insurance sector in indiadocshare02.docshare.tips/files/4507/45074025.pdf · insuring public. 1956:...

PROJECT REPORTSubmitted For the Partial Fulfillment of the

Degree

ON

METLIFE INDIA

Submitted By:Anubhav Tyagi

MBA(IT)IIIT Allahabad

Indian Institute Of Information Technology- Allahabad

ACKNOWLEDGEMENT

Something I never thought about as a student, but that becomes

very clear as a trainee, in such a big organization is that while

making a project, you come to face or have different experiences

and by that you come to know that “A project is not produced by

just one person, it takes lot of hard work by lot of talented people

who guide you with there expert advices and experiences.”

And for making my project successful I have many person to

thank for helping and guiding me in completion of the project.

I would like to especially thank to Mr. Vijay Chourasia(Internal

guide) and Mr. Abhijeet Mukerji (Branch manager), who kept

the ship afloat for the past two months and shared there expert

advices to make my project full of content and also provided me

the facilities to prepare the project.

Also I would like to thanks, Mr. Sachin Tyagi and Mr. Kumud.

K. Tyagi for correcting, formatting and polishing my work with his

special advices and guidance. Also I appreciate the staff of Metlife

India, Kailash Colony and facility support provided by them for the

past two months.

Indian Institute Of Information Technology-Allahabad

2

Anubhav TyagiMBA(IT)

IIIT Allahabad

OBJECTIVE

The main objective of the project was to study the

recruitment methodologies of the High Net-Worth

Individuals and High Net-Work Individuals and at the same

time study their inclination towards the business

opportunity available in the insurance sector and their

awareness towards the same. The study also aimed at

knowing the brand recall of MetLife India Insurance.


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INSURANCE SECTOR IN INDIA

The insurance sector in India has come a full circle from being an

open competitive market to nationalisation and back to a

liberalised market again. Tracing the developments in the Indian

insurance sector reveals the 360-degree turn witnessed over a

period of almost two centuries.

A brief history of the Insurance sector

The business of life insurance in India in its existing form started

in India in the year 1818 with the establishment of the Oriental

Life Insurance Company in Calcutta.

Some of the important milestones in the life insurance business in

India are:

1912: The Indian Life Assurance Companies Act enacted as the

first statute to regulate the life insurance business.


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1928: The Indian Insurance Companies Act enacted to enable the

government to collect statistical information about both life and

non-life insurance businesses.

1938: Earlier legislation consolidated and amended to by the

Insurance Act with the objective of protecting the interests of the

insuring public.

1956: 245 Indian and foreign insurers and provident societies

taken over by the central government and nationalized. LIC

formed by an Act of Parliament, viz. LIC Act, 1956, with a capital

contribution of Rs. 5 crore from the Government of India.

The General insurance business in India, on the other hand, can

trace its roots to the Triton Insurance Company Ltd., the first

general insurance company established in the year 1850 in

Calcutta by the British.

Some of the important milestones in the general insurance

business in India are:

1907: The Indian Mercantile Insurance Ltd. set up, the first

company to transact all classes of general insurance business.


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1957: General Insurance Council, a wing of the Insurance

Association of India, frames a code of conduct for ensuring fair

conduct and sound business practices.

1968: The Insurance Act amended to regulate investments and

set minimum solvency margins and the Tariff Advisory Committee

set up.

1972: The General Insurance Business (Nationalisation) Act,

1972 nationalised the general insurance business in India with

effect from 1st January 1973.

107 insurers amalgamated and grouped into four companies viz.

the National Insurance Company Ltd., the New India Assurance

Company Ltd., the Oriental Insurance Company Ltd. and the

United India Insurance Company Ltd. GIC incorporated as a

company.

Insurance sector reforms:

In 1993, Malhotra Committee headed by former Finance Secretary

and RBI Governor R.N. Malhotra was formed to evaluate the

Indian insurance industry and recommend its future direction.

The Malhotra committee was set up with the objective of

complementing the reforms initiated in the financial sector. The


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reforms were aimed at "creating a more efficient and competitive

financial system suitable for the requirements of the economy

keeping in mind the structural changes currently underway and

recognizing that insurance is an important part of the overall

financial system where it was necessary to address the need for

similar reforms…"

In 1994, the committee submitted the report and some of the key

recommendations included:

1) Structure

• Government stake in the insurance Companies to be brought

down to 50%

• Government should take over the holdings of GIC and its

subsidiaries so that these subsidiaries can act as

independent corporations

• All the insurance companies should be given greater freedom

to operate

2) Competition

• Private Companies with a minimum paid up capital of Rs.1bn

should be allowed to enter the industry


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• No Company should deal in both Life and General Insurance

through a single entity

• Foreign companies may be allowed to enter the industry in

collaboration with the domestic companies

• Postal Life Insurance should be allowed to operate in the

rural market

• Only One State Level Life Insurance Company should be

allowed to operate in each state

3) Regulatory Body

• The Insurance Act should be changed

• An Insurance Regulatory body should be set up

• Controller of Insurance (Currently a part from the Finance

Ministry) should be made independent

4) Investments

• Mandatory Investments of LIC Life Fund in government

securities to be reduced from 75% to 50%


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• GIC and its subsidiaries are not to hold more than 5% in any

company (There current holdings to be brought down to this

level over a period of time)

5) Customer Service

• LIC should pay interest on delays in payments beyond 30

days

• Insurance companies must be encouraged to set up unit

linked pension plans

• Computerisation of operations and updating of technology to

be carried out in the insurance industry The committee

emphasized that in order to improve the customer services

and increase the coverage of the insurance industry should

be opened up to competition.

• But at the same time, the committee felt the need to

exercise caution as any failure on the part of new players

could ruin the public confidence in the industry. Hence, it

was decided to allow competition in a limited way by

stipulating the minimum capital requirement of Rs.100

crores. The committee felt the need to provide greater

autonomy to insurance companies in order to improve their

performance and enable them to act as independent

companies with economic motives. For this purpose, it had

proposed setting up an independent regulatory body.


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Why Insurance ?

Insurance is desired to safeguard oneself and one's family against

possible losses on account of risks and perils. It provides financial


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compensation for the losses suffered due to the happening of any

unforeseen events.

By taking life insurance a person can have peace of mind and need

not worry about the financial consequences in case of any

untimely death.

Certain Insurance contracts are also made compulsory by

legislation. For example, Motor Vehicles Act 1988, stipulates that a

person driving a vehicle in a public place should hold a valid

insurance policy covering " Act" risks. Another example of

compulsory insurance pertains to the Environmental Protection

Act, wherein a person using or carrying hazardous substances (as

defined in the Act) must hold a valid public liability (Act) policy.

Basically there are two types of insurance:

1. Life Insurance

2. General Insurance

Insurance - Life

Your family counts on you every day for financial support: food,

shelter, transportation, education, and much more. Insurance

provides you with that unique sense of security that no other form

of investment provides. It gives you a sense of financial support

especially during that time of crisis irrespective of the fluctuations

in the stock market. Insurance provides for your career goals right

from your childhood years.


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Life insurance is all about making sure your family has adequate

financial resources to make those plans and dreams come true. It

provides financial protection to help your family or business to

manage after your death.

Few of the Life insurance policies are:

Whole life policies - Cover the insured for life. The insured does

not receive money while he is alive; the nominee receives the sum

assured plus bonus upon death of the insured..

Endowment policies - Cover the insured for a specific period.

The insured receives money on survival of the term and is not

covered thereafter.

Money back policies - The nominee receives money immediately

on death of the insured. On survival the insured receives money at

regular intervals during the term. These policies cost more than

endowment with profit policies.

Annuities / Children's policies - The nominee receives a

guaranteed amount of money at a pre-determined time and not

immediately on death of the insured. On survival the insured

receives money at the same pre-determined time. These policies

are best suited for planning children's future education and

marriage costs.

Pension schemes - are policies that provide benefits to the

insured only upon retirement. If the insured dies during the term

of the policy,


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his nominee would receive the benefits either as a lump sum or as

a pension every month.

Since a single policy cannot meet all the insurance objectives, one

should have a portfolio of policies covering all the needs.

Insurance - General

Every asset has a value and the business of general insurance is

related to the protection of economic value of assets. Assets would

have been created through the efforts of owner, which can be in

the form of building, vehicles, machinery and other tangible

properties. Since tangible property has a physical shape and

consistency, it is subject to many risks ranging from fire, allied

perils to theft and robbery.

Concepts of insurance have been extended beyond the coverage of

tangible asset. Now the risk of losses due to sudden changes in

currency exchange rates, political disturbance, negligence and

liability for the damages can also be covered.

But if a person judiciously invests in insurance for his property

prior to any unexpected contingency then he will be suitably

compensated for his loss as soon as the extent of damage is

ascertained.

Few of the General Insurance policies are:


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Property Insurance: The home is most valued possession. The

policy is designed to cover the various risks under a single policy.

It provides protection for property and interest of the insured and

family.

Health Insurance: It provides cover, which takes care of

medical expenses following hospitalization from sudden illness or

accident.

Personal Accident Insurance: This insurance policy provides

compensation for loss of life or injury (partial or permanent)

caused by an accident. This includes reimbursement of cost of

treatment and the use of hospital facilities for the treatment.

Travel Insurance: The policy covers the insured against various

eventualities while traveling abroad. It covers the insured against

personal accident, medical expenses and repatriation, loss of

checked baggage, passport etc.

Liability Insurance: This policy indemnifies the Directors or

Officers or other professionals against loss arising from claims

made against them by reason of any wrongful Act in their Official

capacity.

Motor Insurance: Motor Vehicles Act states that every motor

vehicle plying on the road has to be insured, with at least Liability

only policy. There are two types of policy one covering the act of

liability, while other covers insurers all liability and damage caused

to one's vehicles.


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Since a single policy cannot meet all the insurance objectives, one

should have a portfolio of policies covering all the needs.

Of the two types of insurances, MetLife deals in Life Insurance in

India.

MET-LIFE BEGINS::

The origins of Metropolitan Life Insurance Company (MetLife) go

back to 1863, when a group of New York City businessmen raised

$100,000 to found the National Union Life and Limb Insurance

Company.

The new company insured Civil War sailors and soldiers against

disabilities due to wartime wounds, accidents, and sickness. In

1868, after several reorganizations and five difficult years, the

company decided to focus on the life insurance business. A new

company was chartered to sell "ordinary" insurance to the middle

class. The founders chose the name because they had been most

successful in New York City, or the "Metropolitan" District.


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This new venture also faced difficulties. A severe business

depression that began in the early 1870s rapidly put half of the 70

life insurance companies operating in New York State out of

business. Only very large, long-established ordinary life insurance

companies remained strong. Policy lapses over successive years

forced the company to contract until it reached its lowest point in

the late 1870s.

In 1879, MetLife President Joseph F. Knapp turned his attention to

England, where "industrial" or "workingmen's" insurance programs

were widely successful. American companies had not bothered to

pursue industrial insurance up to that time because of the expense

involved in building and sustaining an agency force to sell policies

door

to door and to make the weekly collection of five- or ten-cent

premiums.

By importing English agents to train an American agency force,

MetLife quickly transferred successful British methods for use in

the United States. By 1880, the company was signing up 700 new

industrial policies a day. Rapidly increasing volume quickly drove

down distribution costs, and the new program proved immediately

successful.

The MetLife agent became an important person in the lives of

these striving families. Manuals instructed agents to call at a home

at the same time each week to ensure familiarity and contact. In

the process of collecting premiums, insurance agents listened to

the problems, concerns, and hopes of their clients. So successful


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was this approach that by 1909, MetLife became the nation's

largest life insurer in terms of insurance in force, a leadership

position we continue to hold today in North America.

MetLife Today

In 2001 MetLife was the first insurance company to establish a

financial holding company with a nationally chartered bank.

Leveraging its unparalleled distribution channels, MetLife entered

the retail-banking arena with the launch of MetLife Bank. This will

make an easier and more convenient way for MetLife’s customers

to realize their financial goals.

After the tragic events of September 11, MetLife responded

quickly. First and foremost, MetLife was fully committed to its

policyholders. Chairman and CEO Bob Benmosche remarked that

"our focus today is on lending whatever support we can to our

customers," and that MetLife "is fully prepared financially to pay all

claims."

MetLife’s support did not end there. In responding to the tragedy,

MetLife and MetLife Foundation made a number of grants to aid

those affected, including: $1 million Foundation grants to both the

September 11th Fund to meet longer-term needs of victims, and to

the Twin Towers fund to assist families and rescue workers.


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MetLife Foundation also matched employee contributions to the

American Red Cross Disaster Relief Fund.

At the same time MetLife, Inc. announced that it had invested $1

billion in a broad array of publicly traded common stocks. The

company said that this was the beginning of a program to

significantly increase MetLife’s investment in the public equity

markets, and one way to get back to the basics of building

America’s future.

Additional grants for disaster relief were made in 2001 and 2002

to a number of different organizations including the Children’s

Health Fund and the Renaissance Economic Development

Corporation.

In 2002 Working Mother magazine honored MetLife by naming the

company one of the "100 Best Companies for Working Mothers,"

for the fourth consecutive year. In addition, the Minority Corporate

Counsel Association (MCCA) selected MetLife’s Law Department as

a

recipient of the Employer of Choice Award for its commitment to

creating and maintaining a diverse and inclusive organization.

On the international front, the Mexican Government selected

MetLife to acquire Aseguradora Hidalgo, S.A., Mexico’s largest life

insurer for approximately $965 million. MetLife "has the expertise,


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the resources and the commitment to provide exceptional products

and services to customers in Mexico, one of the fastest growing

life insurance markets," noted Bill Toppeta, president of MetLife

International.

MetLife announced in 2002 that it would be continuing its long-

standing relationship with Snoopy and the rest of the PEANUTS®

characters. The company signed a new contract that would allow

the characters to appear in MetLife’s domestic and international

advertising for the next 10 years. Commenting on the partnership,

Senior Executive Vice President and Chief Administrative Office

Lisa Weber noted that "Snoopy is our corporate ambassador and

has been an important part of our advertising campaign for 17

years."

For its future successes, the company can draw on the reservoir of

history that has produced an enduring set of corporate values

based on almost 135 years of integrity, social responsibility, strong

leadership, financial strength, and innovative products and

services

With over 137 years of experience and acquiring the 36th

position among the fortune 500 companies, the MetLife

companies serve millions of customers in the Americas and Asia

with one goal in mind – to build financial freedom for everyone.

The MetLife companies are a


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leader in group benefits that serve 88 of the top one hundred

FORTUNE 500®* companies, and provide benefits to 37 million

employees and family members through its plans sponsors in the

U.S.

The MetLife companies are also ranked #1 in group life and #1 in

commercial dental in the U.S. The MetLife companies are the

number one life insurer in the U.S. with approximately US $2.5

trillion of life insurance in force.

In India, MetLife was incorporated in 2001, and aims to

differentiate itself through customized need based selling, simple

and innovative products, and technology-backed service

experience, to tread its path to build financial freedom for

everyone.

MetLife's stated long-term goal is to become the recognized leader

throughout the world with over 100 million people as customers by

the year 2010. The company took a major step toward realizing

this goal in January 2005, when it announced its intention to

purchase Citigroup's Travelers Life & Annuity and substantially all

of Citigroup's international business for $11.5 billion.

Vision / Mission

Is to build financial freedom for all through leadership in

providing financial advice and building long-term

relationships through innovative protection, accumulation and


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retirement products, robust underwriting processes and creating

world-class customer service experience for the customers.

Metlife want to provide customers in India with world-class

solutions for financial security, and in the process add significant

value to our shareholders, associates and society.

Core Values

• Being Innovative in offering world class and competitive

products to customers.

• To build Long Term Relationships with the customers by

creating a world class service experience through operational

excellence and the innovative use of technology

• By creating a Customer Centered and Result Focused Vision

that inspires each of the Associates and has their buy-in

• Committed to creating a High Performance Organization by

creating an environment that allows each of the Associates

to perform at their peak and hence recognized as an

Employer of Choice

• Committed to Partnering with our internal and external

Customers for mutual success

• Work with Integrity, Fairness and Financial Prudence in all

the dealings keeping the interests of the Shareholders,

Customers and Associates paramount .


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CORPORATE GOVERNANCE

Venkatesh Mysore – Managing Director

Miro Farrugia – Chief Financial Officer

Suraj Kaeley – Chief Marketing Officer

B Ashwin - Chief Administrative Officer

Anil Kumar K R - Chief Planning Officer

Vikrant Pande – Director (Bancassurance and Corporate Agency)

Gaurav Suri – Director (Marketing)

Sudip Mukhopadhyay – Director (Institutional Business)

Smitashree Menon – Director (Human Resources)

K Sriram – Chief Actuary

Ajith Vellat – Director (Information Technology)

Kailash Kulkarni – Director (Agency Sales)


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Rajen Jatar – Director (Finance)

Neerav Kaushik – Director (Service Delivery)

Shiva Belavadi – Director (Institutional Service Delivery &

Claims)

Corporate Partners

As the vital channel for MetLife’s products,some exemplary banks

and financial institutions have been chosen. These serve as the

interface between the customers and Metlife to aid them to

understand the unique needs and aspirations of every Indian and

update the products of Metlife with features that form the

cornerstones of financial freedom.

J&K Bank

The J&K Bank Ltd., incorporated on October 1st, 1938 commenced

its business on July 4th, 1939. The bank now, has a network of

440 branches spread over the length and breadth of the country. A

significant contributing factor for this fast growth is the solid

founding principles that are dedicated to the cause of transforming


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the Bank not only as a financial heart but also the social heart of

the community.

The J&K Bank is the first state owned bank of the country and

53% of equity is held by the Govt. of J&K. The bank has a

consistent track record of growth and profitability. It has a unique

distinction of being banker to the J&K State Govt. and has also

been appointed by RBI as its agency in J&K, responsible for

carrying general banking business of the Central Govt. and

collection of taxes pertaining to the Central Board of Direct Taxes.

Dhanalakshmi Bank

The Dhanalakshmi Bank Limited (DLB) headquartered at Thrissur

in Kerala, was started seven decades back, at a time when

banking was less known to the people. In a high literate state of

Kerala, the bank grew in strength over the years. And today, it has

153 branches spread over Kerala, Tamil Nadu, Karnataka, Andhra,

Maharashtra, Gujarat, West Bengal (Kolkata) and New Delhi.

The bank has ambitious plans for growth in branches, total

business and profits. All the 153 branches are classified as NRI

branches, and are computerized and in the process of


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implementing Wide Area Network, ATM's, Any Branch Banking and

Cash Management Services, Telebanking and Internet Banking.

Karnataka Bank

The Karnataka Bank Ltd., a premier private sector bank of the

country, was incorporated on February 18th, 1924 at Mangalore, a

coastal town in South Kanara, a district of Karnataka state, which

has attained renown as the Cradle of Indian Banking.

Today it is one of the leading private sector banks in the country,

known for its steady and disciplined growth and cordial customer

service. The Bank has a strong national presence through a

widespread network of 358 branches. The bank has 230 branches

wholly/partially computerized, as of now.

Plans are underway to put in place additional products to enhance

customer satisfaction and to increase income stream with the help

of upgraded technology. The bank has already put in place an

elaborate risk monitoring and asset liability management system.

Other Partners


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KARVY

In 1982, a group of Hyderabad-based practising Chartered

Accountants started Karvy Consultants Limited with a capital of

Rs.1,50,000 offering auditing and taxation services initially. Later,

it forayed into the Registrar and Share Transfer activities and

subsequently into financial services. All along, Karvy's strong work

ethic and professional background leveraged with Information

Technology enabled it to deliver quality to the individual.

GEOJIT SECURITIES

Geojit Securities was founded by Mr.C.J George in 1987 as a

Proprietorship for doing Broking business in Cochin Stock

Exchange. In 1994, the business was taken over by Geojit

Securities Ltd, a Joint Venture between Mr.C.J George and the

Kerala State Industrial Development Corporation Ltd. In the

following year, the company came up with an IPO and the shares

were listed in various Stock Exchanges in India in 1995.


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WAY2WEALTH

Way2Wealth is a premier Investment Consultancy Firm that has

been launched with the aim of making investing simpler, more

understandable and profitable for the investors. Way2Wealth

brings a wide range of product offerings from Fixed Income

Securities, Life Insurance and Mutual Funds to Equity and

Derivatives (on the National Stock Exchange) for the convenience

and benefit of it customers. Way2Wealth has over 40 easily

accessible Investment Outlets spread across 20 major towns and

cities in the country.

MINI MUTHOOTHU

Established in 1921, Mini Muthoothu with an illustrious history of

banking behind them today operates from 75 branches in Kerala

and 5 in Bangalore. All business concerns of Mini Muthoothu


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function under the strict guidelines set by the Department of

Company Law Affairs and Reserve Bank of India. They also have a

certificate of compliance with the requirements regarding

prudential norms from the Reserve Bank of India. Mini Muthoothu,

under the able leadership of its Chairman, Mr. Roy M Mathew,

offers both the resources and capabilities like any national player

coupled with individualized attention to its customers.

METLIFE PRODUCT OVERVIEW:

1) Met100

Met100 is a limited pay whole-life policy in a non-participating

form. The policy covers the entire life (or till 100 years of age) and

has a guaranteed up-front sum-assured and paid-up value.

Besides, the policyholder has the option to surrender the policy at

any point of time for cash at a pre-decided guaranteed "surrender

value". Met100 thus, assures guaranteed sum assured – to the

policyholder on survival at age of 100 or, a guaranteed amount for


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the nominee/beneficiary in case of death. Also, on payment of

additional premiums one or more of the various riders like

Accidental death benefit, Term Rider, Waiver of Premium Rider,

Critical Illness rider can be added to the policy.

Highlights

• Life Time protection

• Affordable premiums

• Tax Benefit

• Access to cash value of the policy

• Guaranteed returns in case of survival or death.

2) Met100 Gold

Met100 Gold is a limited pay whole-life policy in participating form,

covering the entire life or till the 100 years of age. A bonus is

declared after the first two years of holding the policy, which is

credited as reversionary bonus. Besides, the company can also

declare terminal bonus. A unique feature about this policy is that

the participation in the profit continues even after the premium

paying term, provided the premiums have been paid for the full

term. The premium paying modes available are Annual, Semi-

annual, Quarterly, Monthly and Payroll Savings Scheme. Also, on

payment of additional premiums one or more of the various riders

like Accidental death benefit, Term Rider, Waiver of Premium

Rider, Critical Illness rider can be added to the policy.


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Highlights:

• Life Time protection

• Affordable premiums

• Tax Advantage

• Access to the cash value of the policy

• Future prosperity of the company is shared by getting

reversionary and terminal bonuses.

3) Met Sukh

Met Sukh is a money back non-participating policy where ‘assured’

lump-sum amount is paid to the policyholder at regular intervals.

Being a non-participating policy, the premium rates, sum assured,

surrender values and paid-up values are guaranteed up-front for

Met Sukh. The plan can be availed for the term of 20 years, where

the money is paid every 5 yrs. Premiums for Met Sukh are ceased

on death or on expiry of term - whichever is earlier. Also, on

survival at the end of 20th year the policyholder receives a 40%

accrued

guaranteed addition. The biggest benefit of Met Sukh however, is

that in case of death during the term of the plan, the nominee/

beneficiary receives the guaranteed sum assured plus accrued

guaranteed additions. On payment of additional premiums one or

more of the various riders like Accidental death benefit, Term

Rider, Waiver of Premium Rider, Critical Illness rider can be added

to the policy.


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Highlights

• Assured sum at regular intervals

• Guaranteed returns at maturity

• Waiver of premium in case of death

• Protection

• Savings

4) Met Bhavishya

Met Bhavishya, a non-participating money-back policy with

guaranteed returns, has been specially designed to meet the

financial requirements for children at their different stages of life.

The insured here is the parent and the child – the beneficiary. The

policy is suitable for parents in the age group 20-50 years having

children of 0-12 years old. There are two options to choose from

and fixed term benefits periodic additions & terminal additions are

payable based on the option that you select. The policy can be

customized through 4 riders - Accidental Death Benefit, Critical

Illness (10 illness), Waiver of Premium (Accidental Disability) and

Term Rider

Highlights

• Guaranteed returns at regular intervals


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• Secures the present and the future for the child

• Waiver of Premium in case of death.

5) Met-Mortgage Protector

Met-Mortgage Protector is a single pay/limited pay policy, specially

designed to protect the dependants of the insurer against the

liabilities incurred on a housing loan. The individual here is insured

and not the asset. The biggest benefit of the policy is its

decreasing term-assurance plan, which reduces the burden on the

dependants, while providing guaranteed sum assured to the

beneficiary. Met Mortgage Protector is available for terms of 5-25

yrs

Highlights

• Protect dependents against liabilities incurred on housing

loan.

• Cover continues even after the premium paying term is over.

• Flexible terms

6) Met Suvidha

Met Suvidha is a participatory endowment plan that provides

savings and security in one policy. It provides a lot of flexibility in

choosing the


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premium paying term between 15-30 years i.e terms are available

for 15, 16, 17, 18…30 years. Met Suvidha has been developed

keeping in

mind people with shorter and irregular earning spans eg.

celebrities. The policy allows for flexibility in paying provides

protection to an individual whenever required, and offers tax

advantage. Also, being a participatory policy it is suitable for

people who would like to share the future prosperity of the

company by getting reversionary bonuses and terminal bonuses.

7) Met Suvidha(Non- Participating Endowment Assurance)

Met Suvidha provides the savings and security in one policy. It

provides a lot of flexibility for the policy terms between 15 - 30

year i.e for the terms 15,16,17,18…30 years. This product is

developed keeping people in mind especially people who have

irregular and shorter earning spans. It provides protection to an

individual during the need and whenever required. It provides tax

advantage

8) Met Suraksha

Met Suraksha is a term assurance plan and provides pure

protection at the cheapest price for a specified period of time. The

policy has a term of 5/10/15/20/25 years and level term is up-to

60 years of age. It is an participating endowment policy. The tax

benefits are provided throughout the premium paying terms. Met

Suraksha provides multiple premium paying options like annual,


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semi-annual, quarterly, monthly and payroll savings scheme

(PSP).

USP

• Financial security after retirement

• Multiple premium paying options

• Tax benefits throughout the premium paying options.

9) Met Pension Participating Deferred Annuity

Met Pension is structured as a participating endowment and a

participating immediate annuity. This provides only one annuity

option i,e Life Annuity. Being a pension plan it is developed to

provide financial security after retirement. It provides tax benefits

throughout the premium paying options. The death benefit during

the endowment phase will be the return of premium plus the

reversionary bonus if any. In case of the immediate annuity phase

there will be no benefits in this phase for the beneficiary of the

policy. The maturity benefits at the end of the endowment phase is

equal to the face amount plus guaranteed addition plus attached

reversionary bonuses, if any plus terminal bonus, if any. MetLife’s

pension product offers multiple premium paying options.

Highlights

• Financial security after retirement

• Tax benefits throughout the premium paying options


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• Multiple premium paying options

10) Met Ultimate-"A universal life insurance policy"

Met Ultimate acts as a flexible policy which combines elements of

protection and accumulation simultaneously and provides ready

access to the accumulated cash value. It also acts as a savings

account where

in the premiums are deposited, various charges deducted and

interest credited to the accumulated amount. Met Ultimate

provides minimum guaranteed return(net rate 3.5 p.a) an an

additional bonus interest declared on the investment performance.

It has the facility of tax free withdrawals after two policy years

from the accumulation account. Met Ultimate offers "Premium

Holidays" where there is no schedule for premium payments after

third policy year which allows for skipping payment of premiums

without lapsing the policy.

Highlights

• Flexiblity

• Tax benefits

• Provides coverage upto 100 years of age


35

• Skipping of premium payments after the third policy year

without lapsing the policy.

• Tax free withdrawals after two policy years from the

accumulated account.

• Flexibility to increase/decrease the Face Amount

]

11) MET GROUP LIFE

Met Group Life is a flexible group insurance policy that would

enable both employer and employees to select the right mix of life

insurance to suit their individual needs. It’s a yearly term

insurance product which pays a face amount to the employees

against the risk of death thereby assuring peace of mind. Met

Group Life presents a hassle free implementation and flexible

premium paying modes- annual, semi-

annual, quarterly or monthly. It offers easy enrolment process

with no medical underwriting up to free cover limit, non-

transferable employer liability, non-taxable face-amount for

beneficiary and an additional cover on a contributory basis. Met

Group also offers the option of converting Group Coverage to

Individual Coverage if the employee desires, and the advantage of

covering spouse and children – subject to minimum participation

levels.


36

Highlights

• Flexible Group Insurance Policy

• Provides protection for employee’s family

• Provides significant increased employee motivation, morale

and loyalty leading to a better work environment

Unit-Linked Plans of MetLife

12)MET-SMART

Met Smart is a transparent, unit linked whole life plan that

matures at age 100. The premium you pay is used partly for

insurance cover and the balance is invested in funds to buy units.

Met Smart offers 3 insurance options as well as 6 investment

options that you can choose from, based on your risk profile.

Met Smart at a glance:

• A Unit linked whole life plan that matures at age 100

• Offers you life protection and the advantage of investing in

stocks, debt instruments and government securities

• 3 insurance options


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• A never before choice of 6 investment options covering the

complete range of investment possibilities to suit your risk-

return profile

• Offers you the option of switching between funds

• Convenient limited pay option that allows you to complete

premium payment over a fixed term and enjoy the full

benefits

• Offers a premium holiday after 3 years

• Gives you the freedom to withdraw from your funds.

13)MET-ADVANTAGE

Met Advantage is a unit-linked pension plan that works hard for

you when you stop working. And, like the name suggests, it comes

with the maximum number of advantages. For one, it ensures that

you lead a comfortable lifestyle. Always. More importantly, it helps

you plan ahead, keeping in mind the escalating cost of living.

What’s more, unlike any other plan, Met Advantage comes with six

investment options, seven annuity options, and, much more.

Met Advantage at a glance:

• Transparent unit-linked pension insurance plan

• Choice of 6 investment options.

• Dump-in option.

• Life cover protection up to vesting age

• Tax savings on premium up to Rs.3,366* per annum.

• Postponement of vesting age

• Option of switching between funds

• No health check-up


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• Flexible premium paying terms

• Option to commute up to 1/3rd of vesting benefits tax-free

STRUCTURE OF THE SALES FUNCTION

MetLife India Insurance sales function previously dealt in two

functional structures within the organization. These two

Structures were:

• Corporate sales

• Agency sales

Corporate/Group Sales:


39

Corporate sales includes that part of MetLife India Insurance in

which the sales are affected through the various sales manager ,

who on behalf of the company meet various corporate heads and

try to sell group insurance on the condition that all the employees

of that particular corporate will have insurance from MetLife India

Insurance, automatically when they will join that organization.

Group Insurance has been recognized as an ideal tool to enhance

productivity and build employee satisfaction in business houses

and offer value-added benefits to customers of financial

institutions and members of various affinity groups. MetLife India’s

Group Insurance solutions have been created to satisfy the

changing needs of various group customers.

Agency Sales:

Agency sales includes that part of Met-life in which sales are

affected through various individual agents known as Financial

advisors(or can be called agents) who are basically working with

the company on the commission basis. Leads are generated by

advisors themselves and sales are affected henceforth. The

hierarchy structure of the Agency sales is as under:

o Branch Sales Manager (BSM)/ Center Sales Manager

o Agency Manager (AM)


40

o Sales Manager(SM)

o Assistant Sales Manager (ASM)

o Financial Advisors(FA)

With the opening up of the insurance sector and with so many

players entering the Indian insurance industry, it is required by the

insurance companies to come up with innovative products, create

more consumer awareness about their products and offer them at

a competitive price. New entrants in the insurance sector had no

difficulty in matching their products with the customers' needs and

offering them at a price acceptable to the customer.

But, insurance not being an off the shelf product and one which

requiring personal counseling and persuasion, distribution posed a

major challenge for the insurance companies. Further insurable

population of over 1 billion spread all over the country has made

the traditional channels of the insurance companies costlier. Also

due to

heavy competition, insurers do not enjoy the flexibility of incurring

heavy distribution expenses and passing them to the customer in

the form of high prices.

With these developments and increased pressures in combating

competition, companies are forced to come up with innovative

techniques to market their products and services. At this juncture,

banking sector with it's far and wide reach, was thought of as a


41

potential distribution channel, useful for the insurance companies.

This union of the two sectors is what is known as Bancassurance.

What is Bancassurance?

Bancassurance 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.

Bancassurance if taken in right spirit and implemented properly

can be win-win situation for the all the participants' viz., banks,

insurers and the customer.

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.


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• 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 access for claims, as banks are a regular go.

• Innovative and better product ranges


43

HYPOTHESIS


44

This project is based on the study of High net worth individuals

and high net work individuals, there recruitment methodologies

and there inclination towards the available business opportunity in

insurance sector. Keeping this in mind we started thinking about,

that how to know the basic thinking of HNI’s i.e what they all have

in there mind while investing there money and time in certain

business and how much they are aware of the opportunities in

which they are investing.

After meeting few clients and collecting some data it was known

that the clients are making their investment decisions with the

advice of different consultancy bodies.

TARGETING HNI’s AND BOOST SALES

We are experiencing some of the most turbulent times in history.

There are literally thousands of different marketing strategies one

would be using to grow one’s business but only a few that one

need to do consistently that will allow him to make all the money

he desire. Here are some of the strategies:

Do not rely on simple sources of Business

A Marketing Parthenon means having multiple/different sources of

revenue and lead generation instead of relying on just one.

For example, let's say your primary method for generating new

business is through direct mail. What happens if, for whatever

reason, your postcards stop working tomorrow? How will that

impact your business? Now imagine you also generate leads

through the internet, space advertising, referrals, word of mouth,


45

joint ventures, etc.?

You have now successfully diversified your portfolio like a good

money manager.

Start now by conservatively testing other methods of marketing so

that if one method stops working, it won't put down your entire

business.

Follow up

This is probably the most important marketing strategy, yet only

few follow it. It has been proved time and again that 70% of

people who respond to a cold call or letter will buy the

product/service. But they may not buy from the original caller; the

reason cited is lack of following up the leads.

Whenever a prospect responds to your cold call/letter, it only

shows that he is only interested and there may not be any

immediate sale. Further, it must be remembered that because

people buy when THEY are ready to buy not when YOU are ready

to sell. So it is up to you to follow up till you close the sale.

Maintain Relationships

Did you know it's far easier to re-sell an existing client than to sell

to someone who doesn't know and trust you? Did you also know

that you lose 1/12 of the value of a client every 30 days you don't

communicate with them?

So knowing these two facts, what's the easiest, most profitable


46

way to maintain relationships and re-sell existing clients? You

guessed it right.

A Monthly Newsletter! But don't just send a monthly newsletter.

Make sure you also enclose inserts about other products and

services that you offer.

Create A Back-End For Your Business (Cross

Selling)

It's far easier to re-sell to an existing client. It's also... Far More

Profitable! to create a Back-End For Your Business. Once you've

spent the high upfront costs to acquire a new client, it's relatively

inexpensive to send them a letter promoting another product or

service.

For example, once you are successful in selling, say a car

insurance product, you can sell other related insurance products

such as health insurance, householders insurance etc. by proper

follow up to promote these products.

For the purpose of checking the validity of hypothesis a sample

questionnaire (Refer to Appendix A) was prepared on the basis of

which the findings and analysis were being made.


47

ANALYSIS BASED ON QUESTIONNAIRE SURVEY

RISK BEARING CAPACITY OF HNI’s

Risk is one of the primary factor that an individual have in mind

while investing his/her money or while analyzing any business

opportunity. Due to this I surveyed the people for the amount of

risk they are willing to take while investing there money.

“Risk is the potential loss that may on the happening of

certain events.”

The major risks are:

Interest-Rate Risk:

When interest rates rise, bond prices will fall.

Existing bond portfolio will lose value and vice versa.

Reinvestment risk:

Risk is of interim cash flows being reinvested at a lower rate.


48

Call Risk:

If issuer calls back call option bonds,when interest rate falls,they

can be replaced with cheaper debt.The investor cannot keep a high

coupon bond.

Default risk:

Issuer may default on its obligation to make timely principal and

interest payments.

Inflation risk:

When inflation rates rises, the value of interest payment is

reduced. Higher interest rates will make the existing bonds lose

value again.

Risk and return co-relation:

Risk and return are closely related with each other, they are

inversely proportional to each other. With increase in risk the rate

of return rises and with decrease in risk the rate of return

decreases.

There is one more type of risk that an individual have to face while

investing his/her money in any kind of business or other activity,

and that is Inflation.


49

“Inflation is an increase in the general price level of goods

and services.”

Over time, inflation reduces the purchasing power of the rupee

and making it less worth year after year.

To find out the exact situation in the market, I surveyed different

persons and ask about the amount of risk they want to bear in

achieving returns while investing there money in any market or

product. After collecting the responses I came to the conclusion

that maximum number of people are the one which are in the

category of

low risk ,this means that people are very much protective about

there money and does not want to invest at the places at where

the risk is high (for ex-equity). As seen in the Pie chart below that

people are not willing to take high risk ,but if there are returns

then they can go towards the options where the risk are

medium(32%) or low(34%).


50

Risk Bearing Capacity

high10%

medium32%

low34%

no risk24%

high medium low no risk

The tendency of people to save is now changing and now people

want to earn more income by investing there money in a profit

giving activity. As shown in the chart below that a large mass of

people, i.e. 78%, had said yes to the question


51

Extra Income Generation

yes78%

no22%

yes no

that whether they want to earn more money or not. This clearly

indicates that there is a huge market for the companies who are in

the sector of selling insurance products and other market linked

products.

The maximum people in this survey was the persons in the age

group of 25-35 who are young, dynamic and have a large network

of people around them. These young and dynamic persons should

be targeted because from them only there will be the upcoming

entrepreneurs.

INCLINATION OF HNI’s TOWARDS FLEXIBLE WORKING

HOURS


52

Flexible working hours means that there is no restriction of timings

while working. The need is that the work should be completed on

the due date, not necessary at what timing you have worked to

complete it.

Flexible working hours are nowadays very much accepted pattern

of doing work in an organization. It is very much prevalent in the

IT industries, but now it is being adopted by the other industries or

sector too. Due to the fact that it makes the person feel free in its

job, and also due this the work is being completed to the

perfection.

Our survey also signifies this fact that flexi-working hours are the

choice of today. We surveyed a number of people(High net work

and High net worth individuals) and found out that what actually

they inclined too, so that we understand that while investing there

money and time in the business opportunity available in the

insurance sector, will they be giving there free time to it.


53

Flexible Working Hours

yes80%

no20%

yes no

As shown in the pie chart above, out of people HNI’s surveyed a

large percentage of them showed interest in Flexible working

hours(i.e 80%) as compared to the people who were not

interested in it(i.e 20%).

So, while targeting the High network or High net worth individuals,

we should try to make them feel that they need not have to work

at bounded timings, and should make them feel the easiness of

working in flexi working hours and how they can make there

unproductive time, a productive one.

INCLINATION OF HNI’s TOWARDS BUSINESS

OPPURTUNITY


54

Since the liberalistion of insurance industry the opening of

insurance industry has been a key landmark. The Indian insurance

industry is sitting on a volcano of growth and potential waiting to

explode. Since the last three years that the industry is opened to

private players it has shown a renewed vibrancy resulting in new

opportunities.

These opportunities are in terms of employment, savings,new

channels of insurance distribution, wider coverage to rural areas

and even to the economically deprived section of the society.

Insurance industry is providing business opportunity to HNI’s, that

is very much profitable to both the parties i.e inurance company

and the Individual who is joining them. For insurance companies

they are getting there products and policies sold to large mass of

people who comes under the network of these HNI’s. At the same

time these HNI’s are getting a opportunity of extra income

generation, without effecting there present working or business or

job.


55

Other Business Opportunity

yes62%

no38%

yes no

Nowadays people are becoming more and more inclined to

generate extra sources of income, They want to invest there

money and free time in fruitfull work which give in return huge

revenues to them.

To find out the exact thinking of HNI’s towards these business

opportunities, we surveyed quite a number of people and found

out that the percentage of people who want to earn more

thorough these business opportunities are very much larger then

the one’s who do not want to go towards these opportunity. The

pie chart below shows the exact pattern we got after the survey,

i.e 62% people are inclined towards it, while 38% are not.

So while targeting these High net worth and high net work

individuals, one should be clear about the opportunities available


56

and have the adequate information to make the individual

understand the opportunity available.

The above analysis of our showed that HNI’s are very much eager

to go for the business opportunities available, but the next thing is

that, how many of them are aware of the income generation

source, i.e awareness of the people about these opportunity.

Awareness about the exisiting business oppurtunity

6

12

23

9

0

5101520

25

1

no. of people

aw

are

ness

good little no idea want to know

The bar-diagram above clearly indicates that maximum percentage

of people are those who have no idea(around 50%)about the

business opportunities and the fact that really important that only

10-12% people are those who have a good knowledge of these.


57

So, for tapping these section of individuals, insurance companies

should make there communication systems more stronger and

finer, so that the information about these opportunities should

reach the individuals adequately.

Also the companies who want to target these HNI’s should know

the places where they will find these influential individuals. Such

influencial individual are generally attached to some or the other

community organizations such as by being a member of civic

group, social or political group or any of the religious groups.

The finding done through the questionnaire showed that each of

these HNI’s are related to one or the other community

organizations.

Community Groups

14%

32%

12%12%

30%

political social civic religious none

WHY NOT METLIFE?


58

MetLife being 136 years old private company in the insurance

sector and holding its 36th position in the list of fortune 500

companies, it is shocking that in the Indian market it is the least

known company in comparison to other private sector insurance

companies.

The main reason for this is mainly its late entry in the Indian

market (in 2001) wherein the older companies have already

have a stronger foot hold it is just a beginning for this and so it

will have to pay for its share of time to get to the roots. Again it

being a foreign company Indian mass cannot rely on the same

at such an early stage, they have this thinking that it may anytime

get shut down. They lack trust and faith in MetLife and so fear in

investing their money with it.

Know Met-life?

no60%

yes40%

yes no


59

Again a reason to why more than 50% of the sample surveyed

doesn’t know MetLife is because of its weaker tie-ups with banks

such as Jammu & Kashmir bank, Dhanlakshmi bank and the

Karnataka bank. If it would have made tie-ups with any of the

giants in this insurance sector than may be the competition would

have been much less than it is actually now. Even the other

partners of MetLife are not that strong that would have helped it

gain the same position as it has in the U.S.

MetLife is a private company that believes in its ethics very

strongly and stick to them very tightly. It believes in actions rather

than speech and so it hardly spends its funds in advertising and

publicity because it wants its work to speak for them, so it’s

advertising as compared to other companies is very weak.

But in here, in the Indian market most of the people go by seeing

the advertisements and the heights of publicity done. This is one

of the major reasons of people not being aware of such a big

company! But now they getting into advertisements and publicity

because this is one of the major pathways to reach out to its

customers and be at their doorsteps as this is what the mass

wants!


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VALIDITY OF HYPOTHESIS

The hypothesis we took when we had started the project was that

the HNI’s while investing there money consult with some

consultants, that can be a banker, a investment consultant or a

chartered accountant, also that most of these person want to have

extra income, but the major concern is the risk associated with it

i.e the risk should be less or no risk should be there. Adding to it

these HNI’s are inclined towards the new business opportunities

available and are pretty much aware about these opportunities

present. Also that they are not sure about the credibility of the

private companies and that’s why they do not want to invest there

money in the private sector i.e they prefer the public sector

companies..

Taking the example of MetLife we also took in the hypothesis that

the foreign companies are the least wanted companies at present

in this sector.


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According to the data we have collected and analysis done that is

shown with the help of pie-charts and bar graphs above in the

project, it is clear that :

• HNI’s while investing there money use to consult either with

a banker(26%) or investment consultant(32%) or a

chartered accountant(28%).

• Most of HNI’s want to generate extra income

• While investing and generating extra income maximum of

these HNI’s major consideration is about the risk factor

associated with the investment. That is most of them were

not interested in taking risk or can only want to have a low

risk investment.

• Met-life India pvt limited ,due to having foreign name and

due to the fact of having weak partners in India is lagging

behind as compared to the other companies having strong

Indian partners and a Indian company name attached with

them.

All of the above things we took in hypothesis were proved, to be

accepted but the only thing that our hypothesis failed to prove is

that the awareness about the business opportunities available in

the market is high. Our study showed that maximum


62

percentage(23%),were the person who have no idea about these

opportunities and only 8% of the total were having good idea.

ISSUES AND CHALLENGES FACING THE INSURANCE

INDUSTRY

The liberalization followed by growth of the Indian Insurance

industry has opened wide opportunities for Service and

Infrastructure sectors. This growth has to be properly channelised.

Some of the major challenges which have to addressed for

channelising the growth of insurance sector are Product

Innovation, Distribution Network, Investment Management,

Customer Service and Education.

Product Innovation


63

Customers are now looking at Insurance as complete financial

solution offering stable returns coupled with total protection.

Companies will need to constantly innovate in terms of product

development to meet ever changing consumer needs.

Understanding the customer better will enable Insurance

companies to design appropriate products, determine price

correctly and increase profitability. In this context Management

Guru Peter Drucker has rightly said "Markets are changing from

Cost lead Pricing to Price lead Costing".

Distribution Network

While companies have been successful in product innovation, most

of them are still grappling with right mix of Distribution Channels

for:

a. Capturing maximum market share to build brand equity.

b. Building strong and Effective Customer relationships.

c. Cost effective customer service.

This calls for Selection of right type of Distribution channel mix

along with prudent and efficient FOS (Fleet On Street)

Management.

1. Distribution Network:

While the traditional channel of tied up advisors or Agents

would be the chief distribution channel, insurer should


64

innovate and find new methods of delivering the products to

customers. Corporate agency, brokerage, Bancassurance, e-

insurance, cooperative societies and panchayats are some of

the channels that can be tapped by the insurers to reach the

appropriate market segments.

2. FOS Management

The major issues to be addressed in Insurance FOS

management are High Attrition, lack of Motivation and

Product knowledge. Continuous training, performance linked

reward systems, and career counseling can effectively tackle

these issues.

Customer Education and Service

Insurance, particularly life insurance is never bought but sold. To

convince a large population, which is comparatively not well

informed about the intangible benefits of life insurance, is indeed

an onerous task. This apart, the task would be to position

Insurance as a risk planning tool rather than a tax saving and

investment tool.

In the present competitive scenario, a key differentiator would be

professional customer service in terms of quality of advice on

product choice along with policy servicing. Servicing should focus

on enhancing the customer experience and maximizing customer

convenience. This calls for effective CRM system which eventually


65

would create sustainable competitive advantage and build long

lasting relationship.

Investment Management

The most difficult challenge would be to provide returns

comparable to other financial instruments. The problem is further

aggravated by interest rates moving south. Need of the hour for

an insurer is to follow prudent underwriting practices and

efficiently cut down management and administrative expenses.

Insurers must follow best investment practices and have a strong

Asset management Company to maximize returns.

Others

1. Untapped market Segments

Apart from meeting the above challenges, it is important to

increase customer base in semi urban and rural areas which

offer huge potential. The fact that major chunk of business

for life insurance giant, LIC comes from rural and semi urban

areas stands as a testimony. However, this ignores the

difficulties of approaching this segment. Much of the demand

may not be accessible because of large distances or high

costs relative to returns.

2. Health Insurance:


66

Health insurance is another growth area which offers huge

potential. Estimates indicate that out of the total potential of

Rs.3000 - 4000 crores only Rs.450 - 500 crores is being

tapped. Lack of requisite infrastructure, non standardization

of pricing and procedures, lack of product variants has

hampered the growth of this lucrative market.

E – BROKING

In the Indian market, where insurance is sold after considerable

persuasion , the selling over the net would take some more time.

Also, Insurers need to design products where auto underwriting is

feasible. Certain products like term insurances, vehicle insurances,

mediclaim and others can be sold through internet. But a pure e-

commerce model may not be possible for insurance sector where

Customer-Need-Analysis, Capital-Need-Analysis and other factors

go into determining the exact customer solution. But even then,

selling on internet is very attractive because of low distribution

costs. It makes sense for the insurance companies to supplement

their traditional sales channels withInternet.

The passage of IT bill has given legal sanctity to transactions over

the net and subsequent modification of insurance act allows

payment of premium through credit card. While the technology

capability is there, improvement in bandwidth and infrastructure

are needed to give the required boost to e-commerce on the net.


67

FUTURE PERSPECTIVE

Competition will result in the market to grow beyond current rates

and offer additional consumer choice through the introduction of

new products, services and price options. Development of industry

code of conduct, contributing to a common catastrophe reserve

fund and chalking out agreements to settle claims to the benefit of

customer can be expected with concerted efforts from all the

players.

The current impediments such as 26% equity cap on foreign

partner, limited investment avenues, ill defined regulatory role of

IRDA in pension business etc are to be removed in near future. As

the industry evolves, the present classification of life and non life

insurance may change. There may be specialization in each class

of business. In the years to come, we may witness Insurers

underwriting only one or two classes of business such as health

insurance, auto insurance, life insurance, pension provider,

property and casualty etc.

Challenges in Distribution

KPMG have prepared a report on `Insurance Trends and Issues`

which examines the future of distribution for both life and general

insurance in India once the sector is opened. It is based on KPMG

research in India and abroad and on insights gained through

working with clients in different markets. There are four significant

issues which the report examines.


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69

1. The threat of new players taking over the market has been

overplayed.

2. Nationalized players will continue to hold strong market

share positions, but there will be enough business for new

entrants to be profitable.

3. New companies often overestimate the need for insurance

expertise. They assume that a joint venture is the most

appropriate type of alliance, when in fact many forms are

possible.

4. Both new and existing players must explore new distribution

and marketing channels.


70

Insurance sector to drive Indian CRM market

After telecom and banking, it’s the turn of insurance companies to

deploy customer relationship management (CRM) solutions. As

competition intensifies, insurers are trying every trick in the book

to retain existing customers, with a wide range of services driving

the market for CRM applications in the process

CRM with BI tools can help insurance firms monitor the ebb and

flow of customer behaviour, giving them a holistic 360-degree

view of their customers


71

While the insurance sector is seeking to maintain a balance

between acquiring customers and developing existing ones,

customer acquisition is vital, as no retention strategy will entirely

stem customer defection. Insurance companies are experiencing

unacceptable levels of customer churn, thanks to which they are

focusing on keeping the customers they already have in a bid to

ensure a net growth in their customer base. Today, the focus is on

selling more products to existing customers to improve

profitability. Customer-focused strategies require CRM (customer

relationship management) to help acquire customers thorough

various touch points and translate operational data into actionable

insights for proactively serving customers.

CRM with BI (Business Intelligence) tools can help insurance firms

monitor the ebb and flow of customer behaviour, giving them a

holistic 360-degree view of their customers.”

CRM has helped customers through effective event-based

marketing and lead tracking to cross- and up-sell products. CRM

helps categorise and segment customers and align products that

best suit them. CRM is helps to expand into rural areas

Insurance companies with huge customer databases, servicing

their customers through numerous branches and call centres will

invest between 15 to 20 percent of their total IT budget on CRM

applications

Current market scenario


72

Insurance firms are tactically rolling out an application here and

there rather than strategically implementing a complete CRM

suite. In this, they are on the right track. “They (insurance firms)

are taking baby steps, starting with operational CRM to increase

sales force automation. Once they have a sufficiently large

customer database, they use BI tools to mine data from various

sources (such as contact centres and from banks with which they

align) pushing the need for analytical CRM solutions.

CRM technologies such as sales force automation, contact centre

segmentation and campaign management tools are maturing and

finding wider adoption with large insurance companies.

The banking, financial services and insurance (BFSI) sector and

telecom will continue to drive the CRM market, but the uptake of

CRM in the insurance vertical will climb steeply in 2004 and growth

will be rapid and higher [than in other verticals] The insurance

vertical has

crossed the threshold of IT and process maturity beyond which an

investment in CRM investments starts yielding good returns. The

need to integrate customer data from multiple channels and to

increase sales force productivity (including that of agents) and

running productive marketing campaigns will continue to drive

demand for CRM software.

Spending on CRM is up


73

Insurance firms spend close to 12 percent of their IT budgets on

CRM software and services. The cost includes operational CRM and

spending on BI tools. Industry pundits believe that insurance firms

are looking for CRM initiatives with budgets ranging from Rs 50

lakh going right up to Rs 3 crore. The sector is busy compiling data

on individuals, including their purchasing patterns and buying

preferences of policies, pension plans and the like. In many cases,

policy renewal marketing to existing customers remains an

unsophisticated exercise, often amounting to little more than a

request to renew, with no attempt at putting a value proposition

before the customer. With a little help from CRM software,

insurance firms can sell multiple insurance policies and pension

plans to the same customer.

The opportunity is huge

Within the financial services sector, IT investment in insurance is

expected to grow the fastest with a CAGR of 35 percent in the

five-year forecast period (2001-02 to 2004-05). [Source: IDC

India] Other sub-verticals of the financial services sector are

expected to grow at a

CAGR ranging from 21 to 25 percent. Much of this spending will be

on CRM applications and integrating multiple delivery channels.

IDC says that new delivery channels are evolving as the insurance

market expands.


74

According to a report from Indian Infoline (January 2004), India

has the highest number of life insurance policies in force in the

world. The industry is pegged at Rs 400 billion in India. Gross

premium collections stand at 2 percent of the GDP and this has

been growing by 15 to 20 percent per year from the Life Insurance

Corporation of India (LIC) and other government-owned insurers.

Privatisation has led to new players entering this market and it is

expected to grow at a rapid pace.

More than three-fourths of India’s insurable population has no life

insurance, pension cover and post-retirement protection cover. A

substantial part of the insurance market—the portion dealing in

pension plans and insurance as an investment option—is protected

by a tariff and administered price regime. Competition in pricing is

yet to emerge. Once that happens, as with all dynamic customer-

oriented service industries such as banking and telecom, the race

to gain and retain customer mind share will be on.

Business drivers for CRM

Margins are under pressure: A couple of years ago, LIC dominated

the insurance market with the help of its sales force and channels

and margins were reasonably high. Today, there are close to 20

companies offering both life and general insurance products. All of

them have equally strong international and local partners; all are

focusing upon

similar geographies and target audiences. The new firms selling

life insurance and non-life insurance [pensions, insurance as


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saving, etc] have failed to emulate the LIC model because margins

are getting squeezed. There are several pain areas that new

insurance firms face—acquiring new customers, retaining them,

cross-selling products and controlling rising costs while providing

comprehensive support.

Insurers have added a plethora of products and services to their

kitty. These range from insurance as an investment option to

pension plans. They target the younger generation in the 20 to 30

years age group. The convergence of four factors—protection,

saving (investment option), loans and pension—have compelled

insurance companies to align with banks in reaching out to a larger

audience

This trend has led to another—insurance companies are joining

hands with banks by becoming channel partners for insurance.

This strategy helps insurance firms increase their footprint to cover

a larger part of the customer base in the 20-30 years

demographic. CRM helps connect a bank’s high net worth

customers with insurance firms.

More than three-fourths of India's insurable population has no life

insurance, pension cover and post-retirement protection cover

giving an indication of the insurance opportunity in India

Customer expectations are rising: Customers, faced with a

dizzying array of insurance products expect customised offerings,

value, ease of access, and personalisation from insurers. Today,


76

customers are expecting individual attention, responsiveness,

customisation and

access. At the same time, they don’t want to pay a premium for

these services. High customer expectations and lower exit barriers

could lead to increased customer attrition.

Where to begin—operational CRM or analytical

CRM?

The choice between operational and analytical CRM as a starting

point depends upon the insurer’s needs. Insurance companies with

multiple financial products and a big customer base, such as

integrated insurance solution providers, will leverage their

customer base to cross- and up-sell different financial products,

including insurance. Such providers will benefit from adopting

analytical CRM. Market segmentation, campaign management and

data mining applications will benefit them in many ways.

Call center text mining: This tool can help improve the customer

experience by resolving complaints rapidly. Insurers are using

these tools to mine text from call center transcripts to identify

issues faced by customers.

Text mining tools also help detect and capture other useful

pieces of information around a customer’s life stage, financial

needs and product interests. These can be used to generate leads

and trigger cross selling. However, to be fully effective, customer


77

service representatives must be trained to probe for information

that will help in cross selling during the text-mining phase. Text

mining tools are leading edge today, but are predicted to take off

quickly.

Insurers can use event triggers to generate leads that can be

acted upon quickly, usually within 24 hours

Event-triggering tools monitor incoming transaction and contact

data in near-real-time to recognize changes in a customer’s

behavior or profile to trigger actions or alerts.

Lead management gets sophisticated: Often the ability of an

insurer to generate leads by means of event-triggering, re-

engineered touch points and cross line-of-business referral can

outstrip their ability to manage said leads. In such a situation,

though the number of leads generated rises, the conversion rate

does not. It may even drop.

CRM can help provide sales representatives with a mechanism to

prioritise and manage leads.

Pure insurance providers who do not have a large customer base

will derive the maximum value from operational improvements,

especially in integrating customer information from multiple

channels and sales force automation.


78

Most insurers will look to empower their agents by deploying

partner-facing applications. Apart from making agents more

productive, it will let insurers keep in touch with customers,

otherwise difficult in a primarily channel-driven business.

Analytical CRM insurance companies can enhance Cross- and

up-selling capability to provide market opportunities within an

existing customer database. Information regarding customer

retention or attrition helps determine the likelihood of policy lapses

and helps identify customers worth targeting for retention

campaigns.

Customer segmentation , leverages data to create accurate

categories for use in marketing strategies.

Market automation , combines analytics with campaign

management functionality to help drive a more effective and

efficient marketing campaign.

Broad CRM perspective

CRM module Areas where it can be applied

• Collaborative CRM


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Applying collaborative interfaces (such as e-mail, conferencing,

chat, real-time) to facilitate interaction between customers and

organisations, as well as between organisational entities dealing

with customer information

(customers to sales representatives, sales to marketing, agent to

provider)

• Operational CRM

Automating horizontal integrated business processes involving

front-office customer touch points-sales, marketing, and customer

service-via multiple, interconnected delivery channels and

integration between front-office and back-office

• Analytical CRM

Analysing data created on the operational side of the CRM

equation for the purpose of business performance management.

Analytical CRM is tied to a data warehouse architecture; it is most

often evident in analytical applications that leverage data marts.


80

SWOT ANALYSIS:

1. STRENGHTS:

• Brand name:

The Metropolitan Life Insurance Company (MetLife ) is the

number one insurer in the U.S. based on over US$2

trillion of life insurance in force. MetLife serves

approximately 9 million individual households in the U.S.

as well as 87 of the Fortune 100 companies. MetLife's

institutional clients have approximately 33 million

employees and members. Headquartered in New York,

MetLife through its affiliates, subsidiaries and

representative offices operates in 15 countries throughout

the Americas, Europe and Asia. The MetLife brand, known

for empowering people to feel protected, guided and


81

hopeful about their lives, will it is hoped do the same for

its Indian customers.

• Experience in this particular field of insurance

(136 yrs old):

MetLife India inherits its parent company's over-130-

year-old reputation of helping build financial

independence for its customers. MetLife India has

developed and distributes a range of life insurance

products in India.

• International Backup:

MetLife India benefits from its parent company's global

presence in the field of insurance, track record of

establishing successful insurance operations in emerging

markets and the unique strengths of its other Indian

promoters. Drawing from these experiences, MetLife India

hopes to be able to address the needs of the Indian

customer. MetLife India aspires to build on MetLife's

history of meeting policy holder and contract obligations

and the ability to withstand the impact of adverse

economic factors.

2. WEAKNESSES:


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• Weaker tie-ups

The major problem with the progress of Metlife in India is

its weak partners. In India partners of Met-life are J & K

Bank, M Palonji & co. pvt ltd, Dhanlaxmi bank,all three of

them are certainly cannot be considered as India wide

banks. Also in comparison to other strong competitors

such as ICICI Prudential, Tata AIG etc who are in

partnership with strong names in India such as ICICI &

TATA, MetLife’s partners are too weak

• Late entry

As compared to other Insurance companies who are at

present have more market share than Met-life, it had

entered into the market after these companies, Also,

Met-Life was the last one to enter into the market of

MLPI’s (market link products),which are the major selling

products of any insurance company.

3. OPPORTUNITY:

• Large untapped Indian market


83

`

With such a large population and the untapped market area

of this population Insurance happens to be a very big

opportunity in India. 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.

• Can go for product diversification

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. The There has been a plethora

of new and innovative products offered by the new players.

Customers have tremendous choice from a large variety of

products. More customers are buying products and services

based on their true needs and not just traditional money

back policies, which is not considered very appropriate for

long-term protection and savings. There is lots of saving and

investment plans in the market. However, there are still

some key new products yet to be introduced - e.g. health

products.

4. THREAT:


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• Increased competition in the insurance sector

The insurance sector remains a very competitive market and

those companies that are able to best utilize their data and

provide their customer with the most personalized options

will have the distinct competitive advantage. The insurers

that come up to the top will be those who leverage the

appropriate technology solutions effectively in order to foster

customer loyalty, attract new customers and improve

operational efficiency by providing common information

across their lines of business.

• Increase in the number of new players in this

sector

The introduction of private players in the industry has added

to the colors in the dull industry. The initiatives taken by the

private players are very competitive and have given

immense competition to the on time monopoly of the market

LIC.Since the advent of the private players in the 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 the insurance. As a result LIC down the

years have seen the declining phase in its career. The

market share was distributed among the private players


85

RECOMMENDATIONS:

Advertising and Publicity –

These days everybody is going for things, which they see on air.

Advertising and Publicity hold a very strong role in any products


86

life cycle, it helps the public know about the existence of the

products and the role, which they play in the lives of the people.

MetLife believes in strong ethics and believes that actions speak

more than words and so want its work to prove for itself and so

doesn’t believe in advertising and publicizing itself but in the

Indian context it is a must for any company to publicize itself

because it holds the best medium to reach to its customers and

also to increase its customer base.

1. Implementation of CRM –

While the insurance sector is seeking to maintain a balance

between acquiring customers and developing existing ones,

customer acquisition is vital, as no retention strategy will entirely

stem customer defection. Today, the focus is on selling more

products to existing customers to improve profitability. Customer-

focused strategies require CRM (customer relationship

management) to help acquire customers thorough various touch

points and translate operational data into actionable insights for

proactively serving customers.

CRM with BI (Business Intelligence) tools can help insurance firms

monitor the ebb and flow of customer behaviour, giving them a

holistic 360-degree view of their customers.”


87

CRM has helped customers through effective event-based

marketing and lead tracking to cross- and up-sell products. CRM

helps categorise and segment customers and align products that

best suit them. CRM is helps to expand into rural areas

2. Strengthening the distribution network –

MetLife India mainly operates in all the metros and in certain big

cities. In order to expand its position and to reach to its customers

what MetLife needs is to set-up its branches in more cities and

should also get into the rural areas where there is a huge

untapped market. As MetLife already has a wide global set up it

can easily expand in India also in order to reach to the customers

and be available at their door steps.

3. Strong tie-ups with well known and already

established companies or banks –

Tie-ups act as a backbone for any company as they too represent

the main company as a whole. MetLife being associated with banks

such as Jammu & Kashmir bank, Dhanlakshmi bank & the

Karnataka bank, which in itself are not so common with the

general mass, makes it difficult for MetLife to get itself placed in

the Indian market. For overcoming the same MetLife can go for

further mergers and

acquisitions with strong banks which would help it grow, for

example, it announced its intention to purchase Citigroup's


88

Travelers Life & Annuity and substantially all of Citigroup's

international business for $11.5 billion. Such purchases and

tie-ups would help it strengthen its roots and create its own niche

in the Indian market.

4. Product diversification –

Instead of catering to only one kind of product MetLife can slowly

diversify with the kind of products it deals with. MetLife only

provides life insurance products; it can get into the debt market by

providing housing loans and various other vehicle loans as these

are on a high these days.

5. Emphasis on use of Information Technology –

In the insurance industry today, there is a clear trend away from

selling a broad range of products to a large volume of customers in

a one –size-fits-all manners. Instead of focusing on their different

products lines as silos (i.e., life, property and casualty etc)

insurers are looking for ways to offer highly targeted insurance

products that are tailored to the individuals customers with the

highest propensity to buy them.

There is a evolutionary change in the technology that has

revolutionized the entire insurance sector. Insurance industry is a

data-rich industry, and thus, there is dire need to use the data for

trend analysis and personalization.


89

With increased competition among insurers, service has become a

key issue. Moreover, customers are getting increasingly

sophisticated and tech-savvy. People today don’t want to accept

the current value propositions, they want personalized interactions

and they look for more and more features and add ones and better

service.

The insurance companies today must meet the need of the hour

for more and more personalized approach for handling the

customer. Today managing the customer intelligently is very

critical for the insurer especially in the very competitive

environment. Companies need to apply different set of rules and

treatment strategies to different customer segments. However, to

personalize interactions, insurers are required to capture customer

information in an integrated system.

With the explosion of Website and greater access to direct product

or policy information, there is a need to developing better

techniques to give customers a truly personalized experience.

Personalization helps organizations to reach their customers with

more impact and to generate new revenue through cross selling

and up selling activities. To ensure that the customers are

receiving personalized information, many organizations are

incorporating knowledge database-repositories of content that

typically include a search engine and lets the customers locate the

all document and information related to their queries of request for

services. Customers can hereby use the knowledge database to

manage their products or the company information and invoices,


90

claim records, and histories of the service inquiry. These products

also may be able to learn from the customer’s

previous knowledge database and to use their information when

determiningthe relevance to the customers search request.

The insurance sector remains a very competitive market and those

companies that are able to best utilize their data and provide their

customer with the most personalized options will have the distinct

competitive advantage. The insurers that come up to the top will

be those who leverage the appropriate technology solutions

effectively in order to foster customer loyalty, attract new

customers and improve operational efficiency by providing

common information across their lines of business.


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APPENDICES :

Appendix A

SURVEY QUESTIONAIRE:

For the purpose of finding out the exact market scenario and

behavior of HNI’s I prepared a questionnaire in which there was

questions through which I would be able to understand various

mindsets of these HNI’s.

QUESTIONNAIRE

Name:

Organization:

Area of operation:

Annual Income (approx):

Age:

Address:


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Phone Number: Mob no. :

E mail:

Are you attached with any community organization:

• Any Civic Group

• Any Social Group

• Any Political Group

• Any Religious Group

Basic generic objective for making an investment:

• Saving

• Income generation

• Security

• Tax redemption

• Other (please specify)

Whom would you consult before making an investment :

• Banker (name of the bank) :

• Chartered accountant (specify) :

• Investment consultant (specify) :

How much money do you to invest annually :

How much is your rate of return:


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What would be your expected rate of return :

How much risk will you be able to bear :

• High

• Low

• Medium

• No risk

Would you be interested in extra income generation:

• Yes

• No

How much extra income would you want to generate:

Are you interested in flexible working hours:

• Yes

• No

Would you be interested in Business opportunity with low

investment and high return:

• Yes

• No


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Are you aware of the business opportunity available in

Insurance sector:

• Have good knowledge

• Have little knowledge

• No idea

• Want to know about

Would you like to invest your money in Metlife :

• Yes

• No


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APPENDIX B

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;


96

• 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 crores, 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.

Some of the Bancassurance tie-ups in India are:

Insurance Company Bank

Birla Sun Life Insurance

Co. Ltd.

Bank of Rajasthan, Andhra Bank, Bank of

Muscat, Development Credit Bank, Deutsche

Bank and Catholic Syrian Bank

Dabur CGU Life

Insurance Company Pvt.

Ltd

Canara Bank, Lakshmi Vilas Bank, American

Express Bank and ABN AMRO Bank

HDFC Standard Life

Insurance Co. Ltd. Union Bank of India

ICICI Prudential Life

Insurance Co Ltd.

Lord Krishna Bank, ICICI Bank, Bank of India,

Citibank, Allahabad Bank, Federal Bank, South

Indian Bank, and Punjab and Maharashtra Co-

operative Bank.


97

Life Insurance

Corporation of India

Corporation Bank, Indian Overseas Bank,

Centurion Bank, Satara District Central Co-

operative Bank, Janata Urban Co-operative

Bank, Yeotmal Mahila Sahkari Bank, Vijaya

Bank, Oriental Bank of Commerce.

Met Life India

Insurance Co. Ltd.

Karnataka Bank, Dhanalakshmi Bank and

J&K Bank

SBI Life Insurance

Company Ltd.State Bank of India

Bajaj Allianz General

Insurance Co. Ltd. Karur Vysya Bank and Lord Krishna Bank

National Insurance Co.

Ltd.City Union Bank

Royal Sundaram General

Insurance Company

Standard Chartered Bank, ABN AMRO Bank,

Citibank, Amex and Repco Bank.

United India Insurance

Co. Ltd.South Indian Bank

ISSUES TO BE TACKLED w.r.t BANCASSURANCE:

Issues to be tackled

Given the roles and diverse skills brought by the banks and

insurers to a Bancassurance tie up, it is expected that road to a

successful alliance would not be an easy task. Some of the issues

that are to be addressed are:


98

1. The tie-ups need to develop innovative products and

services rather than depend on the traditional methods. The

kinds of products the banks would be allowed to sell are

another major issue. For instance, a complex unit-linked life

insurance product is better sold through brokers or agents,

while a standard term product or simple products like auto

insurance, home loan and accident insurance cover can be

handled by bank branches

2. There needs to be clarity on the operational activities of the

bancassurance i.e., who will do the branding, will the

insurance company prefer to place a person at the bank

branch, or will the bank branch train and put up one of its

own people, remuneration of these people.

3. Even though the banks are in personal contact with their

clients, a high degree of pro-active marketing and skill is

required to sell the insurance products. This can be

addressed through proper training.

4. There are hazards of direct competition to conventional

banking products. Bank personnel may become resistant to

sell insurance products since they might think they would

become redundant if savings were diverted from banks to

their insurance subsidiaries.


99

Factors that appear to be critical for the success of

bancassurance are :

1. Strategies consistent with the bank's vision, knowledge of

target customers' needs, defined sales process for

introducing insurance services, simple yet complete product

offerings, strong service delivery mechanism, quality

administration, synchronized planning across all business

lines and subsidiaries, complete integration of insurance with

other bank products and services, extensive and high-quality

training, sales management tracking system for reporting on

agents' time and results of bank referrals and relevant and

flexible database systems.

2. Another point is the handling of customers. With customer

awareness levels increasing, they are demanding greater

convenience in financial services.

3. The emergence of remote distribution channels, such as PC-

banking and Internet-banking, would hamper the distribution

of insurance products through banks.

4. The emergence of newer distribution channels seeking a

market share in the network.

With huge untapped market, insurance sector is likely to witness a

lot of activity - be it product innovation or distribution channel

mix. Bancassurance, the emerging distribution channel for the


100

insurers, will have a large impact on Indian financial services

industry. Traditional methods of distributing financial services

would be challenged and innovative, customized products would

emerge.

Banks will bring in customer database, leverage their name

recognition and reputation at both local and regional levels, make

use of the personal contact with their clients, which a new entrant

cannot, as they are new to the industry.

In customer point of view, a plethora of products would be

available to him. More customized products would come into

existence and that too all within a hand reach.

Finally Success of the bancassurance would mostly depend on how

well insurers and banks understand each other's businesses and

seize the opportunities presented, weeding out differences that are

likely to crop up.

Appendix C

Alternative channels of Insurance distribution

With the liberalization of the insurance sector and competition

tougher than ever before, companies are increasingly trying to

come out with better innovations to stay that one-step ahead.


101

Progress has definitely been made as can be seen by the number

of advanced products flooding the market today - products with

attractive premiums, unitised products, unit-linked products and

innovative riders. But a hitherto untapped field is the one involving

the distribution of these insurance products.

Currently, insurance agents are still the main vehicles through

which insurance products are sold. But in a huge country like

India, one can never be too sure about the levels of penetration of

a product. It therefore makes sense to look at well-balanced,

alternative channels of distribution.

Nationalised insurers are already well established and have an

extensive reach and presence. New players may find it expensive

and time consuming to bring up a distribution network to such

standards. Yet, if they want to make the most of India's large

population base and reach out to a worthwhile number of

customers, making use of other distribution avenues becomes a

must. Alternate channels will help to bring down the costs of

distribution and thus benefit the customers.

In March 2003, a seminar conducted by the Asia Insurance Review

and attended by leading consultants in the Asian insurance

market, threw up some interesting findings.

However much the traditional agent's role be part of the company,

the insurer must still be ready to adopt alternative distribution


102

channels not to compete with agents but as a complementary

effort to provide customers with an array of products

Several insurers in Asia, are coming up with innovative, multi-

channel and direct marketing techniques with successful results .

Insurance distribution channels

At present the distribution channels that are being utilized are:

• Direct selling

• Corporate agents i.e. pushing the insurance product through

the directors or partners of a company

• Group selling

• Worksite marketing

• Brokers and cooperative societies

Alternate delivery channels -

• Bancassurance: Bancassurance can be a sure fire way to

reach a wider customer base, provided it is made use of

sensibly. In

India there is an extensive bank network established over the

years. Insurance companies will have to take advantage of the

customers' long-standing trust and relationships with banks.

This is a mutually beneficial situation as banks can expand their

range of products on offer to customers and earn more, while

the insurance company profits from the exposure at the bank


103

branches, and the security of receiving timely payments. The

products that are likely to sell well through bancassurance are

commodotised term and annuity products. Also, those products

that combine insurance and banking needs help to create

demand - such as loan cover, term assurance and simple

products that can be sold over-the-counter at banks. Another

advantage is that banks, with their network in rural areas, help

to fulfil rural and social obligations stipulated by the Insurance

Regulatory and Development Authority (IRDA).

• Selling through employees or authorised officials of a

corporate: Selling through employees can also be a lucrative

prospect. But the full potential of this channel has not yet

been utilised since selling is now permitted only through

directors or partners of the company. Worksite marketing is

inexpensive and provides the opportunity to market products

to large groups of people simultaneously.

• Call centres: Call centres can be utilised for generating

leads. As the market keeps expanding, call centres have the

potential of becoming an important medium for customer

relationship management (CRM) and up selling to the

customers.

• Cooperative societies and Brokers: Cooperative societies and

brokers offer immense support to insurance companies to

widen their reach. Private companies that are already


104

appointing corporate agents, and non-banking financial

corporations (NBFCs) with a sound retail network are in

demand.

• Marketing through mailers etc.: Direct marketing through

mailers, pamphlets etc. require customised simple products

that can be purchased through such mediums, or through

the Internet. Though the unavailability of good databases in

India, and the high expenses to reach the target audience

through direct mailers is a cause for concern, it is definitely a

problem that can be solved through better management of

resources, data collection etc.

Winds of change

Sustaining huge sales force is a costly affair especially when low-

cost electronic distribution channels are available.

Alternate delivery channels are not burdened by the monetary and

geographic limitations of maintaining a physical presence.

Alternate channels also help to cut back costs and enhance

customer service thereby giving the company a competitive edge.

To sum up, it is apparent that multiple distribution channels will

help an insurance company to offer a range of contact points to

the customer, thereby increasing the chances of success.

However, along


105

with these distribution channels comes the challenge of

'relationship management'. Since most of the new channels

involve collaboration with various entities whose demands and

powers of negotiation are varied, it requires delicate skills on the

part of the insurance company

to manage these relationships. Effective management of channel

conflict, and curtailing the costs of distribution will be of utmost

importance


106

Appendix D

Insurance companies

IRDA has so far granted registration to 12 private life insurance

companies and 9 general insurance companies. If the existing

public sector insurance companies are included, there are currently

13 insurance companies in the life side and 13 companies

operating in general insurance business. General Insurance

Corporation has been approved as the "Indian reinsurer" for

underwriting only reinsurance business. Particulars of the life

insurance companies and general insurance companies including

their web address is given below:

LIFE INSURERS

Public Sector

Life Insurance Corporation of India

Private Sector

• Allianz Bajaj Life Insurance Company

Limited www.allianzbajaj.co.in

• Birla Sun-Life Insurance Company Limited

www.birlasunlife.com


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• HDFC Standard Life Insurance Co.

Limited www.hdfcinsurance.com

• ICICI Prudential Life Insurance Co. Limited

www.iciciprulife.com

• ING Vysya Life Insurance Company Limited

www.ingvysayalife.com

• Max New York Life Insurance Co. Limited

www.maxnewyorklife.com

• MetLife Insurance Company Limited www.metlife.com

• Om Kotak Mahindra Life Insurance Co. Ltd.

www.omkotakmahnidra.com

• SBI Life Insurance Company Limited www.sbilife.co.in

• TATA AIG Life Insurance Company Limited www.tata-

aig.com

• AMP Sanmar Assurance Company Limited

www.ampsanmar.com

• Dabur CGU Life Insurance Co. Pvt. Limited

www.avivaindia.com

Reforms In Insurance Sector

Insurance sector has been opened up for competition from Indian

private insurance companies with the enactment of Insurance

Regulatory and Development Authority Act, 1999 (IRDA Act). As

per the provisions of IRDA Act, 1999, Insurance Regulatory and

Development Authority (IRDA) was established on 19th April 2000

to protect the interests of holder of insurance policy and to


108

regulate, promote and ensure orderly growth of the insurance

industry.

IRDA Act 1999 paved the way for the entry of private players

into the insurance market which was hitherto the exclusive

privilege of public sector insurance companies/ corporations.

Under the new dispensation Indian insurance companies in private

sector were permitted to operate in India with the following

conditions:

1. Company is formed and registered under the Companies Act,

1956;

2. The aggregate holdings of equity shares by a foreign company,

either by itself or through its subsidiary companies or its

nominees, do not exceed 26%, paid up equity capital of such

Indian insurance company;

3. The company's sole purpose is to carry on life insurance

business or general insurance business or reinsurance business.

The minimum paid up equity capital for life or general insurance

business is Rs.100 crores.

The minimum paid up equity capital for carrying on reinsurance

business has been prescribed as Rs.200 crores.

Protection of the interest of policy holders:


109

IRDA has the responsibility of protecting the interest of insurance

policyholders. Towards achieving this objective, the Authority has

taken the following steps:

1. IRDA has notified Protection of Policyholders Interest

Regulations 2001 to provide for: policy proposal documents in

easily understandable language; claims procedure in both life

and non-life; setting up of grievance redressal machinery;

speedy settlement of claims; and policyholders' servicing.

2. The Regulation also provides for payment of interest by insurers

for the delay in settlement of claim.

3. The insurers are required to maintain solvency margins so that

they are in a position to meet their obligations towards

policyholders with regard to payment of claims.

4. It is obligatory on the part of the insurance companies to

disclose clearly the benefits, terms and conditions under the

policy. The advertisements issued by the insurers should not

mislead the insuring public.

5. All insurers are required to set up proper grievance redress

machinery in their head office and at their other offices.

6. The Authority takes up with the insurers any complaint received

from the policyholders in connection with services provided by

them under the insurance contract.


110

APPENDIX E

Equity still the best

Equity continues to remain the fancied asset class for investors-

both for 2005 and over a medium term of three years. Gold, can

also give double-digit returns,is the next preferred class,according

to experts.

The Indian economy is witnessing one of its best ever Bull Run on

the bourses. Traditional rules for allocating assets ,making

investment decisions ,gauging upside and weighing risk-returns

are all changing.And changing rapidly.Those who had followed the


111

golden rule of investment guru – “Sell when everyone is buying

and buy when everyone is selling”- when the equity market had

crested the 6000 level early in the year would be representing.As

would have those who , braving the wrath of their wives ,sold off

the family bullion.Both assets have returned double-digit growth

on a year on year basis. Had the investors who had been hasty in

booking profits invested in bank deposits or debt markets , he

would have seen his capital eroding bit with every rise in inflation

rates , which is currently hovering around 6-7 percent.

However, experts believe that 2005 will be The Year of the Equity

and the yellow metal – a view well corroborated by over two dozen

market movers , analysts , brokers ,fund managers and research

houses. For once , the verdict was unanimous. If you have

invested , stay invested. If you have not made allocations, give a

higher weightage to equity class-atleast 40% on a conservative

level and 60% for agggressive investors.The estimate on returns

also varied- from the very conservative 15% to as high as 30% for

one year ; and,over a three year period.

Most analysts also feel that , with no tax on dividend or capital

gains , there is bound to be a shift in capital from local investors.

The total exposure to equity of the mutual funds boasting of a

collective corpus of Rs.1,50,000 crore is less than 30%.And

individual retail investors account for less than 2%.Given this

abysmal level of exposure to equity , even a fraction change will

see incremental funds now parked in bank deposits , mutual funds

and household deposits moving to the equity markets.


112

Added to this is the large number of equity offerings in the

pipeline. With. the government going in for piecemeal

disinvestment of its prized public sector offerings , both at the

Central and the state level , the interest in equity is bound to

remain high.

2005 will be The Year of the Equity and the yellow metal

Enthuse banks

One concern expressed by many experts was regarding the low

level of equity held by Indian investors. Most of the gains being

lapped up by FIIS , which have funds virtually on tap.In such a

scenario the government will do well to enthuse banks and

institutions to take a wider exposure to equity.Hardly any banks

have breached the 5% ceiling permitted for equity investments. If

the future is indeed bright and the industry is undergoing a

structural change, it makes sense for them to use their burgeoning

base of low cost deposits for temporarily store housing the

shares.Rich profits could be reaped when the proper price is

discovered.

A case in point is the cross-holdings effected in ONGC, Indian Oil

and Gas Authority.All three companies gain more than 15,000

crore over their investments of less than three years. And this was

in a flat market..Gains in the booming market can be even


113

more.Nationalised banks were forced to invest in other banks ,

going in for initial public offerings , on fears of there not being

sufficient takers. However , investment in banks , if done by

design , would help gilt plate the bottom line of these institutions ,

besides ensuring that the collective wealth remains within the

country

For banks which have made wrong calls on reading the dollar

movement and dwindling treasury gains from risking interest rates

, judicious investments in equity is also a commercial necessity.

Non-index stocks

While stating that equity is the best option , experts take pains to

point out that this is meant for investors willing to take a longer

view and not for traders wearing a grabs of investors. Horizon

should be for atleast one year and more.Moving in and out may

not give decent returns. Quite a few believe that non-Sensex

stocks may be in a position to outperform index returns.

However , this requires a proper selection procedure and

adherence to investment discipline. Fund managers feel that

diversified schemes would be the best bet for the non-savvy

investors , though thematic schemes or sector funds may generate

better returns in a bull market.

Investments in Equites will continue to fetch decent returns

in 2005


114

Equities still hold investment potential owing to strong economic

growth , good corporate results , better investment climate ,

higher FII inflow and lack of other investment avenues with similar

returns. There are still opportunities to cash in on the growth.

Equity investors should only with a medium-term perspective of at

least threee years and beyond , especially when there has been a

significant rally in the markets over the past two years and the

BSE Sensex is quoting at a historical high of around 6400.

However , it should be kept in mnd that the global experience is

that long term equities as an asset class tend to outperform other

asset classes like bonds ,etc.

Businesses and companies that have a competitive advantage and

can outperform their global rivals will create value. These

companies may lie in the mid-cap sector or the large-cap sector.

However , the key determinant of long term growth capability will

be their to create value innovate and deliver superior performance

in the face of global competition. Any of the mid-caps today may

be the large-caps of tomorrow,which has been demonstrated by

the IT sector ,which was in the mid-cap segment in the early

1990s and today forms a significant part of the large-cap segment.

Indian equity markets look attractive on account of the

economy’s strong fundamentals.


115

The equity market is on a growth and dividend yeild basis is

looking far more attractive, compared to bank deposits.The year

2004 was marked with a great amount of volatility.The markets

swung from euphoria to panic and again back to reasonable

levels.It is believed that the year 2005 will not be as volatile as

2004.

Threat

The risk in 2005 could emerge from the fact that the flows , which

have come into the Indian equity markets , could have come from

the currency view. There is a sensus that the dollar is going to

weaken . Dollar funds are chasing non-dollar assets . India has

received some of these flows . If the dollar gets a pull back from

the exisiting level , some of these flows could return and it could

have an adverse impact on our Indian markets

Appendix F


116

MOTIVATIONAL AWARDS / AWARDS &

RECOGNITION

MetLife believes that every team requires a leader and every

leader, Recognition.

For getting the best out of the team Motivation is a must and so is

inspiring the team to reach greater heights. For doing the same

support from the team leader as well as the Company is a must,

which simultaneously enhances the qualities essential for being a

Leader at MetLife and such qualities, are required to be awarded.

Some of the rewards and recognition are:

• Trigger Award (for the sales manager in self-sales mode)

• Eagle Award (for the sales manager in self-sales mode)

• Eagle Maker (for the sales manager)

• The President’s & Leader’s Conferences (for outstanding

performers of the year)

• The President’s & Leader’s Conferences (for Sales Managers)

• The President’s & Leader’s Conferences (for Agency

Managers)


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• The President’s & Leader’s Conferences (for Regional

Managers-Agency)

• Best Region Award-Monthly & Best Region Award 2005

• The Best Sales Manager Award

• Sales Hall Of Fame


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