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A PROJECT ON
Study of Canara HSBC Oriental Bank of Commerce Life Insurance
Ltd.
SUBMITTED BY
Nisha A. Bangar
M.COM. (part-I) SEM.-II, 2012-13
SEAT NO:-
Roll No:-47
UNDER THE GUIDANCE OF
PROF. Tushar Shah
SUBMITTED TO
University of Mumbai
NIRMALA MEMORIAL FOUNDATION COLLEGE OF
COMMERCE AND SCIENCE
Thakur Complex, 90feet road
Kandivali (E), Mumbai-400 101
Academic Year- 2012-13
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Certificate
This is to certify that Miss. Nisha A. Bangar studying in
M.COM-I at Nirmala Memorial
Foundation College of Commerce And Science, Kandivali (E), has
completed a project on the
Canara HSBC Oriental Bank of Commerce Life Insurance Company L
td. in the Academic
year 2012-13.
This information which is submitted is true and original to the
best of my knowledge.
-------------------- ---------------------
Signature of principal Signature of Coordinator
(Dr. T. P. Madhu Nair) (Dr. Neha Goel)
---------------------- ----------------------
Signature Of Project Guide Signature of External Examiner
(Prof. Tushar Shah)
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Declaration
I NISHA A. BANGAR of Nirmala College of Commerce and Science ,
studyingin M.COM. (Part I) hereby declare that I have completed the
project on A Study of Canara
HSBC Oriental Bank of Commerce Life Insurance Company Ltd. in
the academic year
2012-13.
The information submitted is true and original to the best of
knowledge.
--------------------- ---------------------
Date of Submission Students S ignature
Nisha A. Bangar
M.COM. - Part I
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Acknowledgement
The satisfaction that accompanies the successful completion of a
task would beincomplete without the mention of people who made it
possible, whose constant guidance
and encouragement crown all the efforts with success.
I take this opportunity to express my profound gratitude to
Principal Dr. T.P. Madhu
Nair and the management Of Nirmala Degree College of Science And
Commerce for
giving the opportunity to accomplish that project work.
My journey till date would be incomplete without extending my
gratitude towards
Mr. Tushar Shah my course coordinate Dr. Neha Goel my project
guide for giving her
valuable inputs and suggestion, who not only served as my
supervisory but also
encouraged and challenged me throughout my academic program. He
patiently guided me
through the dissertation process, never accepting less than my
best efforts.
Above all, I would like to thank my family members who were very
supportive and
were constant source of inspiration. It is for them and the
great almighty god that I have
succeeded in my efforts.
I thank them all.
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Preface
As a student, I was very keen to understand the link and the
importance of insurance policy for business and society.
History has shown that the life insurance is an important part
of the insurance. There are
various types of insurance and insurance company. Life Insurance
policy is related to human.
The study is based on secondary data available from various
books and websites my
inference is based on the data that I have obtained and
understood.
The project helps us to understand the importance of life
insurance policy. It is beneficial tothe customers because customer
get the good types of policy..
My study shows that life insurance policy in a simple way to
understand by the readers who
do not have any idea about the life insurance. As I was not
knowing the meaning of the life
insurance before starting the research work. I had heard about
it in class and colleges but I was
not knowing the meaning of its. So I took this as a project to
study in detail.
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Objective
Because of the following reasons, I prefer this project work to
get the knowledge of the
life insurance company.
1) TO STUDY THE DISTURIBUTION AND SALES OF INSURANCE
SECTOR:-
This is the one of the main objective to know how the policies
reach to the customer and
who is the target customer and what would be their motives.
2) TO STUDY BUSINESS MODEL AND ROLE OF FINANCIALADVISOR IN
INSURANCE:-
Act, 1938 in India Insurance agents are governed by the
provision of the insurance, Act
1938 and the IRDA Act 1999.This acts guide insurers on matter of
appointment, functions and
remuneration of insurance agents. An agent must have necessary
license under section 42 of the
insurance.
3) TO CREATE BRAND AWARENESS OF COMPANY:-
The foremost objective is to create brand awareness among the
People. Strategy should
be such that more and more people should come to know About
Canara HSBC Oriental Bank of
Commerce of Life Insurance. Also that people should get an idea
of the products of CanaraHSBC Oriental Life Insurance.
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INDEX
Chap no. Contents Page no.
1
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2
34
Introduction
Meaning of Insurance
Definition
Role & Importance
Types of insurance
Life Insurance Company
SWOT AnalysisResearch Methodology
5
6
7
15
18
3236
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1. Introduction
1.1 Meaning of Insurance-:
Insurance provides financial protection against a loss arising
out of happening of an
uncertain event. A person can avail this protection by paying
premium to an insurance company.
A pool is created through contributions made by persons seeking
to protect themselves from
common risk. Premium is collected by insurance companies which
also act as trustee to the pool.
Any loss to the insured in case of happening of an uncertain
event is paid out of this pool.
Insurance works on the basic principle of risk-sharing. A great
advantage of insurance is that it
spreads the risk of a few people over a large group of people
exposed to risk of similar type.
Under an insurance contract, one party called insurer,
undertakes to indemnify the losses
suffered for some specified causes, by the other party called
insured, in consideration for fixed
premium. Insurance contracts may be characterized generally by
the following:
A) The purchaser of insurance contract makes an initial payment
or deposit to the insurance
company in advance of the possible occurrence of an insured
event.
B) When the insurance contract is made, the insurance company
does not know if, how
much, or when amounts will be paid under the contract.
The document that contains terms of insurance contract is called
insurance policy. The amount
payble by insured to the insurer is known as premium. Premium
for the first year of the policy is
known as the first years premium. Premium for subsequent year is
know n as renewal premium.
The amount payable by the insurer to the insured is known as
claim. In the case of life insurance,
claim may arise on death of insured or maturity of the policy.
In case of general insurance, claim
arises only on loss. -5-
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Insurance is the equitable transfer of the risk of a loss, from
one entity to another in exchange for
payment. It is a form of risk management primarily used to hedge
against the risk of a
contingent, uncertain loss. An insurer, or insurance carrier, is
a company selling the insurance;
the insured, or policyholder, is the person or entity buying the
insurance policy.
The amount to be charged for a certain amount of insurance
coverage is called the premium.
Risk management, the practice of appraising and controlling
risk, has evolved as a discrete field
of study and practice.
The transaction involves the insured assuming a guaranteed and
known relatively small loss in
the form of payment to the insurer in exchange for the insurer's
promise to compensate
(indemnify) the insured in the case of a financial (personal)
loss. The insured receives a contract,
called the insurance policy, which details the conditions and
circumstances under which the
insured will be financially compensated.
Definition-:
Insurance is a contract between two parties whereby one party
agrees to undertake the risk
of another in exchange for consideration known as premium and
promises to pay a fixed sum of
money to the other party on happening of an uncertain event
(death) or after the expiry of a
certain period in case of life insurance or to indemnify the
other party on happening of an
uncertain event in the case of general insurance.
The party bearing the risk is known as the 'insurer' or
'assurer' and the party whos the risk is
covered is known as the insured or assured
-6-
http://en.wikipedia.org/wiki/Risk_managementhttp://en.wikipedia.org/wiki/Hedge_(finance)http://en.wikipedia.org/wiki/Risk_managementhttp://en.wikipedia.org/wiki/Decision_modelhttp://en.wikipedia.org/wiki/Indemnifyhttp://en.wikipedia.org/wiki/Contracthttp://en.wikipedia.org/wiki/Insurance_policyhttp://en.wikipedia.org/wiki/Insurance_policyhttp://en.wikipedia.org/wiki/Contracthttp://en.wikipedia.org/wiki/Indemnifyhttp://en.wikipedia.org/wiki/Decision_modelhttp://en.wikipedia.org/wiki/Risk_managementhttp://en.wikipedia.org/wiki/Hedge_(finance)http://en.wikipedia.org/wiki/Risk_management
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1.2 What is the Role and Importance of Insurance?
The process of insurance has been evolved to safeguard the
interests of people from uncertainty
by providing certainty of payment at a given contingency. The
insurance principle comes to be
more and more used and useful in modern affairs.
Not only does it serve the ends of individuals, or of special
groups of individuals, it tends to
pervade and to transform our modern social order, too. The role
and importance of insurance,
here, has been discussed in three phases: (i) uses to
individual, (ii) uses to a special group of
individuals, viz., to business or industry, and (iii) uses to
the society.
Uses to an individual :
1. Insurance provides Security and Safety :
The insurance provides safety and security against the loss on a
particular event. In case of life
insurance payment is made when death occurs or the term of
insurance is expired. The loss to the
family at a premature death and payment in old age are
adequately provided by insurance. In
other words, security against premature death and old age
sufferings are provided by life
insurance.
Similarly, the property of insured is secured against loss on a
fire in fire insurance. In other insurance, too, this security is
provided against the loss at a given contingency.
The insurance provides safety and security against the loss of
earning at death or in golden age,
against the loss at fire, against the loss at damage,
destruction or disappearance of property,
goods, furniture and machines, etc.
2. Insurance affords Peace of Mind :
The security wish is the prime motivating factor. This is the
wish which tends to stimulate to
more work, if this wish is unsatisfied, it will create a tension
which manifests itself to the
individual in the form of an unpleasant reaction causing
reduction in work.
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The security banishes fear and uncertainty, fire, windstorm,
auto-mobile accident, damage and
death are almost beyond the control human agency and in
occurrence of any of these events may
frustrate or weaken the human mind. By means of insurance,
however, much of the uncertainty
that centers about the wish for security and its attainment may
be eliminated.
3. Insurance protects Mortgaged Property :
At the death of the owner of the mortgaged property, the
property is taken over by the lender of
money and the family will be deprived of the uses of the
property. On the other hand, the
mortgagee wishes to get the property insured because at the
damage or destruction of the
property he will lose his right to get the loan replayed.
The insurance will provide adequate amount to the dependents at
the early death of the property-
owner to pay off the unpaid loans. Similarly, the mortgagee gets
adequate amount at the
destruction of the property.
4. Insurance eliminates dependency:
At the death of the husband or father, the destruction of family
needs no elaboration. Similarly,
at destruction of, property and goods, the family would suffer a
lot. It brings reduced standards
of living and the suffering may go to any extent of begging from
the relatives, neighbours or
friends.
The economic independence of the family is reduced or,
sometimes, lost totally. What can be
more pitiable condition than this that the wife and children are
looking others more benevolent
than the husband and father, in absence of protection against
such dependency? The insurance is
here to assist them and provides adequate amount at the time of
sufferings.
5. Life Insurance encourages saving:
The elements of protection and investment are present only in
case of life insurance. In property
insurance, only protection element exists. In most of the life
policies elements of saving
predominates. These policies combine the programs of insurance
and savings.
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The saving with insurance has certain extra advantages
(i) Systematic saving is possible because regular premiums are
required to be compulsorily paid.
The saving with a bank is voluntary and one can easily omit a
month or two and then abandon
the program entirely.
(ii) In insurance the deposited premium cannot be withdrawn
easily before the expiry of the term
of the policy. As contrast to this, the saving which can be
withdrawn at any moment will finish
within no time.
(iii) The insurance will pay the policy money irrespective of
the premium deposited while in case
of bank-deposit; only the deposited amount along with the
interest is paid.
Uses to business :
The insurance has been useful to the business society also. Some
of the uses are discussed below:
1. Uncertainty of business losses is reduced :
In world of business, commerce and industry a huge number of
properties are employed. With a
slight slackness or negligence, the property may be turned into
ashes. The accident may be fatal
not only to the individual or property but to the third party
also.
New construction and new establishment are possible only with
the help of insurance. In absence
of it, uncertainty will be to the maximum level and nobody would
like to invest a huge amount in
the business or industry. A person may not be sure of his life
and health and cannot continue the
business up to longer period to support his dependents. By
purchasing policy, he can be sure of
his earning because the insurer will pay a fed amount at the
time of death.
Again, the owner of a business might foresee contingencies that
would bring great loss. To meet
such situations they might decide to set aside annually a
reserve, but it could not be accumulateddue to death. However, by
making an annual payment, to secure immediately, insure policy
can
be taken.
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2. Business-efficiency is increased with insurance :
When the owner of a business is free from the botheration of
losses, he will certainly devote
much time to the business. The care free owner can work better
for the maximisation of the
profit. The new as well as old businessmen are guaranteed
payment of certain amount with theinsurance policies at the death
of the person; at the damage, destruction or disappearance of
the
property or goods.
The uncertainty of loss may affect the mind of the businessmen
adversely. The insurance,
removing the uncertainty, stimulates the businessmen to work
hard.
3. Key Man Indemnification :
Key man is that particular man whose capital, expertise,
experience, energy, ability to control,goodwill and dutifulness
make him the most valuable asset in the business and whose
absence
will reduce the income of the employer tremendously and up to
that time when such employee is
not substituted.
The death or disability of such valuable lives will, in many
instances, prove a more serious loss
than that by fire or any hazard. The potential loss to be
suffered and the compensation to the
dependents of such employee require an adequate provision which
is met by purchasing adequate
life-policies.
The amount of loss may be up to the amount of reduced profit,
expenses involved in appointing
and training, of such persons and payment to the dependents of
the key man. The Term Insurance
Policy or Convertible Term Insurance Policy is more suitable in
this case.
4. Enhancement of Credit :
The business can obtain loan by pledging the policy as
collateral for the loan. The insured
persons are getting more loans due to certainty of payment at
their deaths. The amount of loan
that can be obtained with such pledging of policy, with interest
thereon will not exceed the cash
value of the policy. In case of death, this value can be
utilised for setting of the loan along with
the interest.
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If the borrower is unwilling to repay the loan and interest, the
lender can surrender the policy and
get the amount of loan and interest thereon repaid. The
redeemable debentures can be issued on
the collateral of capital redemption policies. The' insurance
properties are the best collateral and
adequate loans are granted by the lenders.
5. Business Continuation:
In any business particularly partnership business may
discontinue at the death of any partner
although the surviving partners can restart the business, but in
both the cases the business and the
partners will suffer economically.
The insurance policies provide adequate funds at the time of
death. Each partner may be insured
for the amount of his interest in the partnership and his
dependents may get that amount at the
death of the partner.
With the help of property insurance, the property of the
business is protected against disasters
and the chance of disclosure of the business due to the
tremendous waste or loss.
6. Welfare of Employees :
The welfare of employees is the responsibility of the employer.
The former are working for the
latter. Therefore, the latter has to look after the welfare of
the former which can be provision for
early death, provision for disability and provision for old
age.
These requirements are easily met by the life insurance,
accident and sickness benefit, and
pensions which are generally provided by group insurance. The
premium for group insurance is
generally paid by the employer. This plan is the cheapest form
of insurance for employers to
fulfil their responsibilities.
The employees will devote their maximum capacities to complete
their jobs when they are
assured of the above benefits. The struggle and strife between
employees and employer can be
minimised easily with the help of such schemes.
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1.3 Life insurance:
Life insurance is a contract between an insurance policy holder
and an insurer, where the insurer
promises to pay a designated beneficiary a sum of money (the
"benefits") upon the death of the
insured person. Depending on the contract, other events such as
terminal illness or critical illness
may also trigger payment. The policy holder typically pays a
premium, either regularly or as a
lump sum.
Other expenses (such as funeral expenses) are also sometimes
included in the benefits. The
advantage for the policy owner is "peace of mind", in knowing
that the death of the insured
person will not result in financial hardship for loved ones and
lenders
It is possible for life insurance policy payouts to be made in
order to help supplement retirement
benefits; however, it should be carefully considered throughout
the design and funding of the
policy itself.
Life policies are legal contracts and the terms of the contract
describe the limitations of the
insured events. Specific exclusions are often written into the
contract to limit the liability of the
insurer; common examples are claims relating to suicide, fraud,
war, riot and civil commotion.
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http://en.wikipedia.org/wiki/Insurance_policyhttp://en.wikipedia.org/wiki/Insurancehttp://en.wikipedia.org/wiki/Beneficiaryhttp://en.wikipedia.org/wiki/Terminal_illnesshttp://en.wikipedia.org/wiki/Critical_illnesshttp://en.wikipedia.org/wiki/Critical_illnesshttp://en.wikipedia.org/wiki/Terminal_illnesshttp://en.wikipedia.org/wiki/Beneficiaryhttp://en.wikipedia.org/wiki/Insurancehttp://en.wikipedia.org/wiki/Insurance_policy
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History
Life Insurance in its modern form came to India from England in
the year 1818. Oriental
Life Insurance Company started by Europeans in Calcutta was the
first life insurance company
on Indian Soil. All the insurance companies established during
that period were brought up with
the purpose of looking after the needs of European community and
Indian natives were not being
insured by these companies. However, later with the efforts of
eminent people like Babu
Muttylal Seal, the foreign life insurance companies started
insuring Indian lives. But Indian lives
were being treated as sub-standard lives and heavy extra
premiums were being charged on them.
Bombay Mutual Life Assurance Society heralded the birth of first
Indian life insurance company
in the year 1870, and covered Indian lives at normal rates.
Starting as Indian enterprise with
highly patriotic motives, insurance companies came into
existence to carry the message of insurance and social security
through insurance to various sectors of society.
Bharat Insurance Company (1896) was also one of such companies
inspired by nationalism.
The Swadeshi movement of 1905-1907 gave rise to more insurance
companies.
The United India in Madras, National Indian and National
Insurance in Calcutta and the Co-
operative Assurance at Lahore were established in 1906. In 1907,
Hindustan Co-operative
Insurance Company took its birth in one of the rooms of the
Jorasanko, house of the great poetRabindranath Tagore, in
Calcutta.
The Indian Mercantile, General Assurance and Swadeshi Life
(later Bombay Life) were some of
the companies established during the same period. Prior to 1912
India had no legislation to
regulate insurance business. In the year 1912, the Life
Insurance Companies Act, and the
Provident Fund Act were passed. The Life Insurance Companies
Act, 1912 made it necessary
that the premium rate tables and periodical valuations of
companies. The first two decades of the
twentieth century saw lot of growth in insurance business. From
44 companies with total
business-in-force as Rs.22.44 crore, it rose to 176 companies
with total business-in-force as
Rs.298 crore in 1938.
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During the mushrooming of insurance companies many financially
unsound concerns were also
floated which failed miserably. The Insurance Act 1938 was the
first legislation governing not
only life insurance but also non-life insurance to provide
strict state control over insurance
business. The demand for nationalization of life insurance
industry was made repeatedly in the
past but it gathered momentum in 1944 when a bill to amend the
Life Insurance Act 1938 was
introduced in the Legislative Assembly. However, it was much
later on the 19th of January,
1956, that life insurance in India was nationalized.
About 154 Indian insurance companies, 16 non-Indian companies
and 75 provident were
operating in India at the time of nationalization.
Nationalization was accomplished in two stages;
initially the management of the companies was taken over by
means of an Ordinance, and later,
the ownership too by means of a comprehensive bill.
The Parliament of India passed the Life Insurance Corporation
Act on the 19th of June 1956, and
the Life Insurance Corporation of India was created on 1st
September, 1956, with the objective
of spreading life insurance much more widely and in particular
to the rural areas with a view to
reach all insurable persons in the country, providing them
adequate financial cover at a
reasonable cost.
LIC had 5 zonal offices, 33 divisional offices and 212 branch
offices, apart from its corporateoffice in the year 1956. Since
life insurance contracts are long term contracts and during the
currency of the policy it requires a variety of services need
was felt in the later years to expand
the operations and place a branch office at each district
headquarter. Re-organization of LIC took
place and large numbers of new branch offices were opened. As a
result of re-organisation
servicing functions were transferred to the branches, and
branches were made accounting units.
It worked wonders with the performance of the corporation. It
may be seen that from about
200.00 crores of New Business in 1957 the corporation crossed
1000.00 crores only in the year
1969-70, and it took another 10 years for LIC to cross 2000.00
crore mark of new business. But
with re-organisation happening in the early eighties, by 1985-86
LIC had already crossed
7000.00 crore Sum Assured on new policies.
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Today LIC functions with 2048 fully computerized branch offices,
109 divisional offices, 8
zonal offices, 992 satellite offices and the corporate
office.
LICs Wide Area Network covers 109 divisional offices and
connects all the branches through a
Metro Area Network. LIC has tied up with some Banks and Service
providers to offer on-line
premium collection facility in selected cities. LICs ECS and ATM
prem ium payment facility is
an addition to customer convenience. Apart from on-line Kiosks
and IVRS, Info Centers have
been commissioned at Mumbai, Ahmadabad, Bangalore, Chennai,
Hyderabad, Kolkata, New
Delhi, Pune and many other cities. With a vision of providing
easy access to its policyholders,
LIC has launched its SATELLITE SAMPARK offices. The satellite
offices are smaller, leaner
and closer to the customer. The digitalized records of the
satellite offices will facilitate anywhere
servicing and many other conveniences in the future.
1.4 Types of insurance
Types of insurance
Insurance business is basically of two types- Life and General.
These terms are define under the
insurance Act, 1938 as follows.
i)Life insurance business means the business of effecting
contracts of insurance upon humanlife, including any contact where
by the payment of money is assured on death or happening of
any contingency dependent on human life and shall be deemed to
include the granting of
disability and indemnity benefit ; annuities upon human life;
and superannuation allowance and
annuities.
ii)General insurance business means fire, marine or
miscellaneous insurance business,
whether carried on singly or in combination with one or more of
them.
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Types of policies
1 life insurance contract:-
Life insurance is a contract between the insurer and insured.
The person who insures
his life is called the insured. The company which insures his
life is called insurer. The insured is
required to pay some amount of money in regular intervals. These
payments are refereed as
premiums. A sum of assured money is paid to the insured in case
policy holder successfully
makes all the payments and the policy comes to an end. On the
contrary if insured dies of an
unexpected event the sum assured is paid to his dependents
irrespective of full payment of the
policy amount. The insurance company pays the money on death or
after the policy period
whichever occurs first.
2 Term life insurance:
A term insurance policy is a pure risk cover for a specified
period of time. The sum
assured is payable only if the policy holder dies within he
policy term. For instance, if a person
buys Rs. 2 lakh policy for 15- years, his family is entitled to
the money ih he dies within that 15-
year period. If he survives the 15- year period, then he is not
entitled to any payment; the
insurance company keeps the entire premium paid during the 15-
year period. There is no
element of savings or investment in a policy. It is 100 percent
risk cover. It simply means that a person pays a certain premium to
protect his family against his sudden death.
3 Whole life policy:
A whole life policy is an insurance cover against death,
irrespective of when it
happens. Under this plan, the policyholder pays regular premiums
until his death, following
which the money is handed over to his family.
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4 Endowment Policies:
In an Endowment policy, the sum assured is payable even if the
insured survives the policy term.
If the insured dies during the tenure of the policy, the
insurance firm has to pay the sum assured
just as any other pure risk cover.
A pure Endowment policy is also form of financial saving,
whereby if the person covered
remains alive beyond the tenure of the policy; he gets back the
sum assured with some other
investment benefit.
5 Money back policies:-
These policies are structured to provide sums required as
anticipated expenses
over a stipulated period of time. A portion of sum assured is
payable at regular intervals. On
survival the remainder of the sum assured is payable. In case of
death, the full sum assured is
payable to the insured. The premium is payable for a particular
period of time.
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2 Company Incorporation
Type Public
Industry Insurance
Incorporated 16 th June,2008
Headquarter Gurgaon
Key People John Holden (CEO)
Commenced Bangalore
No. of branches 929
No, of product (group) 5
Asset under Management Rs. 5881.20 crore
No. of offices 28
Services Services list (show)
Total Capital 1075 crore
Employee Strength 875
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Canara HSBC Oriental Bank of Commerce Life Insurance Company
Limited
The Company was launched on 16 June 2008 and is a Joint Venture
between Canara Bank
(holding 51%), HSBC Insurance (Asia Pacific) Ltd (holding 26%),
the Asian insurance arm of
one of the world's largest banking and financial services groups
- HSBC and Oriental Bank of
Commerce (holding 23%).
Canara HSBC Oriental Bank of Commerce Life Insurance Company
understands that
today innovation is a key differentiator. Based on market demand
and customer preferences, theCompany currently offers 9 products -
3 unit-linked and 6 traditional. Individual unit-linked
products include Grow Smart Plan, Dream Smart Plan and Future
Smart Plan and traditional
products include Secure Smart Plan, Pure Term Plan and Immediate
Pension Plan. Group
Products include Group Term Plan, Group Loan Protection Plan,
Group Traditional Plan and
Canara HSBC Oriental Bank of Commerce Life Corporate Group Term
Plan on traditional
platform. The Company currently has 29 offices across the
country (in 27 cities) to service
customers, provide necessary training and coaching support to
the bank staff and ongoing service
support to around 800 bank branches (with SPs) selling its
products in 316 locations. Out of 316
locations, around 80 locations are in semi-urban and rural
areas.
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http://www.canarahsbclife.com/lifeinsurance/portal/canh/!ut/p/c4/04_SB8K8xLLM9MSSzPy8xBz9CP0os3g_L4vQQFd3EwMDwyATA8_gAH8nMwNzIwMLQ_2CbEdFABKrlF4!/
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To deliver affordable insurance solutions to address the needs
of the rural population, the social
sector and economically weaker sections of the society,
especially those who have no or very
little access to organised financial services, the Company tied
up with three Rural Regional
Banks (RRBs) Pragathi Gramin Bank in Karnataka, Shreyas Gramin
Bank in Uttar Pradesh and
South Malabar Gramin Bank in Kerala. Through a strong network of
around 790 branches of the
three RRBs, Canara HSBC Oriental Bank of Commerce Life Insurance
Company will reach out
to more than 7 million customers in addition to the existing
customer base of 53 million. Canara
HSBC Oriental Bank of Commerce Life Insurance Company is the
fastest Indian life insurance
company to cross Rs 500 crore, Rs 1000 crore and Rs 1500 crore
in weighted premium income
till date.
The Company operates a bank assurance model.
It has an exclusive access to around 60 million customers and
networks of over 6000 bank
branches of its corporate agent.
1. The in-depth local market knowledge of Canara Bank and
Oriental Bank of Commerce
coupled with the considerable insurance experience, product
range and proven banc assurance
capabilities of HSBC make this an unparalleled union of
financial strength, expertise and most
importantly, trust.
2. To deliver affordable insurance solutions to address the
needs of the rural population, the
Company has tied up with three Rural Regional Banks (RRBs) -
Pragathi Gramin Bank in
Karnataka and Shreyas Gramin Bank in Uttar Pradesh in December
2009 and South Malabar
Gramin Bank in June 2010.
The Company has a Resolution Centre (call centre) at the Head
Office that caters to the diverse
needs of its customers pan India and has a capability to handle
calls in 10 different languages.
3. The Company is the fastest Indian life insurance company to
cross ` 500 crore, ` 1000 crore, ` 1500 crore and `2000 crore in
weighted premium income till date.
4. The company through its prudent investment strategy has
demonstrated consistent fund
performance, exceeding benchmarks across all funds.
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2.1 Canara Bank, HSBC and Oriental Bank of Commerce to establish
Life
Insurance Company in India
Canara Bank, HSBC Insurance (Asia-Pacific) Holdings Limited and
Oriental Bank of Commerce
(OBC) have today signed a non-binding Memorandum of
Understanding to jointly establish a
life insurance company in India.
The new company will have exclusive access to the customer bases
of both of the State-owned
banks, Canara Bank and OBC, and of HSBC in India. This comprises
more than 40 million
people and a nationwide network of 3,600 branches. This
formidable distribution capability will
be used by the company to become a significant player in the
country's rapidly expanding life
insurance industry.
Under the proposed agreement, Canara Bank will take a 51 per
cent stake in the new company,
HSBC a 26 per cent interest and OBC the remaining 23 per cent.
The new life insurance
company will be capitalized at INR3, 250 million (approximately
US$73 million), of which
HSBC will contribute INR1, 770 million (approximately US$40
million), Canara Bank
INR1,020 million (approximately US$23 million) and OBC INR460
million (approximately
US$10 million). Under the terms of the agreement, HSBC will
provide a range of management
services, which may include providing executives for senior
roles.
Life insurance premiums in India grew at an annual rate of 21
per cent in the six years following
the opening of the market to private players in 1999, exceeding
US$20 billion in 2005. From
April to November 2006, new life insurance premiums grew by 155
per cent, according to the
business figures released by India's Insurance Regulatory and
Development Authority. However,
with a penetration rate of only 2.5 per cent in 2005, India's
nascent life insurance market has
considerable long-term growth potential. The signing of the MOU
today to promote a life
insurance company with HSBC Insurance and Oriental Bank of
Commerce marks a significant
step forward for Canara Bank in terms of creating and delivering
value added insurance products
not only to the existing customers but also to the customers and
prospects of our partner
institutions. -21-
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By collaborating with HSBC we shall be in a position to bring
the best of international insurance
products to the fast growing Indian markets.
Oriental Bank of Commerce signed a Memorandum of Understanding
with Canara Bank and
HSBC Insurance (Asia Pacific) Holdings Ltd. in March 2007for
setting up Joint Venture in Life
Insurance. The Joint Venture Company got registered with
Registrar of Companies as Canara
HSBC Oriental Bank of Commerce Life Insurance Company Ltd in
September 2007. The
Company has started its operation in June 2008.
The shareholding pattern of the Company is as given below.
Canara Bank -51%
HSBC - 26% OBC - 23%
2.2 Achievement
Made record-breaking entry- in July 2008, in its first full
month of business - the Company
wrote over INR 12 crores of annualized premiums, exceeding what
many companies achieved in
their entire first year of operations.
Went on to become the fastest life insurer to write ` 100 crore,
` 200 crore, ` 300 crore, ` 500
crore and ` 1000 crore in terms of WPI (Weighted Premium
Income). *
The Company also holds the record for the Highest Average
Premium (GWP) in the industry for
individual business since launch.
The Company is the First to launch Immediate Payouts on Death
Claim, so that the deceaseds
family will receive the fund value immediately on registration
of death claim under unit-linked
policies.
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The Company also holds the record for the Highest Average
Premium (GWP) in the industry for
individual business since launch.
The Company is the First to launch Immediate Payouts on Death
Claim, so that the deceaseds
family will receive the fund value immediately on registration
of death claim under unit-linked
policies.
2.3 Company distributor:
Canara Bank was established in 1906, and has completed over a
century of operations in the
Indian banking industry. It is recognized today as the largest
nationalized bank in India in terms of
aggregate business volume. The Bank's total business crossed `
4, 00,000 crore as on 31 st March 2010.
The Government of India owns about 73.17% of the Bank. Canara
Bank has a rating of AAA/Stable
CRISIL (Credit Rating Information Services of India)
respectively. It currently has 3046 branches
spread across all geographical segments and a customer base
exceeding 37 million. The honkong and
shanghai banking corporation limited in India offers a full
range of banking and financial services to
over 2 million customers through its 50 branches and 150 ATMs
across 29 cities.
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HSBC is one of India's leading financial services groups, with
over 35,000 employees in its banking,
investment banking and capital markets, asset management,
insurance broking, insurance, software
development and global resourcing operations in the country. It
is a leading custodian in India. More than
5% of India's exports and imports pass through HSBC India's
banking channels. The asset management
business in India is one of the leading players in the industry.
The Bank is at the forefront in arranging
deals for Indian companies investing overseas and foreign
investments into the country. It has a fully
enabled and established insurance advisory of international
standards.
It is one of the leading players in domestic and export
factoring, and one of the leading banks for
an increasing number of SMEs. With its extensive reach across
Asia, the Americas and Europe, HSBC
has the capacity to offer complete banking and financial
solutions to India's burgeoning economy. In
2008, it acquired a majority stake in IL&FS Invest smart
(now renamed HSBC Invest Direct) that has
enabled it to offer retail brokerage services to its customer
across a wider geography.
HSBC's network of branches is located at Ahmadabad, Bangalore,
Chandigarh, Chennai,
Coimbatore, Gurgaon, Guwahati, Hyderabad, Indore, Jaipur,
Jodhpur, Kochi, Kolkata, Ludhiana,
Lucknow, Mumbai, Mysore, Nagpur, Noida, New Delhi, Nasik, Patna,
Pune, Raipur, Surat, Trivandrum,
Thane, Vadodara and Visakhapatnam.
The Bank is the founding and a principal member of the HSBC
Group which, with around 8,000offices in 88 countries and
territories and assets of US$2,364 billion at 31 December 2009, is
one of the
world's largest banking and financial services
organisations.
Corporate Social Responsibility-:
Canara HSBC Oriental Bank of Commerce Life Insurance Company is
committed to more than just
giving back to the society or community within which it operates
and focuses on doing well by doing
well.
The business of Life Insurance is all about social security and
protection i.e. aimed at the well being of
human beings and the society as a whole. One of the five core
values of the Company is Corporate
Citizenship which stresses the fact that businesses and markets
are essentially aimed at the welfare of
society and thus complement each other.
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As a part of its commitment to CSR, the presentation of life
insurance policies to 8 underprivileged
children at launch was the first step towards this
initiative.
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2.4 Canara HSBC Life Insurance - Product Portfolio
Canara HSBC Term Plans :
The cheapest yet most vital of life insurance a product which
protect our family fromfinancial uncertainties and helps us secure
our future, once we are gone.
Pure Term Plan :
Canara HSBC Oriental bank of commerce life Companys Pure term
plan is a traditional non
participating term plan that provides pure life protection. This
plan caters specifically to those who
are looking for securing life style for their family members in
case of an unfortunate eventuality. It
also caters to individual who are the primary income earners of
the family may stand to suffer heavily in case of loss of income
due to premature income.
Eligibility
Entry Age : Age should be 18 years and 60 years .
Policy Term: A wide variety of policy term to choose from to
meet customers need accurately-
pick a term from 5 to 30 years or coverage age till 60
years.
Sum Assured:
The minimum sum assured will get in Rs. 10, 00,000. We get sum
assured at affordable
cost, across wide range of coverage age, depending our
needs.
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http://www.policybazaar.com/life-insurance/life-insurance-india.aspxhttp://www.policybazaar.com/life-insurance/life-insurance-india.aspx
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Premium Option:
Option is to choose single premium (one time premium only) or
regular premium (yearly, hal
yearly, quarterly and monthly.
Additional Benefit:
If there are female, they get attractive rebate on premium
rates. We can save tax under section 80C
& get free tax free benefits under section 10 (10D) of the
income tax Act, 1961.
Canara HSBC Child Plans:
Canara HSBC plans provide us a long-term investment opportunity
to build a bright future for our
child and a comprehensive child insurance cover to protect in
case of an eventuality
Future Smart Plan :
In this policy, the investment risk in investment portfolio is
borne by the policyholder. Canara
HSBC Oriental Bank Of Commerce Life Insurance companys Future
Smart Plan is a unit lin ked
endowment insurance plan that provides us long -term investment
opportunity to build a bright
future for our child. Its comprehensive insurance cover (Sum
Assured on death and Premium
Funding on death or disability) assists you in securing their
financial future in case of anyunfortunate event. It can be
customized with choice of policy and premium payment term to
link
benefits of the plan with your childs financial requirement e.g.
higher education needs or when
they are ready for marriage. With optional features like Auto
Funds Rebalancing and Safety
Switch Option we can systematically manage our funds without
compromising on the security.
Product Boundary
Entry Age: Age should be 18 years and 60 years.
Premium Term: Payment of 10 years and more(up to term
policy)
Policy Term: The policy term of 10 15 20 and 25 years
http://www.policybazaar.com/life-insurance/child-insurance-india.aspxhttp://www.policybazaar.com/life-insurance/child-insurance-india.aspx
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Premium Options
Premium Frequency: This plan offers only annual premium payment
frequency.
Annual Premium: The minimum annual premium is Rs. 25,000 (Rs.
50,000 for policy term of 10
years). We will have to pay this premium throughout the premium
payment term chosen by us.
There are attractive discounts on premium allocation charge in
case you choose to pay renewal
premiums through ECS / Standing Instructions.
Dream Smart Plan :
In this policy, the investment risk in investment portfolio is
borne by the policyholder.
Canara HSBC Oriental Bank Of Commerce Life Insurance company's
Dream Smart Plan is a unit
linked endowment insurance plan that provides you the
flexibility of planning for key milestones o
life such as buying a house, children's higher education, a
dream vacation etc. You are covered for
20 years whereas you can choose to pay premiums for 10 to 20
years as per your investment
appetite. This plan provides you the twin benefit of securing
your life as well as investing in the
underlying funds, giving you the opportunity to make potential
market returns. At the same time, it
does not compromise on the security that you want to provide
your loved ones.
Product
Entry Age: Your age should be 7 years and 60 years
Premium Payment Term: A payment term between 10 years and 20
years; depending on your
requirement.
Policy Term: While you can pay premium for a shorter duration,
you are covered for a period of 20
years.
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Premium Options
This Plan offers only annual premium payment frequency. The
minimum annual premium is Rs.25,000.
You will have to pay this premium throughout the premium payment
term chosen by you.
Loyalty Addition
1% of your fund value will be added by way of additional
allocation of units at the end of the 15th
policy year to boost your investments.
Investment Funds
You can choose to invest in 5 investment funds with equity
exposure ranging from 0% to 100%,
depending on your investment philosophy:
Equity II fund
Growth plus Fund
Balanced plus Fund
Debt plus Fund
Liquid Fun
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2.5 The major charges levied in ULIP Plans are:
1 Allocation Charges:
This charge is a charge as percentage of premium paid.
Allocation Charge is very high in initial
years mostly in first year and then it comes down to 2% or even
nil in later years, depending on
which plan you plan choose.
2 Policy Administrative Charges:
This charge is either a fix charge expressed in absolute money
terms or expressed as percentage
of either premium or insurance cover. The insurance companies
design these charges very
smartly. In some plans these charges increase by certain
percentage every year.
3 Surrender Charges:
Liquidity is the major factor in deciding any investment avenue.
Therefore, you should also know
surrender charge, before you buy an insurance plan. If you have
not paid minimum 5 years
premiums, the surrender charge will be much higher. As per new
guidelines of IRDA, there should
not be any surrender charges after premiums have been paid for 5
years.
4 Mortality charges:
This charge is nothing but the cost of insurance cover you have
opted for. Mortality charges are
levied as per the current age of the insured and increase every
year as age increases. Mortality
Charges are deducted monthly in ULIPs by canceling equivalent
number of units from units
accumulated in your account.
5 Fund Management Charges:
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T his charge is levied as percentage of the total fund value. As
per new guidelines by the IRDA, this
cannot be more than 1.35% in ULIP plan.
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6 Guarantee Charge:
As the name itself suggests this charge is levied whenever there
is guaranteed returns offered in the
ULIP plan at the end of the term. All 7 year highest NAV
guaranteed plan have these charges inbuilt
in the plan.
7 Discontinuance Charge:
This charge is levied if any premium is not paid during the
first 5 years of the policy. These charges
are mostly expressed in percentage terms of the annual premium
or fund value subject to minimum
and maximum of certain amount.
8 Miscellaneous Charges:
These charges are levied for any change request is it changes of
address, change in nominee, and
change in premium frequency or for partial withdrawal. The
charge is generally between Rs. 100 to
Rs. 250 per transaction during the year.
9 Switching Charges:
Every insurance company allows you to switch your funds from one
fund to another fund minimum
3 to 4 times in a year free of charge. After that they may
charge you Rs. 100 for any additional
switch you make.
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3. SWOT ANALYSIS
Strengths
Present paid up capital: 925 Crore
No of Customer: 53 Million
Premium: 1500 Cores
Weaknesses
Non -government organization -people are having more faith on
L.I.C. Not reachable to the village
area still.
Most of the people are of the thoug ht that private life
insurance company will not last for long and
hence, they prefer to invest in Government undertaking
Slightly less brand awareness for brand of Canara HSBC Oriental
Life Insurance.
Opportunities
Over 76% pe ople in India not insuraranced
Good infrastructure.
Now days more peoples are conscious about the insurance.
Threats
Weather Cycle
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Balance sheet
As on 31 march 2011
(Rs. 000)
Particulars Schedule 31 st march, 2011
SOURCES OF FUNDS
SHAREHOLDERS FUND
Share capital
Reserve and surplus
Credit /debit fair value change account
L-8,L-9
L-10
7,000,000
1,250,000
---
Sub-Total 8,250,000
Borrowing
Policyholders funds:Debit/credit Fair value change account-
net
Policy liabilities
Linked Non-participating- individual life
Linked Non-participating- pension
Non Link Non Par- pension
Non Link Non Par- life
Insurance Reserve
Provision for linked liabilities
Linked non participating- individual life
Linked non participating- pension
L-11 --
(2443)
851,688
116,929
1,111,289
548,695
21,733,270
1,531,545
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Sub-Total 25,890,273
Funds for future appropriations --
TOTAL 34,140,973
APPLICATION OF FUND:
INVESTMENT
- Shareholders
- Policyholders
- Asset held to cover liked liabilities
LOANS
Fixed assets
Current assets
- Cash and balances
-
Advances and other assets
L-12
L-13
L-14
L-15
L-16
L-17
L-18
1,352,314
2,778,191
23,264,815
--
299,426
857,613
783,422
Sub total (A) 1,641,035
CURRENT LIABILITIES
PROVISION
L-19
L-20
1,859,804
19120
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Sub total ( B) 1,878,924
Net current assets (C) = (A-B) (237,889)
Miscellaneous expenditure
Debit balance in profit and loss account
L-21 ---
6,684,116
Total 34,140,973
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4. Conclusion
The majority of India is rural. This market cannot be ignored.
In small market the
credibility of the Indian pattern goes along with. The TATA name
is valuable here. However,
science the level of awareness is much lower than in urban
India, the distributing strategy has to be
different. Distinct has to be formulated for cash collection and
medical facilities. In the absence o
this, comp anys te nd to offer simple and easy to buy and sell
policies in most centres. This market
demands tailored dedicated insurance products, for them, is a
matter of secure saving for the future.
Mindsets are changing, but purchase pattern are not. The month
of February and March still are
busiest at LIC. The traditional hook of tax incentives and
savings will take a long time to change.
Private players need to step up their selling in terms of need
and protection. The life
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insurance industry is growing at 15 to 20 percent, and that
there is enough space for all the players to
thrive because there is so many things as too much insurance. As
the market grows, more generic
products will be put out, but there will be a differentiation in
individual products as compared to
similar products in endowment Private players are major
stakeholders in whole life insurance,
pension plans and term insurance. They have made a sizeable dent
by capturing 40% of the market.
Efficient customer service channels differentiate private
players from the traditional model. Many
companies provide better service today than they did two years
ago.
The customer gets quicker turnaround of claims and access to
faster processing. This is a
welcome change for a customer who was used to LIC previously.
Insurance companies are now
providing information about their performance on a regular
interval to bring transparency in
declaring. Getting work done by the insurance advisor needs
constant support of the manager. Since
the advisor are the people who bring business to the company so
lot of motivation, encouragement,
and support are required. One thing is very good at Canara HSBC
Oriental Life Insurance that this
advisor get lot of recognition award apart from their
commission.
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5. Reference
Website:
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