the overview of insurance.doc

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A

Project Study Report

On

AN OVERVIEW OF INSURANCE

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Contents

Serial no. Topic Page No.

1 Acknowledgement 5

2 Preface 6

3 Executive Summary 7

Chapter 1-Introduction 8

5 Classes of Insurance 10

6 Functions of Insurance 11

7 Life Insurance 12

8 Roles of the Life Insurance 12

9 Importance of Life Insurance 13

10 Insurance Cycle 14

11 How Premiums are collected? 16

Chapter-2 Introduction to Indian Industry 19

12 Brief History of the Insurance 21

13 Indian Insurance market 23

14 How big is insurance market 23

15 Role of IRDA Act 1999 29

16 Name of insurance companies

with logos 30

17 Market Share of private players 32

Chapter-3 Introduction of TATA AIG 33

Chapter-4 Recommendation and benefits 39

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Chapter-5 Conclusion 42

References 43

Acknowledgement

Sometimes words fall short to show gratitude, the same

happened with me during this project. The immense help

and support received from Tata AIG Insurance Companyoverwhelmed me during the project.

I also thank Mrs.Nidhi Arora Kumar the faculty member of

BLS who sincerely supported me with valuable insights for

this project.

My sincere gratitude to Rajiv Dhar(Regional Head TataAIG,Kolkata) for providing me with an opportunity to work

with TATA AIG Life Insurance company.

I am highly indebted to Musawwar Hossain(BranchManager),Tata Aig,Kolkata) and company project guide,

who has provided me with the necessary information and

his valuable suggestion and comments on bringing out thisreport in the best possible way.

I am grateful to all of the members of Tata AIG Insurance

Company,(GirishParkBranch,Kolkata)

Last but not the least; my heartfelt love for my parents,whose constant support and blessings has helped me

throughout this project.

Vivek Srivastava

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PREFACE

The liberalization of the Indian insurance sector has beenthe subject of much heated debate for some years. The

policy makers where in the catch 22 situation wherein forone they wanted competition, development and growth of

this insurance sector which is extremely essential forchanneling the investments in to the infrastructure sector.

At the other end the policy makers had the fears that the

insurance premium, which are substantial, would seep outof the country; and wanted to have a cautious approach of

opening for foreign participation in the sector.As one of the rare occurrences the entire debate was put

on the back burner and the IRDA saw the day of the light

thanks to the maturing polity emerging consensus amongfactions of different political parties. Though some changes

and some restrictive clauses as regards to the foreignparticipation were included the IRDA has opened the doors

for the private entry into insurance. Whether the insurer is

old or new, private or public, expanding the market willpresent multitude of challenges and opportunities. But the

key issues, possible trends, opportunities and challengesthat insurance sector will have still remains under the

realms of the possibilities and speculation. What is the likely

impact of opening up Indias insurance sector?

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EXECUTIVE SUMMARY

This project has been a great learning experience for me; at

the same time it gave me enough scope to implement myanalytical ability. Tata Group is one of the India's largest

and most respected business groups.

Tata Group is one of the India's largest and most respected

business groups. Tata Groups name is synonymous withIndia's industrialization. Tata AIG Insurance Solutions is

one of the leading insurance companies that provide both

life insurance as well as general insurance. This pioneercompany is a joint collaboration between the American

International Group, Inc. (AIG) and Tata Group. They ownthe company in the ratio of 26:74. It is a leading financial

institution that has carved a niche for itself all over the

world.

Tata AIG Insurance Company is having different insurancepolicies. At the end of the project people will be

knowledgeable about various insurance organizations.

Project is on the Overview of of Tata AIG InsuranceCompany in Kolkata City. To get to know a questionnaire has

been prepared which contains open ended and close ended

questions.For collecting the data field survey method,personal interview technique has been used. Secondary datahas been collected from the company. The data collected are

represented into suitable tabular forms for drawing

inferences. Quantitative techniques like averages,percentages, range, two-way tables, chi- square tests

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analysis has been applied as per the requirement. The level

of preference, perception of the customers about theproduct and company were identified by means of a scoring

scheme. For the representation of data various charts and

graphs are used as per requirement.

Chapter 1

INTRODUCTION TO INSURANCE

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INTRODUCTION

"Insurance is a contract between two parties whereby one partycalled insurer undertakes in exchange for a fixed sum called

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premiums, to pay the other party called insured a fixed amount ofmoney on the happening of a certain event.

Insurance may be described as a social device to reduce or

eliminate risk of life and property. Under the plan of insurance, alarge number of people associate themselves by sharing risk,attached to individual.

With the help of Insurance, large number of people exposed to asimilar risk makes contributions to a common fund out of which thelosses suffered by the unfortunate few, due to accidental events,are made good.

Insurance is a tool by which fatalities of a small number arecompensated out of funds collected. from plenteous. Gradually as

competition increased benefits given by industry to its customers.increased by leaps and bounds. Insurance is a basic form of riskmanagement which provides protection against possible loss to lifeor physical assets. Person who seeks protection against such lossis termed as insured, and company that promises to honor claim, incase such loss is actually incurred by insured, is termed as Insurer.In order to get insurance, insured is required to pay to insurancecompany a certain amount called premium. Premium is collected byinsurance companies which acts as trustee to pool created throughcontributions made by persons seeking to protect themselves from

common risk. Any loss to the insured in case of happening of anuncertain event is paid out of this pool.

Classes of insurance

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Insurance business is divided into four classes:

Life Insurance

Fire

Marine

Miscellaneous Insurance.

Insurance provides:

Protection to investor.

Accumulation of savings.

Channeling these savings into sectors needing huge longterm investment

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FUNCTION OF INSURANCE:

The primary function of insurance is to provide protectionagainst future risk, accidents and uncertainty. Insurance cannot

check the happening of the risk, but can certainly provide forthe losses of risk. Insurance is actually a protection againsteconomic loss, by sharing the risk with others.

Small capital to cover larger risk:

Insurance relieves the businessmen from securityinvestments,by paying small amount of premium againstlarger risks and uncertainty.

Contributes towards the development of industries:

Insurance provides development opportunity to those largerindustries having more risks in their setting up. Even thefinancial institutions may be prepared to give credit to sickindustrial units which have insured their assets including plantand machinery.

Means of savings and investment:

Insurance serves as savings and investment, insurance is acompulsory way of savings and it restricts the unnecessaryexpenses by the insured's For the purpose of availing income-tax exemptions also, people invest in insurance.

Source of earning foreign exchange:

Insurance is an international business. The country can earn

foreign exchange by way of issue of marine insurance policiesand various.

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Risk free trade:

Insurance promotes exports insurance, which makes the foreigntrade risk free with the help of different types of policies undermarine insurance cover.

LIFE INSURANCE :

Life insurance is a contract under which the insurer

(Insurance Company) in Consideration of a premium paidundertakes to pay a fixed sum of money on The death of

the insured or on the expiry of a specified period of time

Whichever is earlier. In case of life insurance, thepayment for life insurance policy is certain. The Event

insured against is sure to happen only the time of itshappening is not known. So life insurance is known as

Life Assurance. The subject matter of insurance is life

of human being. Life insurance provides risk coverage tothe life of a person. On death of the person insurance

offers protection against loss of income and compensatethe titleholders of the policy.

ROLES OF THE LIFE INSURANCE :

Life insurance as an investment: - Insurance products yield morethan any other investment instruments and it also provides addedincentives or bonus offered by insurance companies.Life insurance as risk cover: - Insurance is all about risk cover andprotection of life. Insurance provides a unique sense of security

that no other form of invest can provide.Life insurance as tax planning: - Insurance serves as an excellenttax saving mechanism too.

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IMPORTANCE OF THE LIFE INSURANCE:

Protection against untimely death: - Life insurance providesprotection to the dependents of the life insured and the family ofthe assured in case of his untimely death. The dependents orfamily members get a fixed sum of money in case of death ofthe assured.

Saving for old age: -

After retirement the earning capacity of a person reduces. Lifeinsurance enables a person to enjoy peace of mind and a senseof security in his/her old age.

Promotion of savings: -

Life insurance encourages people to save money compulsorily.When life policy is taken, the assured is to pay premiums

regularly to keep the policy in force and he cannot get back thepremiums, only surrender value can be returned to him. In caseof surrender of policy, the policyholder gets the surrenderedvalue only after the expiry of duration of the policy.

Initiates investments: -Life Insurance Corporation encourages and mobilizes the publicsavings and canalizes the same in various investments for theeconomic development of the country. Life insurance is an

important tool for the mobilization and investment of smallsavings.

Credit worthiness: -Life insurance policy can be used as a security to raise loans. Itimproves the credit worthiness of business.

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Life insurance is important for the society as a whole also. Lifeinsurance enables a person to provide for education andmarriage of children and for construction of house. It helps aperson to make financial base for future.

Social Security: Tax Benefit: -Under the Income Tax Act,premium paid is allowed as a deduction from the total incomeunder section 80C

INSURANCE CYCLE:

Insurance cycle source: www.rma.usda.gov

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Policy Renewal/Change Options/Application

The Insurance Cycle begins each year with the insurance offer.Actuarial documents are published annually by the RiskManagement Agency (RMA). The actuarial documents list the plan

of insurance, crop, type, variety, and practice that may be insuredin a state and county, and show the amounts of insurance,available insurance options, levels of coverage, price elections,applicable premium rates, and subsidy amounts. The SpecialProvisions of Insurance list program calendar dates, and generaland special statements which may further define, limit, or modifycoverage.

Sales Closing/Cancellation/Termination Dates

Insurance applications must be completed and signed no later thanthe sales closing date specified in the crop actuarial documents.Applications signed after the crop sales closing date may berejected by the insurance provider.Insurance coverage is continuous and can be cancelled by eitherthe insurance provider or the policyholder for the following cropyear by providing a written notice to the other party no later. thanthe cancellation date specified in the crop policy. For a policyholderinsured the previous crop year, any changes he or she wishes tomake to the policy coverage must be made on or before the cropsales closing date. The policy will automatically renew for the

subsequent crop year unless the policyholder cancels the policy inwriting on or before the crop cancellation date. Insurance coveragemay be terminated by the insurance provider for the following cropyear for nonpayment of outstanding debt by providing a writtennotice to the policyholder no later than the termination datespecified in the crop policy. The insurance provider may terminatecoverage on a crop if no premium is earned for three consecutive

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years.Acceptance Upon receipt of a properly completed and timelysubmitted insurance application, the insurance provider will acceptand process the application, unless the applicant is determined tobe ineligible under the contract or Federal statute or regulation.

The insurance provider will issue a summary of coverage and theappropriate policy documents to the applicant. After the applicationis accepted, the policyholder may not cancel the policy for theinitial crop year.

How premiums are collected?

During the initial years of its business insurance companydoesnt earns any profit because first year company has to

incur all the expenses like-commission to the agent, giftsetc. They start earning from second year i.e when the

premium of the policy is given by the customer. So

insurance company gives stress on renewals. Thisdepartment of collecting renewals is controlled by the

operation department.

Methods of collecting Premiums

1.Tele-Calling: Customer are given cal and are informedabout the due dates of paying the premium and also on

demand of the customers representatives are being send to

the customers house for collecting the cheque.

2. ECS:This stands for Electronic Clearing System.ECSfacility enables hassle free premium payments .it is the

mode of electronic funds transfer from one bank account toanother bank account using the services of a clearing house

as per the pre determined schedule depending on the policydue date.In order to promote ECS and to increase the existing

base of ECS policies a project R.A.C.E Run AutoCredits,Customer Contactibility and ECS is being carried

out.Through this project the customers contact detail and

bank account are being updated so that the customers are

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facilitated with NEFT Authorization for payouts for

Refunds,Coupon payments,Free look etc.

Premium Billing

The annual premium is earned and payable at the time insurancecoverage begins. The insurance provider shall issue a premiumbilling based upon the information contained in the acreage reportno earlier than the premium billing date specified in the cropactuarial documents. The premium billing will specify the amount ofpremium and any administrative fees that may be due. If thepremium or administrative fees are not paid by the date specified

in the actuarial documents or policy, the insurance provider mayassess interest on the outstanding premium balance.

Notice of Damage or Loss

A written notice of damage or loss for each unit is to be filed by thepolicyholder within 72 hours of the policyholder's initial discovery ofdamage or loss but not later than 15 days after the calendar date

for the end of the insurance period unless otherwise stated in theindividual crop policy. The policyholder should refer to theindividual crop provisions for additional requirements in the eventof damage or loss. These notifications provide the opportunity forthe insurance provider to inspect the crop and determine the

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extent of damage or potential production before the crop isharvested or otherwise disposed of.

CHAPTER 2

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Introduction to Insurance Industry

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INDIAN INSURANCE INDUSTRY

The Insurance sector in India governed by Insurance Act,

1938, the Life Insurance Corporation Act, 1956 and GeneralInsurance Business (Nationalisation) Act, 1972, InsuranceRegulatory and Development Authority (IRDA) Act, 1999 and otherrelated Acts. With such a large population and the untappedmarket area of this population Insurance happens to be a very bigopportunity in India. Today it stands as a business growing at therate of 15-20 per cent annually. Together with banking services, itadds about 7 per cent to the countrys GDP .In spite of all thisgrowth the statistics of the penetration of the insurance in thecountry is very poor. Nearly 80% of Indian populations are withoutLife insurance cover and the Health insurance. This is an indicator

that growth potential for the insurance sector is immense in India.It was due to this immense growth that the regulations wereintroduced in the insurance sector and in continuation MalhotraCommittee was constituted by the government in 1993 toexamine the various aspects of the industry. The key element ofthe reform process was Participation of overseas insurancecompanies with 26% capital. Creating a more efficient andcompetitive financial system suitable for the requirements of theeconomy was the main idea behind this reform. Since then theinsurance industry has gone through many sea changes .The

competition LIC started facing from these companies werethreatening to the existence of LIC .since the liberalization of theindustry the insurance industry has never looked back and todaystand as the one of the most competitive and exploring industry inIndia. The entry of the private players and the increased use of thenew distribution are in the limelight today. The use of new

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distribution techniques and the IT tools has increased the scope ofthe industry in the longer run.

A BRIEF HISTORY OF THE INSURANCE SECTOR:

The business of life insurance in India in its existing formstarted 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 inIndia are given in the following table. Some of the important

milestones in the life insurance business in India are:

Year Milestones in the life insurance business in India

1912 The Indian Life Assurance Companies Act enactedas the first statute to regulate the life insurancebusiness

1928 The Indian Insurance Companies Act enacted toenable the government to collect statisticalinformation about both life and non-life insurancebusinesses

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1938 Earlier legislation consolidated and amended toby the Insurance Act with the objective ofprotecting the interests of the insuring public.

1956 245 Indian and foreign insurers and providentsocieties taken over by the central governmentand nationalized. LIC formed by an Act ofParliament, viz. LIC Act, 1956, with a capitalcontribution of Rs. 5 crore from the Governmentof 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 year1850 in Calcutta by the British. Some of the important

milestones in the general Insurance business in India aregiven in the following table.

Year Milestones in the general insurance

business in India

1907 The Indian Mercantile Insurance Ltd. set up, thefirst company to transact all classes of generalinsurance business

1957 General Insurance Council, a wing of theInsurance Association of India, frames a code ofconduct for ensuring fair conduct and soundbusiness practices

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1968 The Insurance Act amended to regulateinvestments and set minimum solvency marginsand the Tariff Advisory Committee set up.

1972 The General Insurance Business (Nationalization)Act, 1972 nationalized the general insurancebusiness in India with effect from 1st January1973. 107 insurers amalgamated and groupedinto four companies viz. the National InsuranceCompany Ltd., the New India AssuranceCompany Ltd., the Oriental Insurance CompanyLtd. and the United India Insurance CompanyLtd. GIC incorporated as a company

1993 Setting up of Malhotra Committee

1994 Recommendations of Malhotra Committee

1995 Setting up of Mukherjee Committee

1996 Setting up of (interim) Insurance RegulatoryAuthority(IRA) Recommendations of the IRA.

1997 Mukherjee Committee Report submittedbut not madepublic

1997 The Government gives greater autonomy to LIC, GIC and itssubsidiaries with regard to the restructuring of boards andflexibility in investment norms aimed at channeling funds tothe infrastructure sector. 1998 The cabinet decides to allow40% foreign equity in private insurance companies-26% toforeign companies and 14% to NRIs, OCBs and FIIs.

1999 Cabinet clears IRDA Bill.

2000 President gives Assent to the IRDA Bill.

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INDIAN INSURANCE MARKET (HISTORY):

Insurance has a long history in India. Life Insurance in its currentform was introduced in 1818 when Oriental Life InsuranceCompany began its operations in India. General Insurance washowever a comparatively late entrant in 1850 when TritonInsurance company set up its base in Kolkata. History of Insurancein India can be broadly bifurcated into three eras:a) Pre Nationalization b)b) Nationalization andc) Post Nationalization. Life Insurance was the first to be

nationalized in 1956. Life Insurance Corporation of India was

formed by consolidating the operations of various insurancecompanies. General Insurance followed suit and wasnationalized in 1973. General Insurance Corporation of Indiawas set up as the controlling body with New India, UnitedIndia, National and Oriental as its subsidiaries. The process ofopening up the insurance sector was initiated against thebackground of Economic Reform process which commencedfrom 1991. For this purpose Malhotra Committee was formedduring this year who submitted their report in 1994 andInsurance Regulatory Development Act (IRDA) was passed in

24 1999. Resultantly Indian Insurance was opened for privatecompanies and Private Insurance Company effectively startedoperations from 2001.

HOW BIG IS THE INSURANCE MARKET?

The insurance sector was opened up for private participation fouryears ago. For years now, the private players are active in the

liberalized environment. The insurance market have witnesseddynamic changes which includes presence of a fairly large numberof insurers both life and non-life segment. Most of the privateinsurance companies have formed joint venture partnering wellrecognized foreign players across the globe. There are now 29insurance companies operating in the Indian market 14 privatelife insurers, nine private non-life insurers and six public sector

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companies. With many more joint ventures in the offing, theinsurance industry in India today stands at a crossroads ascompetition intensifies and companies prepare survival strategiesin a detariffed scenario. There is pressure from both within the

country and outside on the Government to increase the foreigndirect investment (FDI) limit from the current 26% to 49%, whichwould help JV partners to bring in funds for expansion. There areopportunities in the pensions sector where regulations are beingframed. Less than 10 % of Indians above the age of 60 receivepensions. The IRDA has issued the first license for a standalonehealth company in the country as many more players wait to enter.The health insurance sector has tremendous growth potential, andas it matures and new players enter, product innovation andenhancement will increase. The deepening of the health databaseover time will also allow players to develop and price products for

larger segments of society.

Insurance is a Rs.400 billion business in India, and together withbanking services adds about 7% to India's Gap. Gross premiumcollection is about 2% of Gap and has been growing by 15-20% perannum. India also has the highest number of life insurance policiesin force in the world, and total investible funds with the LIC arealmost 8% of GDP. Yet more than three-fourths of India's 25insurable population has no life insurance or pension cover. Healthinsurance of any kind is negligible and other forms of non-life

insurance are much below international standards.

INDIAN SCENARIO:

Indian economy is the 12th largest in the world, with a GDP of$1.25 trillion and 3rd largest in terms of purchasing power parity.With factors like a stable 8-9 per cent annual growth, rising foreignexchange reserves, a booming capital market and a rapidlyexpanding FDI inflows, it is on the hinge of an ever increasing

growth curve. Indians have a tendency to invest in properties andgold followed by bank deposits. They selectively invest in sharesalso but the percentage is very small--4-5%. This in itself is anindicator that growth potential for the insurance sector is immense.Its a business growing at the rate of 15-20% per annum andpresently is of the order of $47.9 billion. India is a vast market forlife insurance that is directly proportional to the growth in

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premiums and an increase in life density. With the entry of privatesector players backed by foreign expertise, Indian insurancemarket has become more vibrant. Competition in this market isincreasing with companys continuous effort to lure the customers

with new product offerings. However, the market share of privateinsurance companies remains very low -- in the 10-15% range.Even to this day, Life Insurance Corporation (LIC) of Indiadominates Indian insurance sector. The heavy hand of governmentstill dominates the market, with price controls, limits on ownership,and other restraints.The upward growth trend started from 2000 was mainly due toeconomic policies adopted by the then Indian government. Thisyear saw initiation of an era of economic liberalization andglobalization in the Indian economy followed by several reformsand long-term policies that created a perfect roadmap for the

success of Indian financial markets. On the basis of severalmacroeconomic factors like increase in literacy rate & per capitaincome, decrease in death rate and unemployment, better taxrebates, growing GDP etc., we estimate that the Indian insurancesector will grow by $28.65 billion and reach $76.54 billion by 2011with a CAGR of 12.44% and a growth of 59.82%.The Indian life insurance market generated total revenues of$41.36 billion in 2007, thus representing a compound annualgrowth rate (CAGR) of 11.84% for the period spanning 2000-2007.Life insurance market had a growth of $22.46 billion within a

period of 7 years with a growth rate of 118.24%. Estimated lifepremiums rose from INR1, 470,800 million ($36.77 billion) in 2006to INR1, 301,540 million ($32.54billion) in 2005. We envisage thatlife premiums in 2011 will be $65.96 billion, a growth larger thanthey were in 2007. The performance of the market is forecast toaccelerate, with an anticipated CAGR of 9.78% for the four-yearperiod 2007-2011 expected to drive the market to a value of$65.96 billion by the end of 2011. There would be a growth of$24.6 billion i.e. 59.48% in the next 4 years.

Non-life premiums in India were $6.53 billion in 2007. Gross

written premium (GWP) in the Indian non-life insurance marketreached a value of $5.75 billion in 2006, this representing anannual growth of 13.55% for the period spanning 2006-2007.Estimated non-life premiums rose from INR230 billion ($5.75billion) in 2006 to INR261 billion ($6.53 billion) in 2007. Weanticipate that non-life premiums will grow by a CAGR of 9.40%

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between 2007-2011. We are looking for non-life premiums to riseby $405 million over the five years to the end of 2011 with agrowth rate of 62.02%.

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Source:The Knowledge Centre

The general insurance industry grew by 16% in 2006-07 as privateinsurers continued their robust performance, while public sectorplayers like New India Assurance and Oriental Insurance improvedtheir show. Despite continuous fall in business of government-owned National Insurance, the 12 non-life insurers collected Rs20,378 crore in first year premium in the last fiscal compared to Rs17,531 crore collected in 2005-06, according to data compiled byregulator IRDA.

New India Assurance collected Rs 4,762 crore in premium andcontinued to lead the non-life sector by cornering 23.36% of themarket. National Insurance was at the second spot by collecting Rs3,524 crore in premium, a decline of 7%, but had a market pie of

17.29%. Oriental Insurance mopped up Rs 3,518 crore in premiumincome after logging 16.6% growth in business to corner a marketshare of 17.26%. Another PSU insurer United India grew by amodest 6.8% to collect Rs 3,147 crore in premium and had15.44% of the market. The eight private players expanded theirbusiness by 52% to collect Rs 5,427 crore in premium income andincreased their combined market share to 26.6% from 20.2% ayear ago.

ICICI Lombard led the private players by logging 80% growth inpremium at Rs 1,592 crore, followed by Bajaj Allianz, which grewby 50% to collect Rs 1,287 crore in premium. ICICI Lombard had amarket share of 7.81% and Bajaj Allianz had 6.31% of the market.

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ROLE OF INSURANCE REGULATORY ANDDEVLOPMENT AUTHORITY (IRDA) ACT, 1999 :

An act to provide for the establishment of an authority to protectthe interests of policyholders, to regulate, to promote and ensureorderly growth of the insurance industry and for matters connectedtherewith for incidental thereto and further to amend, the LifeInsurance Corporation Act, 1956 and the insurance Act, 1938 andGeneral Insurance Business Act 1972. Spread Life Insurance muchmore widely and in particular to the rural areas and to the sociallyand economically backward classes with a view to reaching allinsurable persons in .the country and providing them adequatefinancial cover against death at a reasonable Cost. Maximizemobilization of people's savings by making insurance linked savingsadequately attractive. Bear in mind, in the investment of funds, theprimary obligation to its policyholders, whose money it holds intrust, without losing sight of the interest of the; community as awhole; the funds to be deployed to the best advantage of the

investors as well as the community as a whole, keeping in viewnational priorities and obligations of attractive return. Conductbusiness with utmost economy and with the full realization that themoneys belong to: the policyholders. Act as trustees of the insuredpublic in their individual and collective capacities. Meet the variouslife insurance needs of the community that would arise in thechanging social and economic environment. Involve all people

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working in the Corporation to the best of their capability infurthering the interests of the insured public by providing efficientservice with courtesy. Promote amongst all agents and employeesof the Corporation a sense of participation, pride and job

satisfaction through discharge of their duties with ded1cat1ontowards achievement of Corporate Objective.

NAME OF INSURANCE COMPANIES LOGO NATURE OFHOLDING

Tata AIG Insurance Private

ICICI Prudential Private

Max New York Life Private

Insurance

HDFC Standard Insurance Private

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Reliance Life Insurance Private

Kotak Life Insurance Private

Aviva Life Insurance Private

SBI Life Insurance Private

Bajaj Allianz Private

The general insurance industry grew by 16% in 2006-07 as privateinsurers continued their robust performance, while public sectorplayers like New India Assurance and Oriental Insurance improvedtheir show. Despite continuous fall in business of government-owned National Insurance, the 12 non-life insurers collected Rs20,378 crore in first year premium in the last fiscal compared to Rs17,531 crore collected in 2005-06, according to data compiled byregulator IRDA.

New India Assurance collected Rs 4,762 crore in premium and

continued to lead the non-life sector by cornering 23.36% of themarket. National Insurance was at the second spot by collecting Rs3,524 crore in premium, a decline of 7%, but had a market pie of17.29%. Oriental Insurance mopped up Rs 3,518 crore in premiumincome after logging 16.6% growth in business to corner a marketshare of 17.26%. Another PSU insurer United India grew by amodest 6.8% to collect Rs 3,147 crore in premium and had

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15.44% of the market. The eight private players expanded theirbusiness by 52% to collect Rs 5,427 crore in premium income andincreased their combined market share to 26.6% from 20.2% ayear ago.

ICICI Lombard led the private players by logging 80% growth inpremium at Rs 1,592 crore, followed by Bajaj Allianz, which grewby 50% to collect Rs 1,287 crore in premium. ICICI Lombard had amarket share of 7.81% and Bajaj Allianz had 6.31% of the market.

Above all the company they are having various types of insuranceplans. All the plans are giving a good rate of return after a certainperiod of time. But all the plans dont get success in the market.Many of the companies they are having almost same type of planbut sometimes it happens one of them is successful and another isnot. Always it doesnt depend on the plan of the insurance

sometimes it depends on the marketing strategies, promotion ofthe product, reputation of the company, employees of the companyetc.

MARKET SHARE OF DIFFERENT PRIVATE PLAYERS:

If we see market share of different private players in the financial

year 2009 then from the above chart we can understand ICICIPrudential is holding the maximum market share i.e. 21.6%. Afterthat SBI Life and Bajaj Allianz is holding 14.8% and 13.2%respectively. Reliance Life Birla Sun life and HDFC Standard theyare also holding a good market share all over the India. Tata AIG isholding 3.3% of market share all over the India.

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If we see market share of different private players in the financialyear 2009 then from the above chart we can understand ICICIPrudential is holding the maximum market share i.e. 21.6%. Afterthat SBI Life and Bajaj Allianz is holding 14.8% and 13.2%respectively. Reliance Life Birla Sun life and HDFC Standard theyare also holding a good market share all over the India. Tata AIG isholding 3.3% of market share all over the India.

CHAPTER 3

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Introduction to Tata-Aig

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Tata AIG Insurance Company Tata Enterprises with 82 companies,spread over seven sectors and with an annual turnover exceeding

US $ 8.8 billion, employs more than 262,000 people. Tata Grouphas shown over years that it is a value driven company and haspioneering contributions in various fields including insurance,aviation, iron and steel. In terms of capital market performance asmany as 40 listed Tata companies account for nearly 5% of thetotal market capitalization of all listed companies. The Group hashad a long association with India's insurance sector having beenthe largest insurance company in India prior to the nationalizationof insurance.

TATA GROUP IN INSURANCE:

Tata AIG General Insurance Company Ltd, and Tata AIG LifeInsurance Company Ltd., (collectively "Tata AIG") are joint venturecompanies between the Tata group India's most trusted industrialhouse and American International Group, Inc. (AIG), the leading U.S. based international insurance and financial servicesorganization. The Late Sir Dorab Tata, was the founder Chairmanof New India Assurance Co. Ltd., a group company incorporatedway back in 1919. Government of India took over the management

of this company as a part of nationalization of general insurancecompanies in 1972. Not deterred by the move, Tata group haveventured into risk management services having tied up with AIGgroup, back in 1977, with the incorporation of Tata AIG RiskManagement Services Pvt. Ltd.

The Tata Group is one of India's largest and most respectedbusiness conglomerates, with revenues in 2006-07 of $28.8 billion(Rs129,994 crore), the equivalent of about 3.2 per cent of thecountry's GDP, and a market capitalization of $72.2 billion as onDecember 6, 2007. Tata companies together employ some 289,500people. The Tata Group has operations in more than 85 countriesacross six continents, and its companies export products andservices to 80 countries.

AIG: American International Group, Inc. (AIG), is a majorAmerican insurance corporation based at the American

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International Building in New York City. The British headquartersare located on Fenchurch Street in London, continental Europeoperations are based in La Dfense, Paris, and its Asian HQ is inHong Kong. According to the 2008 Forbes Global 2000 list, AIG was

the 18th-largest company in the world.

Company Background: AIG's history dates back to 1919,when Cornelius Vander Starr established an insurance agency inShanghai, China. Starr was the first Westerner in Shanghai to sellinsurance to the Chinese. In 1962, Starr gave management ofthe company's less than successful U.S. holdings to MauriceR. \"Hank\" Greenberg, who shifted the company's U.S. focus frompersonal insurance to high-margin corporate coverage. Thecompany went public in 1969. American International Group, Inc isthe leading U.S. based international insurance and financialservices organization and the largest underwriter of commercialand industrial insurance in the United States.Its member companies write a wide range of commercial andpersonal insurance products through a variety of distributionchannels in over 130 countries and jurisdictions throughout theworld. AIG's Life Insurance operations comprise of the mostextensive worldwide network of any life insurer. AIG's globalbusinesses also include financial services and asset management,including aircraft leasing, financial products, trading and marketmaking, consumer finance, institutional, retail and direct

investment fund asset management, real estate investmentmanagement, and retirement savings products.THE JOINT VENTURE:

Tata AIG Life Insurance Co. Ltd. is capitalized at Rs. 185 crores ofwhich 74 per cent has been brought in by Tata Sons and theAmerican partner brings in the balance 26 per cent. Mr. GeorgeOommen has been named managing director of Tata AIG Life.Tata-AIG plans to provide broad array of life insurance plans tocover to both individuals and groups. The company headquarteredin Mumbai, with branch operations in Delhi, Chennai, Hyderabad,Bangalore Calcutta, Pune and Chandigarh.

ABOUT TATA-AIG:

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Tata AIG Insurance Solutions is one of the leading insurancecompanies that provide both life insurance as well as generalinsurance. This pioneer company is a joint collaboration betweenthe American International Group, Inc. (AIG) and Tata Group. They

own the company in the ratio of 26:74. It is a leading financialinstitution that has carved a niche for itself all over the world. TataAIG Insurance provides facilities to both corporate and individuals.Starting its operations on April 1, 2001, it seeks to serve differentcategories of people. It acquired its license for carrying outoperations in India on February 12, 2001.

Tata AIG Insurance Solutions is one of the most prestigiousorganizations in the business world. It employs thousands ofemployees and offers various opportunities to people to build aprospective career. As a leading name in the financial world, it

identifies the potential and experience of the individual. Thisinsurance company identifies the clients needs and worksaccordingly. It stresses on innovative aspect and opening of newmarkets. It believes in new economy and latest Internettechnology. Tata AIG Insurance offers a number of products for theGeneral Insurance holders. General insurance products include:

Individual insuranceSmall business insurance

Corporate insurance

Tata AIG Insurance offers flexible life insurance to the individuals,business organization and other association. For the corporate,there are various insurance products like group pensions, employeebenefits, work place solutions and credit life. For the individuals,Tata AIG Insurance offers various products for adults, children andfor retirement planning.

DISTRIBUTION CHANNELS OF TATA AIG:

The winds of liberalization initiated vast changes in the functioningof the industry today. Increasing number of multinationalpartnership with private insurers have paved the way for a radicalshift in insurance selling- through a number of new distributionchannels besides bringing about more awareness on the need for

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insurance and also stressing on the important role technology canplay. In the developed markets, many insurers have a preferredmode of distribution. In India, many players are hedging their betsbecause the need for scale outweighs considerations of focus and

because non-agency distribution, which is presently operational forthe last two years, forms a basis for study.Tata AIG has a corporate agency channel, which handles itscorporate agents and has tie-ups with 38 corporate houses.Insurers want to lower distribution costs by finding more efficientchannels. The new private players are developing multiple channelmodels; many insurers use or plan to use several banks asdistributors. Because most banks have strong regional bias, in thisregards Tata AIG has agreement with HSBC (corporate agencydistribution) through that it is doing both life insurance and generalinsurance business.. Because most banks have a strong regional

bias, Insurers can use several banks without creating large overlap.

An important distribution challenge facing insurers is the need tomeet the rural and social sector legislative requirements stipulatedin terms of market opening. For Tata AIG, it takes rural insuranceas an opportunity and not an obligation. For achieving objective inrural area it has also tie with NGOs (Bridge stone for Karnatakaand Kerala). In this project mainly focus is distribution channel ofLife Insurance of Tata AIG and little bit of distribution of GeneralInsurance of Tata AIG also. So as the whole topic of distribution

can be known for the both company of Tata AIG (Life and Generalinsurance). Gradually channels are incorporating day by day for thegrowth of business.

In the span of two to three years Tata AIG achieve much morebusiness growth what it expected at the time of entrance in Indianmarket. It happened because it has quality people, innovativemanagement, be able to employ technology effectively besideshaving right products with effective and modern distributionchannel

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Chapter 4

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RECOMMENDATIONS AND BENEFITS

RECOMMENDATIONS TO THE COMPANY:

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Being the best product player in the private sector, but still surveyTATA AIG needs to improvement regarding its premium chargesand advertisement to its target customers.

a) Premium charges

Owing to its high premium charges (Tata AIG Apex Plan, PremiumRS. 90000/-) customers perception about the companys producthas become that its only for the upper middle class people.Whereas TATA AIG do has some policy with low premium but thecharges of allocation are too high. So we would like to suggestslowing down its premium charges to some extend by reducingadministration charges and other charges.

b) Advertisement:

During survey we have found that due to lack of advertisementsabout the products and agents selling the products in which theyget high commissions customers are somewhere mislead and theyknow about very few products though TATA AIG has wide range ofvariety of the products. So we would recommend TATA AIG toinvest more in advertisement in form of TV commercials,pamphlets and hoardings.

c) Wrong perception:

AIG is on the edge of filing bankruptcy. So Tata AIG is also going toon the brink of filling bankruptcy. But insurance in India is a highlyregulated industry. Any company that wants to set up an insurancebusiness has to follow very stringent norms given by the InsuranceRegulatory & Development Authority (IRDA). So company shouldtake positive measure to remove this wrong perception from thepeople.

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d) Sample size:

For this research study only hundred sample size has been taken.The result will be more appropriate if a large sample size is

considered.

BENEFITS TO THE COMPANY AND US:

During the survey time sales have been done. It is a win-winSituation for both company and me. The benefits of this summerinternship program are discussed below.

1. Benefit to the company:

a) This survey has been done in Dehradun region on comparison ofTATA AIGs product and its competitor can give an idea of thisposition in the market. As TATA AIG leads in most of theparameters so it should continue to serve in the same manner

. b) The survey also shows the customers perception about TATAAIGs life Insurance product with which it can improve itsimpression better than now. c) The recommendation has given inthis report will help TATA AIG to position its product properly to thetarget customers d) Moreover the sales has been done during thisinternship have done a good business for the company

2. Benefit to us:a)Doing internship in TATA AIG have given me immense

experience in the insurance industry for these fourteen weeks.b) Interaction with the customers for survey and sales has

developed our marketing skills.

c) Working in the office premises has given exposure to corporateworld and an experience in working in corporate pressure.

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Chapter-5

CONCLUSION

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Conclusion

Indian insurance sector is likely to register unprecedented growthof 200% and attain a size of Rs. 2000 billion ($51.2 billion) by2009-10, in which a private sector insurance business will achievea growth rate of 140% as a result of aggressive marketingtechnique being adopted by them against 35-40% growth rate ofstate owned insurance companies. The rural market offerstremendous growth opportunities for insurance companies andinsurers should develop viable and cost-effective distributionchannels; build consumer awareness and confidence. The stateowned insurance companies such as LIC and GIC have limitednumber of policies to offer to their subscribers while in case ofprivate insurance companies, their policy numbers are many moreand the premium amount as well as the maturity period is muchcompetitive as against those of government insurance companies.The private sector insurance players have started exploring therural markets in which until recently, the state owned companieshad the monopoly. Here it can be concluded that the summerinternship program, done for partial fulfillment of the MBA course in

ICFAI University, in TATA AIG Life Insurance Co. Ltd. has beencompleted successfully. Following are the achievements doneduring the summer internship from 24th February 2009 to 23rdMay 2009. a) Survey done with interest of TATA AIG has beenconducted successfully and results are discussed above. b) Salesdone during the time have done great business to the company. c)The experience gained during the internship has sharpen my skillsand given a corporate exposure.

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References

For the references different books, journals, and newspapers havebeen used and different websites have been used.

WWW.tata-aig.com/life insurance

www.tata-aig general.com

www.tata-aig-life.com

www.irdaindia.org

www.allconferenes.com

Name of Book and Journal:

Insurance IndustryBusiness Reasearch MethodTata Aig Life Insurance Co.Ltd

Name of News Paper:

Business Line

The TelegraphEconomics TimesThe Economics Times
http://www.tata-aig.com/lifehttp://www.tata-aig-life.com/http://www.irdaindia.org/http://www.allconferenes.com/http://www.tata-aig.com/lifehttp://www.tata-aig-life.com/http://www.irdaindia.org/http://www.allconferenes.com/

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