channel development of hdfc slic

8/6/2019 Channel Development of Hdfc Slic

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MINOR PROJECT REPORT

CHANNEL DEVELPOMRNT AT HDFC STANDARD

LIFE INSURANCE CO. LTD.

PREFACE

Insurance is system by which the losses suffered by a few are spread over many, exposed

to similar risks. Insurance is a protection against financial loss arising on the

happening of an unexpected event. Insurance policy helps in not only mitigating

risks but also provides a financial cushion against adverse financial burdens

suffered. Insurance policies cover the risk of life as well as other assets andvaluables such as home, automobiles, and jewelry.

The functions of Insurance can be bifurcated into two parts:

Primary Function

Secondary Function

Other Function

Primary Function

Provide Protection: The primary function of insurance is to provide protection against

future risk, accidents and uncertainty. Insurance cannot check the happening of


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the risk, but can certainly provide for the losses of risk. Insurance is actually a

protection against economic loss, by sharing the risk with others.

Collective Bearing of Risk: Insurance is a device to share the financial loss of few among

many others. Insurance is a mean by which few losses are shared among larger

number of people. All the insured contribute the premiums towards a fund and out

of which the persons exposed to a particular risk is paid.

Assessment of Risk: Insurance determines the probable volume of risk by evaluating

various factors that give rise to risk. Risk is the basis for determining the premium

rate also

Provide Certainty: Insurance is a device, which helps to change from uncertainty to

certainty. Insurance is device whereby the uncertain risks may be made more

certain.

Secondary Function

Prevention of Losses: Insurance cautions individuals and businessmen to adopt suitable

device to prevent unfortunate consequences of risk by observing safety

instructions; installation of automatic sparkler or alarm systems, etc. Prevention of

losses causes lesser payment to the assured by the insurer and this will encourage

for more savings by way of premium. Reduced rate of premiums stimulate formore business and better protection to the insured.

Small Capital to cover Larger Risks: Insurance relieves the businessmen from security

investments, by paying small amount of premium against larger risks and

uncertainty.

Contributes towards the Development of Larger Industries: Insurance provides

development opportunity to those larger industries having more risks in their

setting up. Even the financial institutions may be prepared to give credit to sick

industrial units which have insured their assets including plant and machinery

Other Function

Means of Savings and Investment: Insurance serves as savings and investment,

insurance is a compulsory way of savings and it restricts the unnecessary

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expenses by the insured's For the purpose of availing income-tax exemptions also,

people invest in insurance.

Source of Earning Foreign Exchange: Insurance is an international business. The

country can earn foreign exchange by way of issue of marine insurance policies

and various other ways.

Risk Free Trade: Insurance promotes exports insurance, which makes the foreign trade

risk free with the help of different types of policies under marine insurance cover.

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TABLE OF CONTENTS

CONTENTS

CHAPTER 1 Introduction

1.1. Overview of Industry

1.2. Introduction

1.3 Objectives and Research Methodology

1.3. Problems of the organization

1.4. Competition information

1.5. S.W.O.T Analysis of the organization

CHAPTER 2 Problems of the Organisation

2.1. Significance 33

2.2. Managerial usefulness of the study 34

2.3. Objectives 35

2.4. Scope of study 36

2.5. Methodology 37

CHAPTER 3 Conceptual Discussion 38

CHAPTER 4 - Data Analysis 55

CHAPTER 5 Findings & Recommendations 68

ANNEXURE

BIBLIOGRAPHY

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CHAPTER 1

INTRODUCTION


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INTRODUCTION

1.1 OVERVIEW OF THE INDUSTRY

Insurance in India has its history dating back till 1818, when Oriental Life Insurance

Company was started by Europeans in Kolkata to cater to the needs of European

community. Pre-independent era in India saw discrimination among the life of foreigners

and Indians with higher premiums being charged for the latter. It was only in the year

1870, Bombay Mutual Life Assurance Society, the first Indian insurance company

covered Indian lives at normal rates.

At the dawn of the twentieth century, insurance companies started mushrooming up. In

the year 1912, the Life Insurance Companies Act, and the Provident Fund Act were

passed to regulate the insurance business. 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. However, the disparage still existed as discrimination between

Indian and foreign companies. The oldest existing insurance company in India is National

Insurance Company Ltd, which was founded in 1906 and is doing business even today.

The Insurance industry earlier consisted of only two state insurers: Life Insurers i.e. Life

Insurance Corporation of India (LIC) and General Insurers i.e. General Insurance

Corporation of India (GIC). GIC had four subsidiary companies.

With effect from December 2000, these subsidiaries have been de-linked from parent

company and made as independent insurance companies: Oriental Insurance Company

Limited, New India Assurance Company Limited, National Insurance Company Limited

and United India Insurance Company Limited.

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Related Acts

The insurance sector went through a full circle of phases from being unregulated to

completely regulate and then currently being partly deregulated. It is governed by a

number of acts, with the first one being the Insurance Act, 1938.

The Insurance Act, 1938

The Insurance Act, 1938 was the first legislation governing all forms of insurance to

provide strict state control over insurance business.

Life Insurance Corporation Act, 1956

Even though the first legislation was enacted in 1938, it was only in 19 January 1956, that

life insurance in India was completely nationalized, through a Government ordinance; the

Life Insurance Corporation Act, 1956 effective from 1.9.1956 was enacted in the same

year to, inter-alia, form LIFE INSURANCE CORPORATION after nationalization of the

245 companies into one entity. There were 245 insurance companies of both Indian and

foreign origin in 1956. Nationalization was accomplished by the govt. acquisition of the

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management of the companies. The Life Insurance Corporation of India was created on

1st September, 1956, as a result and has grown to be the largest insurance company in

India as of 2006.

General Insurance Business (Nationalization) Act, 1972

The General Insurance Business (Nationalization) Act, 1972 was enacted to nationalize

the 100 odd general insurance companies and subsequently merging them into four

companies. All the companies were amalgamated into National Insurance, New India

Assurance, Oriental Insurance, and United India Insurance which were headquartered in

each of the four metropolitan cities.

Insurance Regulatory and Development Authority (IRDA) Act, 1999

Till 1999, there were not any private insurance companies in Indian insurance sector. The

Govt. of India then introduced the Insurance Regulatory and Development Authority Act

in 1999, thereby de-regulating the insurance sector and allowing private companies into

the insurance. Further, foreign investment was also allowed and capped at 26% holding

in the Indian insurance companies. In recent years many private players entered in the

Insurance sector of India. Companies with equal strength competing in the Indian

insurance market. Currently, in India only 2 million people (0.2 % of total population of 1

billion), are covered under Mediclaim, whereas in developed nations like USA about

75 % of the total population are covered under some insurance scheme. With more and

more private players in the sector this scenario may change at a rapid pace.

Growth of private insurance companies

SBI Life Insurance is planning to raise the number of branches to 250 branches this

financial year. Further, ICICI Prudential Life Insurance has stated that in the last two

years, the company had expanded the distribution network by increasing the number of

branches to over 2,090 from 177. AEGON Religare Life Insurance, in its first year of

operations is actively scaling up to open 51 branches, of which 48 are already operational

across 39 cities. HDFC SLIC is planning to increase the number of branches to at least

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250 every year going forward. This willexpand HDFC SLICs distribution network from

311 offices in June-end 2008 to almost 900 agency offices and 700 rural offices by FY

2012.

Children's products such as ICICI Prudential Life's 'Smart Kid', Birla Sun Life's

'Children's Dream Plan', or HDFC Standard 'Life's Young Star Plus', are on a consistent

growth path. According to industry estimates, currently, 2030 per cent of business of

many companies comes from children-specific insurance policies alone.

Life Insurance Corporation (LIC) has now entered the health insurance market and has

mobilized premium income of US$ 21.23 million in the last two months of 200708.

Birla Sun Life on January 7, 2008 also announced its plans to enter into the US$ 40.75

billion health insurance business with the launch of two plans nationally. ICICI

Prudential Life on January 5, 2008 launched Health Saver, to help consumers meet their

current healthcare expenses and also invest for future healthcare expenses.

Banc assurance segment

The banc assurance segment has been growing consistently pace and is competing with

the traditional sale of insurance by agents owing to the keenness of banks to augment

other income (fee-based income). Global insurance consulting firm, Watson Wyatt

Worldwide in 'India Banc assurance Benchmarking Study 2006-07', had said that both

life and general insurers were bullish about prospects of insurance penetration in the rural

markets. According to the study, about 30 per cent of the life insurers have indicated that

by the year 2010, rural insurance business will constitute between 16-20 per cent of their

total bancassurance new business premium. The growth in the banc assurance for

insurance companies wholly depends on the number of bank branches that actively

dispense these products. According to industry sources, private and foreign banks arebiggest mobilizes of insurance premium despite public sector banks having a wider reach.

In August 2008, banc assurance accounted for 35 per cent of the premium collected by

private players. In 200607, that figure was about 17 per cent

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Rural insurance

The Indian rural market offers tremendous growth opportunities for insurance companies.

According to a survey 'India Invest Incomes and Savings Survey 2007' by IIMS Dataworks (a Noida-based retail finance research firm), 58 per cent of India's 105.4 million

insured people were from the rural areas. Yet, urban India was ahead in terms of

penetration (47 per cent), or the number of policyholders compared with the total

population. This meant that almost one out of every two paid workers in urban India was

insured, while it was only 27 per cent in rural areas. According to international

consultancy firm Celent's report'Selling Life Insurance in Rural IndiaIndia's rural

market revenues are expected to grow as much as four times to reach US$ 2.9 billion by

2015. Over 70 crore people reside in the rural areas of the country with insurance

penetration rate as low as three per cent providing a huge opportunity for life insurance

firms.

The Road Ahead

In its report 'Insurance Sector Futuristic Growth'ASSOCHAM has stated that India's

insurance sector is likely to reach US$ 46.25 billion by 2010. The report said, "The total

insurance business will reach a level of US$ 46.25 billion in the next two years from the

current level of US$ 1.15 billion." Private insurance business is likely to see a 140 per

cent growth rate due to the aggressive marketing techniques used by them. Conversely,

state-owned insurance companies would see a 3540 per cent growth rate.

Major Life Insurance Companies

Aviva Life Insurance

Bajaj Allianz

Birla Sun Life Insurance

HDFC Standard Life Insurance

ICICI Prudential

ING Vysya

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Kotak Mahindra

LIC

Max New York Life Insurance

MetLife India Insurance

Reliance Life Insurance

SBI Life Insurance

Shriram Life Insurance

Tata AIG Life Insurance

Some of the important milestones in the life insurance business in India are:

1912 - The Indian Life Assurance Companies Act enacted as the first statute to regulatethe life insurance business.

1928 - The Indian Insurance Companies Act enacted to enable the government to collect

statistical information about both life and non-life insurance businesses.

1938 - Earlier legislation consolidated and amended to by the Insurance Act with the

objective of protecting the interests of the insuring public.

1956 - 245 Indian and foreign insurers and provident societies taken over by the central

government and nationalized. LIC formed by an Act of Parliament, viz. LIC Act, 1956,

with a capital contribution of Rs. 5 crore from the Government of India.

The business of insurance is related to the protection of the economic values of assets.

Every asset would have been created through the efforts of the owner the asset is valuable

to the owner, because he expects to get some benefits from it. The benefit maybe an

income or something else. It is a benefit because it meets some of his needs. In case of a

factory or a cow, the product generated by is sold and income generated. In the case of a

motor car, it provides comfort and convenience in transportation. There is no direct

income.

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Every asset is expected to last for a certain period of time during which it will perform.

After that, the benefit may not be available. There is a lifetime for a machine in a factory

or a cow or a motorcar. None of them will last forever. The owner is aware of this and he

can so manage his affairs that the end of that period or lifetime makes a substitute made

available. Thus, he makes sure the value or income is not lost. However, the asset may

get lost earlier. An accident or some other unfortunate event may destroy it or make it

non-functional. In that case, the owner and the others deriving benefits there from would

be deprived of the benefit and the planned substitute would not have been ready. There is

an adverse or unpleasant situation. Insurance is a mechanism that helps to reduce the

effect of such adverse situations.

Risks are the consequential losses or damages. The risk only means that there is apossibility of loss or damage. The damage may or may not happen. Insurance is done

against the contingency that it may happen. There has to be an uncertainty about the risk.

Insurance is relevant only if there are uncertainties. If there is no uncertainty about the

occurrence of an event , it cannot be insured against. In case of a human being,

death is certain, but the time of death is uncertain. In the case of a person who is

terminally ill, the time of death is not uncertain, though not exactly known. He

cannot be insured.

UTILITY OF INSURANCE FOR THE SOCIETY

The United Nations Declaration of Human Rights 1948 provides that Everyone has

a right to a standard of living adequate for the health and well being of himself

and his family, including food, clothing, housing and medical care and necessary

social services and the right to security in the event of unemployment, sickness ,

disability, widowhood or other lack of livelihood in circumstances beyond his

control.

Under a socialist system the responsibility of the full security would be placed upon

the State to find resources for providing social security. In the capitalistic society,

provisions of security is largely left to the individuals. The society provides

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instruments, which can be used in securing this aim. Insurance is one of them. In a

capitalistic society too, there is a tendency to provide some social security by the

State under some schemes, where members are required to contribute e.g. Social

Security Scheme in UK .In India, social security finds a place in our constitution.

Article 41 requires the State , within the limits of its economic capacity and

development, to make effective provision for securing the right to work, to

education and to provide public assistance incase of unemployment , old age ,

sickness and disablement and in other cases of undeserved want. Part of the

States obligations to the poorer sections are met through the mechanism of life

insurance.

INSURANCE AS A GROWTH ENGINE FOR THE SOCIETY

For economic development, investments are necessary. Investments are made out of

savings. A life insurance company is an important instrument for the mobilization of

savings of people, particularly from the middle and lower income groups. These

savings are channeled into investments for economic growth.

A Life insurance company will have large funds. These amounts are collected by way of

premium. Every premium represents a risk that is covered by that premium. In effect, therefore,these vast amounts represent pooling of risks. The funds are collected and held in trust for the

benefit of the policyholders. The management of the life insurance companies are required to

keep this aspect in mind and make all its decisions in ways that benefit the community.

This applies also to its investments. That is why successful insurance companies would not

be found investing in speculative ventures. Their investment benefits the society at large.Apart

from investments, business and trade benefit through insurance. Without insurance, trade and

commerce will find it difficult to face the impact of major perils like fire , earthquake,

floods etc. Financiers, like banks, would collapse if the factory, financed by it, is reduced to

ashes by a terrible fire. Insurers cover also the loss to financiers, if their debtors default.

Insurance Regulatory and Development Authority (IRDA) Act, 1999

Prior to 1999 there were only two players in the market

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Life Insurance Corporation Of India (LIC)

General Insurance Corporation (GIC)

Then to protect the interests of the policyholders and to ensure growth of the insurance

industry, IRDA was set up. After this the private players started entering the market.

Constitution of IRDA

The insurance regulatory and development authority consist of the following members.

1. Chairperson

2. Less than 5 whole time members

3. Less than 4 part time members.

Members should be person of ability, integrity & standing.

They should have experience in the field of:

1. Life Insurance

2. General Insurance

3. Actuarial science

4. Finance

5. Economics

6. Law

7. Accountancy

8. Administration

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Chairperson, members, officers and other employees of authority shall be public servants.

Mission Statement of IRDA

To protect the interest of and secure fair treatment to policyholders;

To bring about speedy and orderly growth of the insurance industry (including annuity

and superannuating payments), for the benefit of the common man, and to provide long

term funds for accelerating growth of the economy;

To set, promote, monitor and enforce high standards of integrity, financial soundness, fair

dealing and competence of those it regulates;

To ensure that insurance customers receive precise, clear and correct information about

products and services and make them aware of their responsibilities and duties in this

regard;

To ensure speedy settlement of genuine claims, to prevent insurance frauds and

other malpractices and put in place effective grievance redressal machinery;

To promote fairness, transparency and orderly conduct in financial markets dealing with

insurance and build a reliable management information system to enforce high standards

of financial soundness amongst market players;

To take action where such standards are inadequate or ineffectively enforced;

To bring about optimum amount of self-regulation in day to day working of the industry

consistent with the requirements of prudential regulation.

DEVELOPMENT OF INSURANCE SECTOR IN PRE-

INDEPENDENT INDIA

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

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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 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 19 th of June 1956,

and the Life Insurance Corporation of India was created on 1 st 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. Pre-independent era in India saw discrimination

among the life of foreigners and Indians with higher premiums being charged for the

latter. It was only in the year 1870, Bombay Mutual Life Assurance Society, the first

Indian insurance company covered Indian lives at normal rates. 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. However, the disparage still

existed as discrimination between Indian and foreign companies.

Life and general insurance in India is still a nascent sector with huge potential for various

global players with the life insurance premiums accounting to 2.5% of the countrys GDP

while general insurance premiums to 0.65% of Indias GDP. The Insurance sector in

India has gone through a number of phases and changes, particularly in the recent years

when the Govt. of India in 1999 opened up the insurance sector by allowing private

companies to solicit insurance and also allowing FDI upto 26%. Ever since, the Indian

insurance sector is considered as a booming market with every other global insurance

company wanting to have a lions share. Currently, the largest life insurance company in

India is still owned by the government.

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INTERNATIONAL SCENARIO IN INSURANCE SECTOR

Industrialized countries which generated most of the world Insurance Premium in 2004

crowd the insurance industry and account for over 88% of the global life premium and

90% of the world non-life premium in 2004 (Sigma 2/2005) with a terrestrial average

penetration of 7.8% of the Gross Domestic Product (GDP). Switzerland, with per capita

premium of US$ over 3275 are the highest savers through the instrumentality of life

insurance and also with US$ over 2441 per capita are the leading spenders on non-life

insurance premium. The edifice of insurance business in the mature economies has been

built on the pillars of sustained high economic growth. In the US and Western Europe

private pension provisions along with index-linked policies piggy backing on the stock

market rallies, up to mid 2000 enabled expansion of the life insurance business. Thesubstantial upswing is also allocable to the dramatic rise in the single premium business

since the year1995. However, the unpredictability of the single premium business

introduced capriciousness in the otherwise steadily growing life insurance industry. In

the 90s non-life insurers have reported higher growth rates as compared to Life Insurers.

However in 2004, global growth in life as well as in non-life was same at 2.3%. While

in life insurance sector ,industrialized countries achieved 1.7% growth rate, it was 7.4%

at emerging economies. But stronger growth rate in non-life was noted in emerging

economies (7.7%) as against industrialized countries(1.7%). The escalators were a robust

economy growth and resurgence following the financial meltdown of Far Eastern and

Latin American economies. Significantly higher nominal growth rate (in local

currency) was achieved by China (7%), Taiwan (20%),Vietnam (45%), Hong Kong

(30%) in life premium ,while in non-life growth was a bit lower - China(22%),

Taiwan (5.4%), Vietnam (21%), etc. Compared to these countries Indian growth rate in

life and non-life premium was 15% and 14% respectively. The premium upsurge in

Asian markets outpaced their respective GDP growth rates. However, in spite of good

growth and fewer reported major losses, the prosperity of the industry remained listless.

The share of Asian Countries in the World Market in 2004 was30% life insurance (21%

being of Japan) and 13% in non-life (8% from Japan) with a steady increase supported

by a sustained higher growth rate over the years.

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THE BENEFITS OF LIFE INSURANCE

Risk cover: -Life Insurance contracts allow an individual to have a risk cover

against any unfortunate event of the future.

Tax Deduction: - Under section 80C of the Income Tax Act of 1961 one can get

tax deduction on premiums up to one lakh rupees. Life Insurance policies thus decrease

the total taxable income of an individual.

Loans: - An individual can easily access loans from different financial

institutions by pledging his insurance policies.

Retirement Planning: - What had provided protection against the financial

consequences of premature death may now be used to help them enjoy their retirement

years. Moreover the cash value can be used as an additional income in the old age.

Educational Needs: - Similar to retirement planning the cash values that flow

from ones life insurance schemes can be utilized for educational needs of the insurer or

his children.

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Tax Benefits

INCOME TAX

SECTION

GROSS

ANNUAL

SALARY

HOW MUCH TAX CAN YOU

SAVE?

HDFC STANDARD LIFE

PLANS

Sec. 80CAcross All

income Slabs.

Upto Rs. 33,990 saved on

investment of Rs. 1, 00,000.All the life insurance plans.

Sec. 80 CCCAcross all

income slabs.

Upto Rs. 33,990 saved on

Investment of Rs.1, 00,000.All the pension plans.

Sec. 80 D*Across all

income slabs.

Upto Rs.10, 197 saved on

Investment of Rs. 30,000

(inclusive of Rs.15,000 towardshealth insurance of parents.)

All the health insurance riders

available with the

conventional plans. All

Health insurance plans.

Upto Rs.11,897 on investment of

Rs.35,000 (inclusive of Rs.

20,000 towards health insurance

of parents who are senior citizen)

TOTAL

SAVINGS

POSSIBLE **

Rs.44,187

Rs.33,990 under Sec. 80c and under Sec. 80 CCC, Rs.10,197 /

Rs. 11,897 under Sec. 80 D, calculated for a male with gross annual income

exceeding Rs.10,00,000.

Sec. 10 (10)DUnder Sec. 10(10D), the benefits you receive are completely tax-free, subject to

the conditions laid down therein.

* Applicable to premiums paid for Health plans, Critical Illness Benefit, Accelerated Sum

Assured and Waiver of Premium Benefit.

** These calculations are illustrative and based on our understanding of current tax

legislations, which are subject to change..

ROLE OF LIFE INSURANCE IN THE GROWTH OF THE ECONOMY

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The Life Insurance Industry has an enviable track record among public sector

units. It has a Consistent profit and dividend paying record accompanied by a steady

growth in its financial resources. Through investments in the Government sector and

socially- oriented sectors the Industry has contributed immensely to the nation's

development. The industry is recognized as one of the largest financial Institutions in the

country. The ventures initiated by the industry in the areas of Mutual Fund, Housing

Finance has done exceedingly well in recent years. To protect the country's foreign

exchange reserves, the reinsurance arrangement are so organized that maximum retention

is made possible within the country while at the same time protecting interests of the

policy holders.

INDIA AGAINST THE GLOBAL MARKETS

India is an under-insured market Indias insurance market is still at an early stage

of development. This is reflected in low penetration rates and low premiums per capita.

Insurable population only 10% of Indias population have life insurance

According to ING only 10% of the population is insured, which represents around 30%

of the insurable population. This suggests more than 300m people, with the potential to

buy insurance, remain uninsured

Global perspective India ranks 19th on the global stage

India represents only around 0.66% market share (ranked 19th) of global insurance premiums. As

of 2004 the largest markets in size are the US (50x bigger than India), Japan and the UK. Out of

the Asian countries (ex Japan), South Korea is the largest insurance market, Comprising 2.12% of

global premiums, followed by China with 1.61%.

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1.2 PROFILE OF THE ORGANIZATION

HDFC i.e. HOUSING DEVELOPMENT AND HOUSING CORPORATION.

HDFC Standard Life is a joint venture between HDFC of India and Standard Life of UK.

The new company, HDFC Standard Life, was one of the first to be awarded a license in

the recently deregulated Indian market and one of the first to open its doors for business

and issue policies.

Founded in 1977, HDFC id Indias market leader in housing finance, providing finance

for more than 1.5mn homes. They have 83 offices in India, one international office in

Dubai and three service associates in Kuwait, Qatar and the Sultanate of Oman.

Like Standard Life, HDFC is strongly committed to providing quality products and

excellent customer service and has won a number of important awards : in Jan 2001

Asiamoney named them as second Best managed company in India.

HDFC is also financially very strong and for the last six years has enjoyed the highest

financial strength ratings from Indias two leading rating agencies.

The HDFC group includes:

1 HDFC Bank

2 HDFC Asset Management

3 HDFC Realty Ltd.

4 HDFC Securities Limited

Over the period of operations, HDFC group has been felicitated with various rewards.

Some of them are as follows:

1 United Nations Scroll of Honor 1991

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2 Indias best managed company by Asiamoney magazine 1995 and 1996

3 Most competitive Indian company by Euromoney 1997

4 One of the 5 best Indian Boards by Business Today 1997

5 Rated as one of the best companies in India for strategy & management and

investor relations by Asiamoney 1998.

6 Excellence in service industry by the Indian Institute of Marketing Management

& Top Management Club (Pune) 1998

7 Shield for the best presented accounts for banks and financial institutions over11 times (last 8 years in a row)

8 1999 IMC Ramakrishna Bajaj National Quality Award in the service category.

9 CII-Exim Bank Commendation Certificate for commitment to Total Quality

Management 2000.

HISTORY OF THE JOINT VENTURE

Discussions commenced -- January 1995

Joint Venture agreement signed October 1995

Joint venture agreement renewed October 1998

Life insurance project team established January 2000 (Mumbai)

Company officially incorporated 14th August 2000

First Private Sector Life Insurance company to be granted a certificate of registration

23rd October 2000

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MISSION STATEMENT OF HDFCSLIC :

1 We aim to be the top new life insurance company in the market.

2 This does not just mean being the largest or the most productive company in themarket, rather it is a combination of several things like

Customer service of the highest order

Value for money for customers

Professionalism in carrying out business

Innovative products to cater to different needs of different

customers

Use of technology to improve service standards

Increasing market share.

VISION STATEMENT

The most succesful and admired life insurance company, which means that we are the

most trusted company, the easiest to deal with , offer the best value for money, and set

the standards in the industry. In short, the most obvious choice for all.

VALUES THAT WILL BE OBSERVED IN HDFCSL :

1 Integrity

2 Innovation

3 Customer Centric

4 People Care

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5 Team Work One for all & all for one

6 Joy & Simplicity

Integrated Financial Services

HDFC

realty.com

HDFC HOME

LOANS

HDFC

DEPOSITS

HDFC

SLIC

CENTRE

FOR

HOUSING

FINANCE

HDFC

MUTUAL

FUNDS

SECURITISATION

INTELNET

HDFC CHUBB

GENERAL

INSURANCE CO.

LTD

HDFC

FUTURE ACTIVITIES

CIBIL i.e CREDIT

INFORMATION

BUREAU LTD

HDFC

BANK

HDFCSECURITIES

DISTRIBUTION

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Sale Growth

Fiscal Year No. of policies sold in FY New Business in FY

2001-2002 21,376 7 Cr.

2002-2003 1,15,965 69 Cr.

2003-2004 1,86,443 180 Cr.

2004-2005 2,88,189 857 Cr.

2005-2006 7,81,685 2717 Cr.

2006-2007 20,79,217 4270 Cr.

ORGANIZATION STRUCTURE

DIRECTOR

VICE PRESIDENT

SR. BRANCH MANAGER

BRANCH MANAGER

ASSISTANT BRANCH MANAGER

SR. SALES MANAGER

SALES MANAGER

ASSISTNAT MANAGER

MANAGEMENT TRAINEE

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AN INSURANCE COMPANY

In the insurance industry the sales team following the typical organization structure:

HIERARCHY IN INSURANCE COMPANY

SALES

MANAGER

AREA SALES

MANAGER

AREA SALES

MANAGER

AREA SALES

MANAGER

UNIT

MANAGER

UNIT

MANAGER

UNIT

MANAGER

ADVISORS ADVISORS ADVISORS

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FUTURE PLAN OF THE ORGANISATION

HDFC SLIC promises to provide higher returns in higher investments. The plans

smart assure will help the customer in wealth creation and is aimed at providing

efficiency affordability and flexibility to customer needs. The product offer the customer

a choice of allocating up to 100% of premium paid beyond specified premium bracket.

As the premium goes up, the allocation charges keep on decreasing with no allocation

charges levied on premium upward rupees 3lakhs.

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1.3 PROBLEMS OF THE ORGANIZATION

Negative Environment

Top management takes large amount of time to approve high value loan

borrowers.

Since HDFC SLIC is a private player in the insurance industry, it has not yet

reached break-even. Hence, it has high cost due to which its premiums are high as

compared to LIC.

It has to create credibility in the public.

It has to compete with the wide range of products that its competitors offer.

It has to focus towards rural segment also which has a great scope of growth.

It has to decide on the strategies to be adopted which will help to counter

competition.

It has to increase its no. of branches and also enhance its network of agents so that

it can compete with LIC.

It has to focus on providing effective training to its agents so that the customer

base can be increased and moreover customer satisfaction can be ensured.

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1.4 COMPETITION INFORMATION

MAJOR MARKET PLAYERS

Presently there are 15 Life insurance companies in the country. There is only one

public sector company LIC and the rest 14 are private sector. Although LIC has been

dominating the Life Insurance business since past few years the private players have now

started to take the momentum.

Major Market Players

Birla Sun Life Insurance Company

Birla Sun Life Insurance Company is a 74:26 joint venture between Birla group and Sun

Life Financial. It is a private sector company. The company was registered on 31/1/2001.

The market share for first the eight months of FY 2005-06 is 1.84%.

ICICI Prudential Life Insurance

ICICI Prudential Life is a 74:26 joint venture between ICICI and Prudential. It is a

private sector company. The company was registered on 24/11/2000. The market share

for the first eight months of FY 2005-06 is 7.11%.

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Life Insurance Corporation of India (LIC)

Life Insurance Corporation of India is a 100% government held Public Sector Company.

Being the first to be established LIC is the forerunner in the Life Insurance sector. The

market share for the first eight months of FY 2005-06 is 73.91%.

OM Kotak Mahindra old Mutual

OM Kotak Mahindra is a 74:26 joint venture between Kotak Mahindra bank and Old

Mutual. It is a private sector company. The company was registered on 10/1/2001. The

market share for the first eight months of FY 2005-06 is 0.71%.

Royal Sundaram

Royal Sundaram marks the coming together of Sundaram Finance, one

of Indias most respected and trusted finance companies, and Royal and Sun Alliance,

one of the largest insurance groups in the world.

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Aviva Life Insurance India

Aviva Life insurance is a 74:26 joint venture between Aviva and Dabur. It is a private

sector company. The company was registered on 14/5/2002. The market share for the

first eight months of FY 2005-06 is 1.12%.

ING Vysya Life insurance

ING Vysya Life Insurance is joint venture between Exide (50%), Gujarat Cements

(14.87%), Enam (9.13%) and ING (26 %). It is a private sector company. The company

was registered on 2/8/2001. The market share for the first eight months of FY 2005-06 is

0.63%.

Met Life India

Met Life India is a 74:26 joint venture between 74:26 JV between J & Bank, Pallonji &

Co and MetLife. It is a private sector company. The company was registered on 6/8/2001.

The market share for the first eight months of FY 2005-06 is 0.40%.

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Allianz Bajaj Life Insurance Co.

Allianz Bajaj Life Insurance Company is a 74: 26 Joint venture between Bajaj Auto

limited and Allianz AIG. The company was registered on 3/8/2001.The market share for

the first eight months of FY 2005-06 is 6.12%.

SBI Life Insurance Company Ltd:

SBI Life Insurance Company is a 74: 26 Joint venture between SBI and Cardiff S.A. The

company was registered on 31/3/2001.It is a private sector company. The market sharefor the first eight months of FY 2005-06 is 1.52%.

The TATA AIG Group

TATA AIG group is a 74:26 JV between Tata Group and AIG. It belongs to the private

sector. The company was registered on 12/2/2001. The market share for the first eight

months of FY 2005-06 is 1.78%.

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Sahara India Life Insurance Company Ltd.

First Wholly Indian Owned Private Life Insurance Company. The Company commenced

operations from 30th October 2004.

Shriram life insurance company Ltd

Shriram Life is a recent entrant into the life insurance sector It is a 74:26 joint venture

between the Shriram group through its Shriram Financial

Holdings and Sanlam Life Insurance Limited, South Africa. The company expects to start

operations soon.

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1.5 SWOT Analysis

STRENGTHS

Premiums are increasing and so are commissions.

The variety of products is increasing.

Transparency in working is followed.

Fund charges are less i.e. 0.8%

Stronger financial base.

Employee centric organization.

WEAKNESSES

Strong competitors like LIC, ICICI Pru, Birla Sun Life etc.

Premium is priced high as compared top the market leader.

Infrastructure cost is high.

Less expenditure on promotion.

Products not customized for lower segment.

OPPORTUNITIES

The ability to cross sell financial services barely being tapped.

Technology is improving to the point that paperless transactions are available.

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The client's increasing need for an "insurance consultant" can open new ways to

service the client and generate income.

THREATS

Government regulations on issues like health care, mold and terrorism can quickly

change the direction of insurance.

The increasing expenses and lower profit margins. Intense competition from LIC.

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2.1 SIGNIFICANCE

The main objective of my project is to know the channel distribution of HDFC SLIC in

Delhi and to recruit quality agent advisors for the company for providing life Insurance

solutions to the customers. Agent advisors play a vital role in the growth of company

with respect of companys earnings as well as they create value for the organization after

achieving some milestones. Agent advisors are an integral part of the team and sales

manager assigned to them help them to groom in terms of personality development,

selling skills and handling objections of customers.

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2.2 MANAGERIAL USEFULNESS OF THE STUDY

The study is useful to know the channel distribution of HDFC SLIC and to recruit quality

agent advisors for the company for providing life Insurance solutions to the customers.

To gain an insight on the functioning of the distribution of policy and contribution by

agents, Corporate Direct Selling Associates (DSA) and other channels of HDFC SLIC

that will aid the competitors in this sectors to devise an effective distribution strategy.

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2.3 RESEARCH OBJECTIVE

(1) Definition of problem

Identification of distribution channel of HDFC SLIC in Delhi

(2) Research objective-

Objective of my research is following-

1) To find out various channel of HDFC SLIC operating in

2) To find out contribution in distribution of Agents and Other channel.

3) To find out contribution of new distribution channel as: -

Corporate Direct Sales Associate (DSA)

Banc assurance

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2.4 SCOPE OF THE STUDY

To understand the potential for life insurance and number of peoples needs to be

insured moreover to know tremendous life insurance opportunities for people to workand be a part of organization.

Study the various distribution channels, the existing ones and the new areas.

evaluating the new areas their limitation and extent.

Corporate Agency tie ups through which the untapped market segments can be

targeted

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2.5 RESEARCH METHODOLOGY

(1)Data Collection

It consists of primary data and secondary data. Primary data was collected by holding

semi- structured and focused individual interviews of sales Agent, executive,

Consultant and Personnel associated with Corporate Direct sales associate.

For the primary data Interviewed 35 insurance personnel, out these 15 were

Executives including Consultants, Executive (Managerial), and associated Executive

from other tied organization.

Where as secondary data was obtained by different records, magazines, newspapers,

inter nets and various pamphlets of HDFC SLIC.

(2) Type of Research

The type of research used for our study was an exploratory research, as the objective

of the research was to have in depth understanding of the sales agents.

Since the research was qualitative, the need for formal and rigid questionnaire was

not felt. However I covered a specific list of topics and sub areas. This was done in

the form of Open-ended question, where the timing, exact wordings and timeallocated to each question area was left at the interviewers discretion open structure

ensured that inspected facts or attitudes could perused easily.

(3) Sample size

I have selected sample on the basis of performance of the premium collected by agent

at least 25 policies per year. Other has been taken from the branch Manager and

Consultant, branch Executives. All are taken randomly.

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CONCEPTUAL DISCUSSION

CHANNEL DISTRIBUTION

A channel of distribution or trade channel is the path or route along which goods move

from producers to ultimate consumers or industrial users. In other words, it is the

distribution network through which a producer puts his product in the hands of actual

users. The channel of distribution includes the original producer, the final buyer and any

middlemen-either wholesaler or retailer. The term middleman refers to any institution or

individual in the channel which either acquires title to the goods or negotiates or sells in

the capacity of an agent or broker. But facilitating agencies that perform or assist in

marketing function are not included as middlemen in the channel of distribution. This is

because they neither acquire title to the goods nor negotiate purchase or sale. Such

facilitating agencies include banks, railways, roadways, warehouses, insurance

companies, advertising agencies, etc. The following diagram (chart) is illustrative of the

channel of distribution which may exist in a market.

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The above chart indicates that the number of middlemen may vary. If there is direct sale

by the produce to the consumers then there is no middleman. But that is very rare. As the

chart shows the producer may sell goods to retailer who may then sell the same to

consumers. The producer may sell goods to wholesalers who may in turn sell to retailers

and the retailer may sell to consumers. The fourth alternative channel of distribution is

when any agent/dealer intervenes between the producer and retailers and acts as a

middlemen. The agent is appointed by the producer for the sale of goods to the retailers.

Another alternative channel is there when producers agent sells goods to wholesalers

who sell to retailers. Agent/dealer is an independent person/firm buying goods and selling

them to retailers. Agent/dealer may also sell to wholesalers who may then sell to retailers

and goods are thus made available to consumers. In the channel of distribution there may

be more than one agent/dealer and wholesaler.

Channel decisions determine how the firm will reach its target markets. The choice and

performance of the channel are major determinants of an organizations success. Channel

of distribution decisions are of vital importance to all types of firms, including producers,

wholesalers, and retailers. A key factor in selecting a channel is economic performance-

estimated revenue and cost flows over the planning horizon. Qualitative factors are also

important in selecting channels of distribution. Given two channel alternatives that are

similar in their estimated economic performance, selection may rest on the extent of

management control that the firm could exercise in the two channels.

CHANNEL DISTRIBUTION OF INSURANCE INDUSTRY IN INDIA

The insurers must refine and exploit the market segment product distribution system

linkage.

This will lead to distribution system pluralism; many different distribution systems will

be implemented across companies rather than across the industry.

Distribution channels:-

Why it is needed.

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1 Distribution - the key differentiator

It has been two years since the Indian insurance market has opened up, and the new

entrants into the market have set up shop in every major city. The public sector

companies have already established themselves in the market. But there are multiplechallenges faced by these insurance companies, of which two are critical:

Designing of products suiting the market

Using the right distribution channel to reach the customer

While the companies have been quite successful in dealing with the first of these

challenges using the existing product features and leveraging the technical know-how of

their partners, most are still grappling with the right channel mix for reaching potential

customers.

This paper discusses the distribution channels from the perspective of the socio-cultural

ethos of the market and how these channels fit into it, along with where the various

companies face challenges and bottlenecks. Whenever any debate arises about the

intermediaries and distribution channels, the discussion veers to technology and its

impact on distribution. However, the authors believe that the basic existential problems

being faced by the channels in this market needs to be looked into first, and then the

question of enablers technology, tools, training, learning etc. -- is to be takenup.

2 Challenging Scenario demanding role transformation of intermediaries

Insurance has to be sold the world over, and the Asian Market is no exception. The touch

point with the ultimate customer is the distributor or the producer (as they are known in

certain markets), and the role played by them in insurance markets is critical.

It is the distributor who makes the difference in terms of the quality of advice for choice

of product, servicing of policy post sale and settlement of claims. In the Asian markets,

with their distinct cultural and social ethos, these conditions will play a major role in

shaping the distribution channels and their effectiveness.

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In today's scenario, insurance companies must move from selling insurance to marketing

an essential financial product. The distributors have to become trusted financial advisors

for the clients and trusted business associates for the insurance companies.

This calls for leveraging multiple distribution channels in a cost effective and customer

friendly manner. For example, in the developed markets producers (brokers and agents)

form the major channels of distribution, while the web as a complementary channel is

catching up slowly. According to a Forrester survey, 88% of the Life insurance

executives responding identified agents as the primary channel of distribution.

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The distinction of channels in the developed markets is: personal distribution systems and

direct response systems. Personal distribution systems include all channels like

agencies of different models and brokerages, bancassurance, and work site marketing .

Direct response distribution systems are the method whereby the client purchases the

insurance directly. This segment, which utilizes various media such as the Internet,

telemarketing, direct mail, call centers, etc., is just beginning to grow.

3 What should the companies look at?

Basically companies have to take a look at the intermediaries they are using, whether it is

optimal to use them, and what are the alternatives?

The new companies have attempted appealing only to the middle, upper middle and elite

classes in the major cities. Contrasted with Public sector insurance companies, with their

offices across the country, the new companies have miles to go before they reach

anywhere. They must overcome the mindset of the customer that life insurance is Life

Insurance Corporation of India (LIC) and general insurance is General Insurance

Corporation of India (GIC) if they hope to grow in the market. Meanwhile, the public

sector companies are going to great lengths to revamp their image to look and feel more

contemporary.

In this process all are targeting the same market --the existing pie is being cut up further,

but no attempt is being made to increase the size of the pie. For example, while attempts

are made to complete the quota of rural insurance in percentage terms, the rural market

potential is yet to be tapped, as the new insurers are not able to attract the right kind of

talent into their distribution force to address this. Intelligent segmentation of distribution

channels to match the market segmentation is what will help the companies to move in

this direction.

4 Distribution Scenario in the Indian market

In today's Indian insurance market, the challenge to insurers and intermediaries is two-

pronged:

Building faith about the company in the mind of the client

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Intermediaries being able to build personal credibility with the clients

Traditionally tied agents have been the primary channels for insurance distribution in the

Indian market; the public sector insurance companies have their branches in almost all

parts of the country and have attracted local people to become their agents. The agentsare from various segments in society and collectively cover the entire spectrum of

society. A person who has lived in the locality for many years sells the products of the

insurance company with a local branch nearby. This ensures the last mile touch point

being closer to the customer. Of course, the profile of the people who acted as agents

suggests they may not have been sufficiently knowledgeable about the different products

offered, and may not have sold the best possible product to the client. Nonetheless, the

customer trusted the agent and company. This arrangement worked adequately in the

absence of competition.

In today's scenario agents continue as the prime channel for insurance distribution in

India, as is the case in most markets, supported by call centers to a small extent. Almost

all the new players follow this model primarily because the regulations for other channels

are yet to be put in place.

However there is great excitement in the industry over the impending broker regulations,

and companies are planning possible channels in their enthusiasm to increase volumes.

The belief that all these channels will grow and seamlessly integrate to bring in business

seems a fallacy.

What has emerged is a much more difficult and evolving market scene with existing

players, more new players coming in, and global marketing practices and ideas being

tested. But none of this has changed the fundamental character of the market, which we

believe will take more time than expected

As the insurance market in India is liberalized, the pattern of distribution is likely to

undergo some changes with new channels being introduced

A quantum jump in insurance business in terms of premium, policies, lives

covered, etc would necessitate a corresponding increase in the capacity of

the distribution channels.

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The cost of effectiveness of certain channels would induce insurers to start

using them.

There are sectors of market for whom the agency channel may not be the

most efficient and introduction of new channel will help to increase the

penetration of insurance products.

Creation of awareness and demand as a result of the increasing

distribution channels.

Dissatisfaction with the existing channels.

Key issue in increasing the number of policies sold would be;

The number of agents

Public awareness

Public perception of the need for protection and long term savings.

Favourable tax treatment

Professionalism of financial advisors

Quality and range of products.

Favourable tax treatment

Profetionalism of financial advisors Quality and range of products.

The distribution channels would play an important role in meeting the increased volumes.

Traditionally, the life insurers have been working primarily on the agency distribution

force, while the general insurance business has depended primarily on the development

officer. The private players are bringing with them international experience, new

technology, new channels of distribution and of course, new products. The ground rules

in the insurance business are being redefined. Even the existing public sector players are

gearing up with matching strategies to face competition.

EXAMPLE:

Tied Agent of LIC-

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*Tied agents attached to development officers

* Direct agents/career agents supervised by ABM(S)/BM/Sr.B.M

Branch Manager

Direct Agents

Development officer

Career Agents

(presently not in practice) Agents

Full time

Part time

Changes in distribution pattern of life insurance after IRDA

came into existence.

FROM TIDE AGENTS

TO

MULTIPLE

CHANNELS

BANKSCORPORATES/

INSTITUTIONS

BROKERS

TELEMARKETING/

WORK-SITE MKTG./

DIRECT MKTG. INTERNET

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CHANNEL DEVELOPMENT STRATEGIES AT HDFC SLIC.

Tied agency model

Bank assurance and alliance

Corporate Agency(exclusive for HDFC SLIC) and Brokers(can sell any product)

Tied Agency (Agent Advisors)

Tied Agency is the largest distribution channel of HDFC SLIC, comprising a large

advisor force that targets various customer segments. The strength of tied agency lies in

an aggressive strategy of expanding and procuring quality business. With focus on sales

& people development, tied agency has emerged as a robust, predictable and sustainable

business model.

Banc assurance and Alliances

At its most simple level banc assurance is the business of banks selling insurance. In

concrete terms banc assurance, which is also known as Allfinaz constitutes a package of

financial services that can fulfill both banking and insurance needs at the same time.

Simplest form where bank provides database to the insurance companies and insurance

companies pays certain base charges for each customer and commissions are paid on the

basis of conversions.

Strategic alliance

Sharing of customer data

Branding of insurers products to leverage the banks own brand

Developing specific products exclusive to banks own customer

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Deployment of insurers staff within the bank

Joint marketing strategy with complete risk management and financial services

offers.

Sharing of technical infrastructure.

Banc assurance is the term used to describe the sale of investment products in a bank.

The word is a combination of "banc" and "assurance" signifying that both banking and

insurance is provided by the same corporate entity.

Banc assurance - selling life insurance through bank branches - has also driven life

insurance business over the two years. Heres why. First, banks deposits as a percentage

of total financial assets of the household sector have gone down from about 46% in 1980

to about 30% now. This means that banks have to seek other avenues, beyond just

interest income, to remain profitable. Banks have found that selling life insurance policies

is a great way to make profits.

Company adopted the concept of banc assurance merely few years back and got a good

amount of success through that. Within a short span of time, company has large number

of partners like Yes Bank, India bulls and Amway. B & A has emerged as a vital

component of the companys sales and distribution strategy, contributing to

approximately one third of companys total business.

The business philosophy at B&A is to leverage distribution synergies with our partners

and add value to its customers as well as the partners. Flexibility, adaptation and

experimenting with new ideas are the hallmarks of this channel.

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Corporate Agency(exclusive for HDFC SLIC) and Brokers(can sell any

product)

Corporate agency are those which sells exclusive Services of HDFC SLIC and Where are

a Brokers is a one who can sell and service of and company depending on the rate of

commission

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FUNCTIONS OF AN AGENT AT HDFC SLIC.

An insurance agent would be required to solicit and procure new insurance business, in

manner that is consistent with the interests of the policyholders and of the insurance

company.

For this purpose he would have to do the following

contact prospects for insurance;

study their insurance needs;

persuade them to buy;

complete all formalities for proposal for new insurance, including filling up the

proposal forms;

collecting supporting documents and premium arranging inspection if necessary,

ensure that warranties and special conditions, if any are property explained to the

insured

Assist the insured in filling the proper documents and proofs for making a claim.

An insurance agent would be required to solicit and procure new insurance business, in

manner that is consistent with the interests of the policyholders and of the insurance

company.

For this purpose he would have to do the following

contact prospects for insurance;

study their insurance needs;

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STEPS IN DIRECT MARKETING

Select your customers

Tailor the product

Prepare the operation

Launch the campaign

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CHANNEL DEVELOPMENT PROCESS FOR TIED

AGENCY MODEL

YES

NO

NO

YES

Start

Name Gathering in P200

Short listing

Contacting

Intereste

d?End

Initial Screening

NAT

Career Seminar & P200

Intereste

d?End

Career interview

FCS

Contract with MNYL

IC-33? Reappear

NOT CLEARED

CLEARED

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WAYS OF NAME GATHERING

There are several ways for gathering names in order to follow rule of 31.

Natural Market:

A natural market consist of people to whom you know well from your family,

friend circle, relative can be a good prospect. The most admired way for

recruitment in HDFC SLIC is through natural market. Natural market persons are

easily approachable and most of the successful recruitment in HDFC SLIC is

from natural market.

Personal Observation:

It means identify the right person through observation. For e.g. a person residing

in your locality and very famous in taking initiative in social activities can be a

good prospect.

Nominator Call:

A nominator is a person who is very much influential in the market as well as in

societies. Name gathering and identification is easy in this case, but these people

are highly unapproachable. These people can be very productive in giving

references of the prospect. They are not prospect by default.

Centre of Influence (CoI) Call:

A centre of influence person is people who are influential and you know them

personally. They are approached for giving references of the client.

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DATA ANALYSIS

After the interview of 20- agents and 15- officer I have gathered much Information that

can be classified in the following ways i.e.

1) On the basis of Age.

Age 18-25 26-35 36-45 46 above total

No of Agents 4 8 5 3 20

No. Of Executives

Or Other 2 8 4 1 15

8

9

Analysis of this information make us clear that maximum no of Insurance advisor comes from

age group 25-35. It has inference that Maximum agents are matured enough to deal and live in

the organization. When I the look age group of officers we can find it easily that maximum come

from matured and experienced age range i.e. 26-35. It has implication that company is

administered by well experience young people.

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2) On the basis of Education.

Education level HSC Degree PG Professional total

Degree

No of Agents 3 10 4 3 20

No of Executives 5 5

Consultants 1 1 3 5

No Others 2 3 5

Total 3 13 5 14 35

12

I can have many inferences from the above information as follows on the basis of Education.

50% of Agent comes from degree level, 20% from professional degree and rest from others

80% Executive comprises professional degree.

60% Consultant/ manager has professional degree and other from, Degree, and PG.

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Other executive to whom I met have 60% professional degree.

When I assess total staff (agents with officers) I draw inferences that out of total, approximately

90% staff are graduate and above that. If I exclude Agents then 70% (0ut 0f 15, 10 have

professional degree) is professional. It means company is mostly governed by professionals.

Note Professional qualification means MBA/MCA/ BE/CA etc. Out of 35, a person has not

given their opinion.

3) Geographical area they covered

Area specific not specific whole city total

No of agent 4 2 14 20

12

14

16

Information from above table states that out of total, maximum (50%) covers whole city

of Delhi. 40% covers specific area (means, western, eastern suburban).

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When I combine this information I can have more specific inferences. As HDFC SLIC have most

dynamic& experience professional young people with different geographical area covers and

maximum has to facility to grow business in any area.

Working time

When I analyzed the question on the basis of timing, maximum agents have their flexible

time. But officers and Managers have specific time generally 9am to 8 pm and more than

that. Here we have to consider two types of agent one is part timers and others is full

timers. So full timer gives maximum time and uses the facility of Tele phone in the

Office.

Telephone call per day

No of calls 1-6 7-13 14-20 21- 27 total

Agents 2 5 10 3 20

12

Telephone calls generally made by agents are maximum 14-20 calls / day. And time of calling

depends on policy and person.

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4) Feature of the company

5

When I asked about the features of convenience, 90% has their (Out of the 35 persons)

opinion in favor of Trust and customer friendly.

5) Operational hassles/problems

Hassles travel timing phone availability procedure paper work total

No of Agent 10 1 1 3 5 20

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Executives 10 2 1 2 15

20 3 1 4 7 35

12

Maximum operational hassles comes from traveling and after that paper work involved

but weight age is almost low, Procedure is the third most problem in distribution of the

services. Time and phone availability have very low contribution in operational problem.

6) Facility available for agents and Officers.

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14

When agents are asked about the facilities that are provided by the HDFC SLIC for him

maximum has answered in the support of telephone, and very few have support regarding

stationary. Some have given their view in the support of computer facilities. But they

demanded more support of stationary and traveling allowances.

7) About Appraisal system

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25

When I talked about performance appraisal system in HDFC SLIC they all have similar

view that it has good performance appraisal system. Insurance advisors are judge by their

performance to fulfilling their target weekly, monthly, annually basis. Many other things

also they are considering in the process of performance appraisal. So this system is very

effective to keep motivated of the channel force.

8) Knowledge about product and training.

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25

Company provides comprehensive knowledge about products to Insurance adviser and

dealing staff so as they can do their work without any confusion. Staffs are trained by

extensive training session (100 hours) and required test. They are also assessed time to

time by the Organisation to maintain their knowledge and skills.

Similar things are also available for the officer but in different way. They have to take

care of the organization so they have go with a very hard extensive session of training.

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9) Yearly earning.

16

Insurance advisors average earning falls at the range of 1lakh to 2lakh per years but it

depends on the advisors. There no limitation of their earnings if they have enough contact

and selling skills.

Here consultant has no fixed income only salary is fixed but commission from Agents is not

fixed. Due to commission they are always want to develop their business.

Executive has some more fixed income than above two. Income depends on experience and

position in the company.

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12) Factors make you as a part of HDFC SLIC?

Mainly trust and brand value of HDFC SLIC work here more than the other factors to

remain as a part of this organization. This is fact New York Life as a brand of quality,

economic, and strong believe for perfection and HDFC SLIC has good image and

perception for the people.

They are ranked as following way

Trust>> Brand name>> Performance of the company>> Job satisfaction>> Salary

structure>> security>> others.

13) Factor that can Influence the people in future.

For the most influential factors responsible the people to remain in the Organization can

be arranged in the following way.

Carrier growth Opportunity>pay package>Salary>Others.

So for the future carrier growth has maximum weight age then others (for both of them).

14) Change in the distribution channel

When I think about new change in the area of distribution. They have similar view but

some agents have opinion to remain in Traditional way. They have their own logic, it has

no substitute because insurance is a product of selling not bringing. It requires personal

relation and faith.

Executives have their opinions that HDFC SLIC has many distribution

channels(traditional as well as new) but new multiple distribution channel is required due

to maintaining sales growth and reducing the cost of delivery. Change is required becausecombined forces of increasing technological expertise, Transformation in the Industry

and Innovative techniques working in the Indian market, the distribution system seems to

be widening.

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In there view future customers will be multi channel. The insurers will have to offer all

types of channel to the customer and it is the customer who will have the right to choose

the channel suiting him/her. Future demand of high level of sophistication in providing

our services to customer cant be ignore.

So change in distribution channel is required.

They have a corporate agency channel, which handles its corporate agents and have tie-

ups with 38 corporate houses. In their opinion DSA provide a very wide reach in India.

This is a much diversified channel. They are best served using similar approach- such as

direct mail or Telemarketing.

Recently it tied up with India Bulls and some NGOs. The distribution has to happen at

the grass root level, as the average rural Indian finds a greats level of comfort and

security in dealing in groups. The Rural population normally prefers monthly premium in

line with the Micro-finance repayments that they are used to.

15) HDFC SLIC has a tie-up with Yes Bank(Bank assurance).

For total financial solution HDFC SLIC has a tie-up with Yes Bank. It is also looking at

opportunities for tying-up with many more banks in India.

This is multiple channel of distribution. Put simply, the Insurance distribution can be

made during a loan application process. The use of a highly trained advisor with support

from bank is very Important in the banc assurance, this is very promising channel due to

the large coverage banks have in India.

When they were talking with me majority have opinion this is most viable channel for

coming days. It has presently very little bit contribution due to lack of interest and

experience.

channels. Their concept is very clear about selling of insurance product.

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16) Future distribution channel for HDFC SLIC.

They have given their view on the future channel that will be most effective for HDFC

SLIC would be Banc assurance and Direct Marketing.

17) Performance with respect to distribution.(restricted to HDFC SLIC)

When they were asked to give their opinions on the weight age of performance of

Different distribution channel of HDFC SLIC, If hundred (100) points is whole business

then contribution of channel can be show as following way;

100

80

60 Agency (approx 60%)

40 Corporate Agents (33%)

20 Banc assurance (4-5%)

NGOs (1-2%) others (0-2%)

They have given 1st rank to the agents and Insurance Advisors or Traditional channel

(only for HDFC SLIC)

But opportunity of new modern channel cant be denied. After trained Insurance Advisor,

they have given their 2nd rank Corporate Agent and farther as following way;

Agency>Corporate Agents (DSA)> Banc assurance>NGOs>Brokers>Direct Marketing

(20) When asked about the most important feature HDFC SLIC possessed that attracts

the customer I got and anonymous Result Companies Experience in Life Insurance

which is 162 years.

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There are 38.5 million Indians online as of now and this number is set to grow to 100

million by 2007-08. Sky-rocketing at a CAGR of 125%, the online travel industry is

expected to become a $2-billion industry by 2008.

The number of heavy internet users in India, the persons who spend long hours on the

web, has grown to 38 per cent this year, as against barely 16 per cent in 2001.

These heavy users are spending an average 8.2 hours per week on the internet, I-Cube

2006 report said.

Their numbers are increasingly rising over the past few years: from 16 per cent in 2001 to

20 per cent in 2004 and to 38 per cent the total internet users in 2006 - resulting in a jump

of 20 per cent over a 5-year period.

In contrast, the number of 'light' users has dropped from 63 per cent in 2001 to a 28 per

cent in 2006, which shows the older population spend more time on internet as against

the younger lot who are considered to be more net-savvy. While, the school going

children spend an average of 322.3 minutes a week on the internet, the college going

students spend an average of 433.2 minutes per week and the older men spend an average

of 580.5 minutes a week. Working women spend 535.3 minutes per week while women

non-working women spend an average of 334.5 minutes each week. There will be 50

million internet users by March 2007. At present 25% of the internet users in India are

from small towns and this figure is estimated to increase further.

32 per cent active users of the Internet in India use it for sourcing information and

research. Back in 2001, only 20 per cent used the Internet for searching information. E-

mail as a killer application is on the downslide with only 46 per cent of subscribers using

the Internet for e-mail, compared to 64 per cent in 2001

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RECOMMENDATIONS

There are certain flaws existing in this working of the insurance industry there are some

the recommendation I come across while doing this thesis. It will help to make

insurance more important sector in todays economy.

The need of the hour is to devise a comprehensive strategy that will help the firms

face the challenges of the future. The financial service industry, around the world. Over is

undergoing a major transformation. It is very important that trained marketing

professionals who are able to communicate specific features of the policy should sell the

policy.

From the research I could find out that people are not aware about the policies and

features of insurance.

The penetration of insurance in India is around 22%. This indicates that a vast

majority of rural population is not covered. The market player needs to explore this

untapped potential through their marketing and sales network.

The returns of the policies are not properly managed and never given in time. So,

these areas must be looked at.

Pricing of insurance products, as empirically available in India, shows that pricing

is not in consonance with market realities. Life Insurance premium is generally

perceived, as being too high while general insurance (especially motor insurance) is

priced too low.

Some insurance products, which are not available in India should, be introduced

in market. There are area for new product development like Industry all risk policies;large projects risk cover, Risk beyond a floor level, extended public and product liability

cover.

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CONCLUSION

My Experience with HDFC SLIC will always be grateful for me. I learned many things

in HDFC SLIC. The very first thing I learned in HDFC SLIC is to handle objections from

the customers. Different type of scripts of HDFC SLIC helps in this.

Working on deadline for achieving target is most crucial process in this sector and I am

thankful to my Manager who was always behind me to support during initial phases and

helped me to complete my training.

The GO meet to reward successful AA and SM for the month is another example which

clearly emphasizes that HDFC SLIC has strong belief in maintaining a healthy

relationship with their stakeholders.

Overall Channel Distribution of HDFC SLIC at Delhi was a fair attempt from me.

My telephonic conversation with the prospect always gave me a positive direction to

build my confidence and even in bad phase of response I learnt the art of making

calmness.

I shared a lot of activities with my colleagues. All the trainees from different background

also remained a source of energy for my daily activities.

IN FUTURE INSURANCE WILL BE BOUGHT NOT SOLD

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ANNEXURE

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QUESTIONNAIRE

NAME .

QUALIFICATION..

AGE..

(1) Why you select HDFC SLIC as an Agent?

(a) For Monetary benefits (b) flexibility in Hours

(c) Commission (d) easy of entry

(e) Interest in the sector (f) nature of job

(2) What geographical area do you cover?

(3) What is your work timing?

(4) How many calls do you made in a day?

(5) What features / services of the company do you like for your convenience?

(a) Trust in the company(b) Quick settlement of claims

(c) Customize product

(d) Customer friendly

(6) What are the operational hassles/ problems that you face?

(a) Travel (b) timing (c) phone availability

(d) Procedure (e) paper work

(7) What are the facilities you are using or provided by the company?

(a) Traveling allowances (b) telephone (c) computer

(d) Day hour food (e) stationary

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(8) Does Company provide knowledge of entire product range in its portfolio?

(9) Does HDFC SLIC have performance appraisal system?

(10) What is your yearly average Income?

(11) What factors would you consider while selecting the new Life Insurance Company?

Please rank them on the basis of 1-10 point.

FACTORS

Trust

Performance of company

Security

Salary structure

Brand value

Infrastructure support

Perk/ allowances

Flexible work timing

Level of autonomy

(12) What are the reasons / factors for which you remain in this Organization?

Rank them on the basis of 1-10 point.

REASONS RANK1 RANK2

(For HDFC SLIC) (For others)

Monetary factors

Job satisfaction

Autonomy

Easy of entry

Flexible work hours

Status

Job security

Commission base pay

Perks/allowances

Others

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(13) What are the reasons /factors for which you are a part of this HDFC SLIC?

RANK them

channel development of hdfc slic

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