which a loan can be given and its terms have to be explained to the policyholder. These go a long way in strengthening the bond between policyholder and the agent.

BANCASSURANCE

Banc assurance is the distribution of insurance products through the bank's distribution channel. It is a phenomenon wherein insurance products are offered through the distribution channels of the banking services along with a complete range of banking and investment products and services. To put it simply, Bancassurance, tries to exploit synergies between both the insurance companies and banks.

Advantages to banks

Productivity of the employees increases.

By providing customers with both the services under one roof, they can improve overall customer satisfaction resulting in higher customer retention levels.

Increase in return on assets by building fee income through the sale of insurance products.

Can leverage on face-to-face contacts and awareness about the financial conditions of customers to sell insurance products.

Banks can cross sell insurance products Eg: Term insurance products with loans.

Advantages to insurers

Insurers can exploit the banks' wide network of branches for distribution of products. The penetration of banks' branches into the rural areas can be utilized to sell products in those areas.

Customer database like customers' financial standing, spending habits, investment and purchase capability can be used to customize products and sell accordingly.

Since banks have already established relationship with customers, conversion ratio of leads to sales is likely to be high. Further service aspect can also be tackled easily.

Advantages to consumers

Comprehensive financial advisory services under one roof. i.e., insurance services along with other financial services such as banking, mutual funds, personal loans etc.

Enhanced convenience on the part of the insured

Easy accesses for claims, as banks are a regular go.

Innovative and better product ranges

Bancassurance in India

Bancassurance in India is a very new concept, but is fast gaining ground. In India, the banking and insurance sectors are regulated by two different entities (banking by RBI and insurance by IRDA) and bancassurance being the combinations of two sectors comes under the purview of both the regulators. Each of the regulators has given out detailed guidelines for banks getting into insurance sector. Highlights of the guidelines are reproduced below:

RBI guideline for banks entering into insurance sector provides three options for banks. They are:

Joint ventures will be allowed for financially strong banks wishing to undertake insurance business with risk participation;

For banks which are not eligible for this joint-venture option, an investment option of up to 10% of the net worth of the bank or Rs.50 corers, whichever is lower, is available;

Finally, any commercial bank will be allowed to undertake insurance business as agent of insurance companies. This will be on a fee basis with no-risk participation.

The Insurance Regulatory and Development Authority (IRDA) guidelines for the bancassurance are:

Each bank that sells insurance must have a chief insurance executive to handle all the insurance activities.

All the people involved in selling should under-go mandatory training at an institute accredited by IRDA and pass the examination conducted by the authority.

Commercial banks, including cooperative banks and regional rural banks, may become corporate agents for one insurance company.

Banks cannot become insurance brokers

CORPORATE PROFILE

(The Joint Venture HDFC Standard Life)

Be granted license by the IRDA to operate in life insurance sector. Each of the JV HDFC Standard Life Insurance Company Limited was one of the first companies to player is highly rated and been conferred with many awards. HDFC is rated 'AAA' by both CRISIL and ICRA. Similarly, Standard Life is rated 'AAA' both by Moody's and Standard and Poors. These reflect the efficiency with which HDFC and Standard Life manage their asset base of Rs. 15,000 Cr and Rs. 600,000 Cr respectively.

HDFC Standard Life Insurance Company Ltd was incorporated on 14th August 2000. HDFC is the majority stakeholder in the insurance JV with 81.4 % stake and Standard Life has a stake of 18.6%. Mr. Deepak Satwalekar is the MD and CEO of the venture.

The Partnership:

HDFC and Standard Life first came together for a possible joint venture, to enter the Life Insurance market, in January 1995. It was clear from the outset that both companies shared similar values and beliefs and astrong relationship quickly formed. In October 1995 the companies signed a 3 year joint venture agreement.

Around this time Standard Life purchased a 5% stake in HDFC, further strengthening the relationship.

The next three years were filled with uncertainty, due to changes in government and ongoing delays in getting the IRDA (Insurance Regulatory and Development authority) Act passed in parliament. Despite this both companies remained firmly committed to the venture.

In October 1998, the joint venture agreement was renewed and additional resource made available. Around this time Standard Life purchased 2% of Infrastructure Development Finance Company Ltd. (IDFC). Standard Life also started to use the services of the HDFC Treasury department to advise them upon their investments in India.

Towards the end of 1999, the opening of the market looked very promising and both companies agreed the time was right to move the operation to the next level. Therefore, in January 2000 an expert team from the UK joined a hand picked team from HDFC to form the core project team, based in Mumbai.

Around this time Standard Life purchased a further 5% stake in HDFC and a 5% stake in HDFC Bank.

In a further development Standard Life agreed to participate in the Asset Management Company promoted by HDFC to enter the mutual fund market. The Mutual Fund was launched on 20th July 2000.

Incorporation of HDFC Standard Life Insurance Company Limited:

The company was incorporated on 14th August 2000 under the name of HDFC Standard Life Insurance Company Limited.

Company’s ambition from as far back as October 1995, was to be the first private company to re-enter the life insurance market in India. On the 23rd of October 2000, this ambition was realized when HDFC Standard Life was the only life company to be granted a certificate of registration.