ICICI PRU overview

8/14/2019 ICICI PRU overview

1/31

An over view of ICICI Prudential Insurance Co. Ltd

MFS 101 Fundamentals of insurance

NALSAR University Of Law

Institute Of Insurance And Risk Management

Page | 0

SUBMITTED TO

Mrs. Sashikala Choudary

Rajendran Pradeep Kumar | FS09-20

MFS-101

ANOVERVIEWOFICICI

PRUDENTIALLIFEINSURANCE

COMPANY


2/31


3/31


MFS101Fundamentals of insurance


Institute Of Insurance And Ris Management

Page|0

Introduction

The entire effort of human life is to proceed from uncertainty to certainty. The rigmarole of

life proceeds with first acquiring the wherewithal to earn a living and then striving for its

betterment and ensuring that the comfort and pleasure derived from a physical commodity or

a human being continues. It is at the latter stage that the mechanism of Insurance comes in

play.

The concept of insurance is in essence related to the protection of the economic value of

assets. Every asset whether physical or in form of a human being has a value. The asset is

built up in the expectation that, either through the income generated there from or some other

output, some needs of the individual would be met. For example, in the case of an industry its

production is sold and income generated. In the case of a vehicle, it provides comfort and

convenience in transportation.

1ST Insurance in India started from 1817.Basically it is divided into two types such as

General insurance & Life insurance. After freedom there are 245 companies in India who

provide life insurance. In 1956 finance minister C.D.Deshmukh seize all those companies.

There is only one life insurance company from1956-2000 that is LIC of India. In 1993 the

finance secretary R.N.Malhotra introduce IRDA(Insurance Regulatory Development

Authority) act. After that private life insurance companies came into existence. HDFC is the

1st

private insurance company in India. After that ICICI prudential Life insurance corporation

started its operation. From 2001-2008 ICICI place the 1st

position among all private insurance

company. Now days there are 12 private life insurance companies.

As compare to past now a days insurance companies provides not only life cover plan but

also provides investment plan. In recent trend there are two type of plan provided by the Life

insurance company such as:

y Traditional Plan

y ULIP (Unit Linked Insurance Plan)

Traditional Plan consisting of a long maturity period where as ULIP consists of both

insurance and investment having shorter maturity period.


4/31





Page|1

Fundamental definition:

In the words of D.S. Hansell, Insurance accumulated contributions of all parties

participating in the scheme.

Contractual definition:

In the words of Justice Tindall, Insurance is a contract in which a sum of money is paid to

the assured as consideration of insurers incurring the risk of paying a large sum upon a given

contingency.

Characteristics ofinsurance:

Sharing of risks

Cooperative device

Evaluation of risk

Payment on happening of a special event

The amount of payment depends on the nature of losses incurred.

The success of insurance business depends on the large number of people insured against

similar risk.

Insurance is a plan, which spreads the risk and losses of few people among a large number

of people.

The insurance is a plan in which the insured transfers his risk on the insurer.

Insurance is a legal contract which is based upon certain principles of insurance which

includes utmost good faith, insurable interest, contribution, indemnity, causes proximal,

subrogation, etc.

The scope of insurance is much wider and extensive.

Functions ofinsurance:

Primary functions:

1. Provide protection: - Insurance cannot check the happening of the risk, but can provide for

the losses of risk.


5/31





Page|2

2. Collective bearing of risk: - Insurance is a device to share the financial losses of few

among many others.

3. Assessment of risk: - Insurance determines the probable volume of risk by evaluatingvarious factors that give rise to risk.

4. Provide certainty: - Insurance is a device, which helps to change from uncertainty to

certainty.

Secondary functions:

1. Prevention of losses: - Insurance cautions businessman and individuals to adopt suitable

device to prevent unfortunate consequences of risk by observing safety instructions.

2. Small capital to cover large risks: - Insurance relives the businessman from security

investment, by paying small amount of insurance against larger risks and uncertainty.

3. Contributes towards development of larger industries.

Other Function:

Means of savings and investment: Insurance companies are business houses. The product

they sell is financial protection. To succeed and survive, they must cover their costs, which

include payments to cover the losses of policyholders, as well as sales and administrative

expenses, taxes and dividends.

Sources ofincome

Insurance companies have two sources of income for covering these costs:

Premiums and Investment income. The premiums are collected on a regular basis and

invested in Government Bonds, Gilt, stocks, mutual funds, real estates and other conservative

avenues. However, investment income depends on market conditions, interest rates, economy

etc. and varies from year to year. Because of the uncertainty associated with the investment

income, insurance companies must generate enough income from premiums to cover the bulk

of their expenses.

The risk becomes insurable if the following requirements are complied with:

The insured must suffer financial loss if the risk operates.

The loss must be measurable in money,

The object of the insurance contract must be legal.

The insurer should have sufficient knowledge about the risks he accepts.


6/31





Page| 3

Fundamentals of Insurance

The fundamental Principles of the Insurance are as follows:

Insurable Interest: Insurable interest means the legal right to insure. Insurable Interest is a

must and only then the insurance contract is enforceable at law. This principle differentiates a

Contract of insurance from wager. Lack of insurable interest renders the contract null and

void. For Insurable Interest to exist there must be Property, Rights, Interest, Life or Liability;

this must be insured and the Insured should have a legally recognizable relationship thereto.

The Insured should be benefited by the safety of the property or is prejudiced by its loss.

Insurable Interest may arise in the following manner:

1. Ownership: Absolute ownership entitles the owner to insure the property. This is the

commonest method whereby Insurable Interest arises.

2. Partial Interest is also insurable e.g. a mortgagee. A creditor can also insure the life of his

debtor but only to the extent of his loan.

3. Administrators and executors i.e. officials appointed by a court of law to take care of a

property may also insure the property.

4. Relationship does not automatically constitute insurable interest. The only relationship

recognized by law for this purpose is the one between a husband and wife.

5. An employer can insure his employee under a Personal Accident Policy as he has

insurable interest in them.

Proximate cause: Generally, the claims are payable under insurance policies if they arise

out of events which are proximately caused by the insured perils. In other words, the

proximate cause of the event has to be peril covered by the policy, so as to constitute a valid

claim.

Contribution: An insured may have several insurance on the same subject matter. If he

recovers his loss under all these insurance, he will obviously make a profit out of loss. This

will be an infringement of the principle of indemnity. Common Law has, therefore, evolved

the doctrine of contribution whereby the insured is prevented from recovering more than his

loss, despite his having several insurance on the subject matter.

Subrogation: The principle of indemnity seeks to prevent the insured from making profit

out of loss. However, it may so happen that that the insured may recover his loss under his

policy and he may also have rights against third parties. If, after the insurance claim is settled,

the insured is allowed to enforce his rights against third parties and to retain whatever

damages he receives from them, he will certainly make a profit and the principle of indemnity

will be infringed.Common Law has therefore, evolved the doctrine of subrogation as

corollary to the principle of indemnity. Subrogation may be defined as the transfer of rights


7/31





Page| 4

and remedies of the insured to the insurers who have indemnified the insured in respect of the

loss. The Common Law right of subrogation is implied an all contracts on indemnity, as it

arises only after payment of loss.

Utmost Good Faith: In all General Insurance contracts we know that a property or interest

or liability or life is offered for insurance and the insured has to take decisions on the

acceptance of the proposal. If he decides to accept the proposal a premium commensurate

with the risk has to be charged. To enable him to take necessary decision in this regard, the

insurer must have certain facts about the risk offered. These facts influence the judgment of

the insurer in deciding about the acceptance or otherwise of the risk and the rate of premium

to be charged, if accepted. Such facts are known as material facts.

Nature of Insurance Contracts

When the insured pays the premium and the insurers accept the risks, the contract ofinsurance is concluded. The policy issued by the insurers is the evidence of the contract. The

contract of insurance, like any other contract, for example a contract for the sale of goods, is

subject to the general law of contract as embodied in the

Indian Contract Act, 1872

According to this Act, a contract must have certain essential features in order to make it

legally valid and enforceable. The following are the essential elements:

a) Offer and acceptance: Usually, the offer is made by the proposer, and acceptance made by

the insurer.

b) Consideration: This means that the contract must involve some mutual benefit to the

parties. The premium is the consideration from the insured and the promise to indemnity is

the consideration from the insurers.

c) Agreement between the parties: Both the parties should agree to the same thing in the same

sense.

d) Capacity of the parties: Both the parties to the contract must legally competent to enter into

the contract. For example, minors cannot enter into insurance contracts.

e) Legality: The object of the contract must be legal and the contract should not violate any

legal requirements. E.g. no insurance can be had for smuggled goods.

Risk

Reasonable or not, risks are inescapable in business. Every business venture is something of a

gamble, because the possibility of loss is as real as the prospects for profits. And even though


8/31





Page| 5

managers do everything possible to ensure that their business succeed, they cannot guard

against every conceivable form of risk.

Pure Risk versus Speculative Risk

Pure Risk: Events representing the kind of risk that no business can predict or escape,

known as Pure Risk, it is the threat of a loss without the possibility of gain. In other words, a

disaster such as avalanche or fire is costly for the business it strikes, but the fact that no

disaster occurs contributes nothing to a firm's profit.

Speculative Risk: It is the type of risk that offers the prospect of making profit - and

prompts people to go into business in the first place. Every business accepts the possibility of

losing money in order to make money.

Approaches to Risk Management

Risk Management is the process of reducing the threat of loss due to uncontrollable events.

Steps in selecting a risk management approach:

To identify all the things those can possibly go wrong.

To consider the probability that an event will occur.

Techniques of Risk Management are:

1. Avoiding the Risk: When a company avoids risk, it eliminates the possibility that a

particular event will occur. To avoid the possibility of a suit, for example, not to produce anyproducts -which would, of course, eliminate both the threats of a lawsuit and the opportunity

to profit. With rare exceptions, avoiding risk entirely is extremely difficult.

2. Reducing Risk: A more practical approach is to reduce the risk by taking precautions.

Risk reduction is an important element in most companies' approach to risk management.

Typical precautions include putting safety locks on doors to prevent robberies, installing

overhead sprinklers to minimize fire damage, and periodic checking motor vehicles to

prevent accidents.

3. Assuming risk: Many companies draw on current revenues or set aside a "Contingency

Fund" to cover unexpected losses. Setting aside money on regular basis could be cheaper thanpurchasing insurance. Moreover, the company can earn interest on the reserved cash. Such

assumption of risk is also called self-insurance or risk retention.

4. Transferring the risk: Most companies still rely on outside insurance firms for financial

protection against catastrophic losses. In buying insurance, companies transfer the risk of loss

to an insurance firm, which agrees to pay for certain types of losses. In exchange, the

insurance firm collects a fee known as a premium.


9/31





Page| 6

Insurable and Uninsurable Risks:

Insurable risks: An insurable risk - one that an insurable company will cover - Generally

meets the following requirements. The peril insured against must not be under the control ofthe Insured. This means, of course that insurer do not pay for losses that are intentionally

caused by an insured, caused at the Insured's direction, or caused with the insured's collusion.

For example, a fire insurance policy excludes loss caused by the Insureds own arson. It does,

however, include loss caused by an employee's arson. Losses must be calculable, and the cost

of insuring must be economically feasible. To operate profitably, insurance companies must

have data on the frequency of losses caused by a given peril. If this information covers a long

period of time and is based on a large number of cases, Insurance companies can usually

predict quite accurately how many losses will occur in the future. For example, the insurance

companies to fix up the rate of premium of Personal Accident Insurance may use the

information of the number of people who will die each year in India in accidents. The perilmust be unlikely to affect all insured simultaneously. Unless an insurance company spreads

its coverage over large geographic areas or a broad population base or different classes of

Insurance, a single disaster might force it to pay out all its policies at once. The possible loss

must be financially serious to the Insured. An Insurance company could not afford the

paperwork involved in handling numerous small claims of a few Rupees each. As a result,

many policies have a clause specifying that the insurance company will pay only that part of

a loss greater than an amount - the deductible or excess - stated in the policy. The excess

represents small losses that the Insured has to absorb.

OVERVIE OFTHE INDUSTRY

Origin oflife insurance

Life Assurance was born in England when the first policy providing temporary cover for a

period of 12 months was issued as easy as 1583 A.D. The Amicable Society started granting

fluctuating sum on death since 1705 and a fix sum since 1757, with the development of

mortality tables, the life Assurance acquired a scientific character.

The Equitable Society founded in 1762 was the first Society established on scientific basis.

Origin oflife assurance in India

In India, after failure of two British companies, the European and the Albert in 1870, which

attempted writing business on Indian lives, first Indian Life Assurance Society was formed in

the same year called Bombay Mutual Assurance Society Ltd. It was followed by the Oriental

Life Assurance Company Limited in 1874, Bharat in 1896 and Empire of India in 1897. The

Idea of insurance was born out of a desire of the people to share loss of an individual by

many.


10/31





Page| 7

Originally it restricted to forms other than life assurance. It started with Marine Insurance,

where the losses on account of perils of sea were shared by all who were engaged in trade.

Reference to some forms of insurance, is found in the codes of Hammurabi, Manu (Manav

Dharma Shastra). The word `Yogakshema is used in the Rig Veda suggesting that some

form of community insurance was practiced by the Aryans in India over 3000 years ago. In

India during Buddhist period burial societies existed which were mutual in their character and

used to help a family by building a house, protecting the widow, marrying the girls.

The Swadeshi Movement of 1905 provided impetus to the formation of several companies

such as the `Hindustan Cooperative, the `United India, the `Bombay Life, the `National.

Further in the wake of freedom movement number of companies such as the `New India, the

`Jupiter the Lakshmi emerged.

The Government began to exercise a certain measure of control on Insurance business by

passing the `Insurance Act in 1912. For controlling investment of funds, expenditure and

management, a comprehensive Act was passed known as `The Insurance Act 1938. For

controlling the affairs, the office of Controller of Insurance was established. The act was

extensively amended in 1950.

In the year 1955, approximately 170 Insurance Offices and 80 Provident Fund Societies had

been registered for transacting Life Assurance business in India. There were, however, no full

guarantees to the policyholders. The concept of trusteeship was lacking. Many insurance

companies went into liquidation. There were malpractices in insurance business. For

achieving the following purposes it was felt necessary to nationalize the insurance business in

India.

(i) To provide security to the policyholders.

(ii) To utilize the funds for nation-building activities.

(iii) To avoid cut throat competition.

(iv) To abolish mal-practices.

(v) To spread the insurance message to the rural areas.

The first step in this direction was taken by the Government of India by issuing the Life

Insurance (the Emergency provisions) Ordinance, 1956 on 19th January, 1956. The then

Finance Minister, Shri C. D. Deshmukh mentioned the purpose of nationalisation as reaching

the goal of socialistic pattern of society, rendering genuine service to the people in the rural

area. The Life Insurance Corporation Act (Act XXXI of 1956) was passed by the Parliament

in June 1956 which came in force on 1st July 1956. The Life Insurance Corporation of India

came into existence on 1st September 1956.


11/31





Page| 8

Insurance Sector Reforms

Having looked at the insurance sector, let us look at the efforts made by the government to

make the industry more dynamic and customer friendly. To begin with, the Malhotra

committee was set up with the objective of suggesting changes that would achieve the much

required dynamism.

The Malhotra Committee Report

In 1993, Malhotra Committee, headed by former Finance Secretary and RBI Governor R. N.

Malhotra, was formed to evaluate the Indian insurance industry and recommend its future

direction. In 1994, the committee submitted the report and gave the following

recommendations:

Structure:

Government stake in the insurance Companies to be brought down to 50%.

Government should take over the holdings of GIC and its subsidiaries so that these

subsidiaries can act as independent-corporations.

All the insurance companies should be given greater freedom to operate.

Market Regulations

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

industry.

No Company should deal in both Life and General Insurance through a single entity.

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

companies.

Postal Life Insurance should be allowed to operate in the rural market.

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

Regulatory Body

The Insurance Act should be changed.

An Insurance Regulatory body should be set up.

Controller of Insurance (Currently a part from the Finance Ministry) should be made

independent.


12/31





Page|9

Investments

Mandatory Investments of LIC Life Fund in government securities to be reduced from 75%

to 50%.

GIC and its subsidiaries are not to hold more than 5% in any company (There current

holdings to be brought down to this level over a period of time).

Customer Service

LIC should pay interest on delays in payments beyond 30 days.

Insurance companies must be encouraged to set up unit linked pension plans.

Computerization of operations and updating of technology to be carried out in the insurance

industry.

Overall, the committee strongly felt that in order to improve the customer services and

increase the coverage of the insurance industry should be opened up to competition. But at

the same time, the committee felt the need to exercise caution as any failure on the part of

new players could ruin the public confidence in the industry. Hence, it was decided to allow

competition in a limited way by stipulating the minimum capital requirement of Rs.1 bn. This

amount is not very high for foreign firms, as it translates to only about US$25 million.

Further, to date it is unclear whether equity should be payable in one go or should be brought

in as installments. Also, the foreign equity participation was to be restricted to only 40%.The

committee

felt the need to provide greater autonomy to insurance companies in order to improve their

performance and enable them to act as independent companies with economic motives. For

this purpose, it had proposed setting up an independent regulatory body.

The industry and analysts find that there is lack of clarity in the following areas:-

Though coverage of rural areas was to be made compulsory, it raises the question as to who

would subsidies the rural policies as they would be difficult to service and hence costs will go

up.

There is some confusion with respect to investments. Where the funds should be invested?Currently 70% of the funds with LIC & GIC are invested in Government securities. Would

new entrants be allowed to invest in GOI securities?

The report also does not enumerate exit options available to the new entrants. In the event of

failure, there should be an arrangement made whereby the other Companies pool in to bail the

customers, who in all probability would be middle class individuals.


13/31





Page|10

Potentiality of Insurance in Indian Market

Marketing inefficiency of general insurers has kept society in dark even when so many

personal as well as commercial lines of insurance covers are available for them. Insurers havefailed to identify the need of the individual risk factors and thereafter selecting proper market

segments and developing demand of these needs by adopting proper marketing mix. There is

great scope of commercial line of insurance as we are developing at a very fast rate but the

potentiality and scope of personal lines of insurance is vast as this area is still under-tapped.

Product designing and pricing is also simple and growth of this portfolio is guaranteed in this

country which has a base of over 100 crore population, where there are about 25 crore

dwellings, 20 crore schools, colleges and educational institutions and about 5 crore small and

big shops. But despite this the Indian insurers share in personal line of business is very low or

negligible.

There are enormous growth opportunities to Indian as well as foreign insurers because of

such a huge base of population there is ample scope to introduce the new line of covers as per

the changing needs and to increase the per capita share of the insurance.

By encouraging risk transfer by investing small portion of the savings of the individuals.By

opening up the sector far more opportunities has came up in insurance and reinsurance

market. After privatization of this sector presence of the foreign players has also increased.

Therefore the insurers, in time to come, will have to change their attitude from selling of the

product to marketing of the protection needs of the insured and for this is required is:

Effective product planning

Suitable pricing

Efficient promotion and physical distribution.

Proper physical evidence and good and well trained sales force.


14/31





Page|11

PROFILE OFTHE ORGANISATION:

ICICI PrudentialLife Insurance

ICICI Prudential Life Insurance is a joint venture between the ICICI Group and PrudentialPLC, of the UK. ICICI started off its operations in 1955 with providing finance for industrial

development, and since then it has diversified into housing finance, consumer finance, mutualfunds to being a Virtual Universal Bank and its latest venture Life Insurance.

ICICI Bank:

ICICI Bank Limited (NYSE:IBN) is India's largest private sector bank and the second largest bank in the country with consolidated total assets of about US$ 95 billion as of March 31,

2009. ICICI Banks subsidiaries include Indias leading private sector insurance companies

and among its largest securities brokerage firms, mutual funds and private equity firms. ICICIBanks presence currently spans 19 countries, including India

Foreign Partner:

Established in 1848, Prudential PLC. of U.K. has grown to be the largest life insurance andmutual fund company in U.K. Prudential PLC. has had its presence in Asia for the past 75years catering to over 1 million customers across 11 Asian countries.Prudential is the largestlife insurance company in the United Kingdom (Source: S&P's UK Life Financial Digest,1998).

ICICI and Prudential came together in 1993 to provide mutual fund products in India and

today are the largest private sector mutual fund company in India. Their latest venture ICICIPrudential Life plans to take care of the insurance needs at various stages of life.

ICICI Prudential Life Insurance was established in 2000 with a commitment to expand andreshape the life insurance industry in India. The company was amongst the first private sectorinsurance companies to begin operations after receiving approval from Insurance RegulatoryDevelopment Authority (IRDA), and in the time since, has taken several steps towards itsrealizing its goal.


15/31





Page|12

T h e jo in t s tr e n g t h s

A p o w e r f u l j o in t v e n t u r e p a r t n e r s h i p w i t h e a c h c a r r y i n g a s e t o f s t r e n g t h s

c o m p l e m e n t in g e a c h o t h e r s

R e p u t a t i o n

I n s u r a n c e

e x p e r t i s e

P r o d u c t

D i s t r i b u t i o n

O p e r a t io n s

B r a n d s t re n g t h

I n f r a s t r u c t u r e

C u s t o m e r b a s e

L o c a l k n o w le d g e

M a r k e t I n n o v a t o r s

P R U D E N T I A LI C I C I

About The Partners

ICICI Bank (NYSE:IBN) is Indias second largest bank with an asset base of Rs. 106812crore. ICICI Bank provides a broad spectrum of financial services to individuals andcompanies. This includes mortgages, car and personal loans, credit and debit cards, corporateand agricultural finance. The Bank services a growing customer base of more than 7 millioncustomer accounts and 5 million bondholders accounts through a multi-channel accessnetwork. This includes about 450 branches and extension counters, 1675 ATMs, call centresand Internet banking (www.icicibank.com). ICICI Bank is the only Indian company to berated above the country rating by the international rating agency Moody''s and the only Indiancompany to be awarded an investment grade international credit rating. The Bank enjoys thehighest AAA (or equivalent) rating from all leading Indian rating agencies.

Established in 1848, Prudential plc is a leading international financial services company inthe UK, with some US$250 billion funds under management and more than 16 millioncustomers worldwide. Prudential has brought to market an integrated range of financialservices products that now includes life assurance, pensions, mutual funds, banking,investment management and general insurance. In Asia, Prudential is UK''s largest lifeinsurance company with a vast network of 22 life and mutual fund operations in twelvecountries - China, Hong Kong, India, Indonesia, Japan, Korea, Malaysia, the Philippines,Singapore, Taiwan, Thailand and Vietnam. Since 1923, Prudential has championedcustomer-centric products and services, supported by over 60,000 staff and agents across theregion.

Company Vision

To make ICICI Prudential the dominant Life and Pensions player built on trust by world-classpeople and service.

This is what ICICI Prudential hope to achieve by

Understanding the needs of customers and offering them superior products and service


16/31





Page|13

Leveraging technology to service customers quickly, efficiently and conveniently

Developing and implementing superior risk management and investment strategies to offer

sustainable and stable returns to our policyholders

Providing an enabling environment to faster growth and learning for ICICI Prudential

employees

And above all, building transparency in all ICICI Prudential dealings.

The success of the company will be founded in its unflinching commitment to 5 core values -- Integrity, Customer First, Boundary less, Ownership and Passion. Each of the valuesdescribes what the company stands for, the qualities of our people and the way we work.

Board of Directors

The ICICI Prudential Life Insurance Company Limited Board comprises reputed people fromthe finance industry both from India and abroad.

Ms. Chanda D. Kochhar, Chairperson

Mr. N. S. Kannan, Director

Mr. K. Ramkumar, Director

Mr. Barry Stowe, Director

Mr. Adrian OConnor, Director

Mr. Keki Dadiseth, Independent Director

Prof. Marti G. Subrahmanyam, Independent Director

Ms. Rama Bijapurkar, Independent Director

Mr. Vinod Kumar Dhall, Independent Direct

Mr. V. Vaidyanathan, Managing Director & CEO


17/31





Page|14

Management Team

The ICICI Prudential Life Insurance Company Limited Management team comprises reputedpeople from the finance industry both from India and abroad.

Mr.V.Vaidyanathan, Managing Director & CEO

Ms. Anita Pai, Executive Vice President - Customer Service, Technology & Marketing

Dr. Avijit Chatterjee, Appointed Actuary

Mr. Puneet Nanda, Executive Vice President

Products Insurance Solutions for Individuals:

ICICI Prudential Life Insurance offers a range of innovative, customer-centric products thatmeet the needs of customers at every life stage. Its 13 products can be enhanced with up to 4riders, to create a customized solution for each policyholder.

Savings Solutions:

ICICI Pru Save n Protect is a traditional endowment savings plan that offers life protectionalong with adequate returns.

ICICI Pru CashBak is an anticipated endowment policy ideal for meeting milestoneexpenses like a child's marriage, expenses for a child's higher education or purchase of anasset.

Protection Solutions:

ICICI Pru LifeGuard is a protection plan, which offers life covers at very low cost. It isavailable in 3 options - level term assurance, level term assurance with return of premium andsingle premium.

Child Solutions:

ICICI Pru SmartKid: provides guaranteed educational benefits to a child along with life

insurance cover for the parent who purchases the policy. The policy is designed to providemoney at important milestones in the child's life.

Market-linked Solutions:

ICICI Pru LifeLink: is a single premium Market Linked Insurance Plan which combineslife insurance cover with the opportunity to stay invested in the stock market. .


18/31





Page|15

Retirement Solutions:

ICICI PruF

oreverLife: is a retirement product targeted at individuals in their thirties.Market-linked retirement productsICICI Pru

LifeTime Pension: is a regular premium market-linked pensionplan

ICICI Pru LifeLink: Pension is a single premium market-linked pension plan.

Single Premium Solutions:

ICICI Pru AssureInvest is a single premium savings product with life cover for terms of 5,7 or 10 years.

ICICI Pru ReAssure is a retirement product for senior citizens who are on the verge ofretirement or have just retired.

ICICI Prudential also launched ''Salaam Zindagi'', a social sector group insurance policytargeted at the economically underprivileged sections of the society.

Group Insurance Solutions:

ICICI Prudential also offers Group Insurance Solutions for companies seeking to enhancebenefits to their employees.

ICICI Pru Group Gratuity Plan:ICICI Pru''s group gratuity plan helps employers fund

their statutory gratuity obligation in a scientific manner. The plan can also be customized tostructure schemes that can provide benefits beyond the statutory obligations.

ICICI Pru Group Superannuation Plan: ICICI Pru offers a flexible defined contributionsuperannuation scheme to provide a retirement kitty for each member of the group.Employees have the option of choosing from various annuity options or opting for a partialcommutation of the annuity at the time of retirement.

ICICI Pru Group Term Plan: ICICI Pru''s flexible group term solution helps provideaffordable cover to members of a group. The cover could be uniform or based ondesignation/rank or a multiple of salary. The benefit under the policy is paid to the

beneficiary nominated by the member on his/her death.

Flexible Rider Options:

ICICI Pru Life offers flexible riders, which can be added to the basic policy at a marginalcost, depending on the specific needs of the customer.


19/31





Page|16

1.Accident & disability benefit: If death occurs as the result of an accident during the termof the policy, the beneficiary receives an additional amount equal to the sum assured underthe policy. If the death occurs while traveling in an authorized mass transport vehicle, the

beneficiary will be entitled to twice the sum assured as additional benefit.

2. Accident benefit: This rider option pays the sum assured under the rider on death due toaccident.

3.Critical Illness Benefit: protects the insured against financial loss in the event of 9specified critical illnesses. Benefits are payable to the insured for medical expenses prior to

death.

4.Major Surgical Assistance Benefit: provides financial support in the event of medicalemergencies, ensuring that benefits are payable to the life assured for medical expenses

incurred for surgical procedures. Cover is offered against 43 different surgical procedures.

Insurance Plans

Savings Plans:

Most endowment policies are a good way of saving for the future. A policy can be designedto make your savings grow and have them available to you at the end of a fixed number ofyears. Or, a policy could provide you with an income every three or four years. You can

browse through these policies to find one that best suits your needs:

SmartKid - a superior way to guarantee your childs future no matter what the uncertainty.

LifeTime - a complete market-linked insurance plan that adapts itself to your changingprotection and investment needs, throughout a lifetime.

Save'n' Protect - a traditional endowment savings plan that offers both high returns andprotection.

CashBak - an endowment savings plan that allows you to get back substantial survival

benefits without having to wait till the maturity date.

Depending on your particular needs, Savings Plans could allow you to do one or more of thefollowing:

Plan For Tangibles: buy that fashionable car, that huge refrigerator, etc.

Plan For A Cosy Nest: by facilitating the purchase of that home you have always dreamt of.


20/31




Institute Of Insurance And Ris ! Management

Page|17

Plan For Milestones: ensure a good education for your children, children's wedding, etc.

Save on Deferred Taxes: because the interest income and maturity benefits of the Policy are

tax exempt.

Lifestyle Planning: maintain your lifestyle - even if your income was to reduce in the future.

Legacy Creation: buy property; invest in shares, bonds, etc. for your children orgrandchildren

Attain Greater Heights: ensure that your children's education continues undisrupted.

Protection Plans

We all hope to live a full life till a ripe old age... to ensure our children's sustenance andhealthy growth. But what if a sudden disability or illness strikes? Besides the grief and the pain, such an event also completely disrupts life for all the people who are financiallydependent on us. Our life insurance policies offer a comprehensive range of protection

benefits:

Lifeguard - A low cost-high protection plan that offers protection over a specified period.

Riders - Additional benefits that one can add on to the policy. The rider can be opted for atthe time of taking the basic policy. Additional premium is charged for each rider.

An insurance policy can be tailor made to provide protection to you and your loved ones. If

something were to happen to you, it can help:

Safeguard Your Better Half: ensure life's continuity for your loved one.

Dear and Near Ones: ensure continuity of lifestyle for your dependents.

Attain Greater Heights: ensure your children's education continues undisrupted.

Unforeseen circumstances: bear the cost of fighting an illness, disability, etc.

Retirement Plans

Most of you picture yourselves enjoying the fruits of labor after retirement, going on yourdream vacation, or helping your children's career take wing. But do you realize that financingall this will most likely depend partly on your personal savings? Because personal savingsand investments represent a significant source of retirement income for many people, you cannever save too much.

Currently, you are at a stage where you are juggling many roles, as nurturing parents, dutifulcaregivers to elders, supportive life partners, while trying to maintain a career. It is too easy


21/31


MFS 101 Fundamentals of insurance


Institute Of Insurance And Risk Management

Page | 18

t get carried away handling and sol ing the day-to-day problems to not look into yourretirement needs. It may also seem too far away to be of concern. But a look at the issues

below will make the need for some strategic planning atthis stage amply clear.

Today, thanks to a healthier lifestyle and advances in medicine, the average Indian liveslonger. This makes the challenge of accumulating enough money for retirement even moredifficult, since it may have to lastlonger. Also, with the falling interest rate scenario and therising costs of medical expenses retirement means monetary uncertainty for most of us. More

so, because there is also the ever-persistent evil of inflation, which erodes your purchasing power. The graph below illustrates how much Rupees will 10,000/- amount to after some

years:

I l i i

Therefore, the message is simple - no matter whether you are 30 or 50, you shou ld start

planning early to have a healthy retirement kitty. (See graph below for an illustration)

0

1000

2000

3000

4000

5000

6000

7000

8000

5yr 10yr 20yr 30yr

Inflation rate

at 10%

Inflation rateat 5%

0

500000

1000000

1500000

2000000

A B

Saving

RetirementKitty


22/31


23/31




Institute Of Insurance And Ris # Management

Page|20

Investment Plans:

Often you may have some investible funds lying idle - a bonus or maybe a windfall. You can

either secure your family through insurance or invest it for growth. The need for insurance iscrucial but you also want to see your money grow through market investments. But in volatilemarket conditions how do you secure both? Relax, because now you can hedge yourinvestments with safer investment vehicles that provide you with a diversified portfolio.

ICICI Prudential Life Insurance presents a package of Investment Solutions, which provideyou high returns, while guaranteeing complete peace of mind. This follows from our

understanding that life has many facets and they are manifested through its various needs.Therefore our philosophy is to provide you with comprehensive insurance solutions that caterto your dual needs of earning potentially high returns as well as stay insured for life. Thus weoffer you a unique package of Investment Solutions that combine the best of insurance andinvestment.

ICICI Prudential offers flexible solutions for planning your investment.

LifeLink - an investment plan that gives you the flexibility of choosing your investment

options while keeping you insured for life.

Assure Invest - a single premium endowment plan that gives you potentially high returnscoupled with insurance protection.

Depending on your particular needs, Investment Plans could allow you to do one or more ofthe following:

Plan for Tangibles: buy that fashionable car, that huge refrigerator, etc.

Earn Market-linked Returns: earn market-related returns while your family remainsprotected, even in volatile market conditions.

Save on Deferred Taxes: because the interest income and maturity benefits of the Policy aretax exempt.

Lifestyle Planning: maintain your lifestyle - even if your income was to reduce in the future.

Legacy Creation: buy property; invest in shares, bonds, etc. for your children or

grandchildren

Group Insurance Solutions

Employee care - the defining edge

In this new age of rapid developments and just-in-time methodologies, one big challenge thatorganizations face is to establish and maintain a competitive edge over others. Today's


24/31




Institute Of Insurance And Ris $ Management

Page|21

cutting-edge product or service becomes tomorrow's undifferentiated commodity. In an era ofcompetitive parity, the only asset that makes a decisive difference between corporate successand failure is the quality of human capital.

Investment in ones employees is an investment in the future:

Employees are a companys human capital. Not only do companies care for them, but also provide an environment that fosters a deep and lasting sense of belonging. Employees

determine the present and decide the future of a company.

Employee benefits have proven to be an excellent tool to optimize the retention of talent andimprove an organizations bottom line. The quality of an organizations employee benefitsestablishes and maintains a company's image as a caring employer. Optimum care ofemployees is a long-term investment that results in a sustained competitive advantage for an

organization in the times to come.

ICICI Pru Group Insurance Solutions Advantage

An integrated basket of flexible group insurance solutions that offer incomparable flexiblebenefits.

Sound investment management that focuses on safety, stability and profitability of theportfolio.

Personalized financial planning for your employee that takes care of his/her changingfinancial needs at every stage of life.

Quality service initiatives and transparency across all operations, promising superlativeoperational efficiency.

Group Gratuity Plan:

A plan that helps employers funds their statutory gratuity obligation in a scientific manner.

Group Term Assurance: A plan that helps provides affordable cover to members of a group.

Group Superannuation Plan: A flexible Defined Contribution Superannuation scheme thatprovides for a retirement kitty for each member of the group.


25/31




Institute Of Insurance And Ris % Management

Page|22

Contact Information

ICICI PrudentialLife Insurance Company Limited,

Registered Office,

1089, ICICI PrudentialTowers,

Appasaheb Marg, PrabhaDevi,

Mumbai - 400 051.

CUSTOMERSERVICE AND OPERATIONS

The Operations department oils the work processes between the customer and the company

to ensure consistent and quality service to the customer. To streamline the operations, theOperations department interfaces between the clients and the agents, the branches and the

underwriters, and manages work processes.

The Vision at Customer Service is to deliver World Class Service at every opportunity.Units such as the 9 to 9 contact centre, Outbound Call Centre, Customer Care and QueryResolution Unit are all committed to providing effective solutions to over lakhs of customersacross the country.

Information Technology

The Information Technology function at ICICI Prudential is committed to enable businessthrough the use of technology. It is segmented into 4 groups to enable highest levels ofdelivery to the customers: Life Asia Solutions Group that provides flexibility in designing

better product offerings to end-users, the Solutions Group- Web that provides real-timeinformation to customers and is responsible for customer relationship management, ITArchitecture & Corporate Solutions Group is in charge of developing and maintaining a

blueprint for the IT architecture for the enterprise as a whole. This team works as an in houseR&D Solution Group, exploring new technological initiatives and also caters to informationneeds of corporate functions in the organization. IT Infrastructure group is responsible for

providing hardware, software, network services to the whole organization. This group runsthe 'Digital Nervous System' of the Enterprise at the highest levels of efficiency and providerobust, scalable and highly available platform for deployment of business application.

Marketing

The Marketing function at ICICI Pru covers an array of activities - brand and mediamanagement, channel support, direct marketing and corporate communications. The Brandand Communications team is in charge of advertising, consumer research, media planning &


26/31


27/31




Institute Of Insurance And Ris ' Management

Page|24

TRAINING AT ICICI PRUDENTIAL

One of the objectives of the present study is to understand the objectives of training programsfor advisors in insurance industry in general and then to make a study of the training programconducted in ICICI Prudential.

Training objectives in insurance sector

In insurance sector, the need to be well trained assumes gigantic proportions. A uniquefeature as regards insurance is that it is not merely sufficient to have a properly trainedworkforce; there is a need to spread the message of insurance among the populace. Theabove, to a great extent, depend on the knowledge ability of the distribution personnel onaccount of the interface that they are required to maintain with all the prospects. The best ofadvertisements and other forms of spreading message would be no substitute for a job welldone by the intermediary.

The advisor/ agent are the public face of the insurance company and make the most enduringimpact on the customer. The prospective policyholders today need professional inputs fromintermediaries whom they can trust and respect. Therefore, the undeclared objective behindtraining the advisors is their professionalization, making them capable of good selling andthus ultimately benefitting the customer. Need analysis, features and benefits, objectionhandling and closing skills are the key components of quality insurance sales training.

The opening up of the sector has given a boost to the training industry. Acute shortage oftrained and expert professionals has spurred the corporate houses to adopt the strategy oftying up with educational institutions and overcome the dearth of skilled insurance

professionals in this highly competitive market. A case in point is ICICI Prudential. Thecompany has joined hands with some training/ educational institutions to start customized

courses.

Training Program for Advisors

Advisors are the people who are not the employees of the ICICI prudential, but works ascommission agents. Becoming an advisor is a part time job offer which can be taken up byany person above the age of 18 years and who has passed 12th or higher secondary, whereinthe person can utilize his/her contacts for making a different high source of income. They can

be associated either full time or part time as per their requirements. There are unlimitedcareer paths and opportunities for income & growth for deserving candidates.

The training program is conducted at all the branches of the company. Each batch consists of

minimum of 12 17 candidates. The training program consists of following components:

CAREER ORIENTATION PROGRAM


28/31




Institute Of Insurance And Ris ( Management

Page|25

ADVISOR INDUCTION PROGRAM ( AIP )

REFRESHERTRAINING

I.R.D.A training of 50 hours duration (i.e., 7 hours per day for 7 days period) is mandatory.

The course comprises of different modules.

Test

The student has to undergo a test at the end of the program. On successful completion of thetest, the student will become an IRDA (Insurance Regulatory and Development Authority)

Certified Insurance Agent.

Incentive Schemes for Advisors

The advisors generally receive a premium of 12 % - 15% on the premium amount in the case

of life insurance products and in the case of health insurance products; they are paidcommission up to 35% of the premium amount. If the advisor achieves a target of Rs.30 lakhsin a period of one year, he /she will become member of Million Dollar Round Table(MDRT). The benefits derived from this membership is that the advisors would get one freelaptop , invitations to participate in National Conventions, family trips , international starclubs membership and so on.

Apart from this, there is Grand Perk (GP) membership which would entitle them to variousbenefits. The different kinds of GP membership are given below

Premium Amount Achieved(in lakhs) Type of Membership

1.5 SILVER

3.5 SILVER PLUS

10 GOLD

22 GOLD PREMIERE

40 PLATINUM


29/31




Institute Of Insurance And Ris ) Management

Page|26

Awards

y

ICICI Prudential Life won the ICICI Group Marketing Excellence Award 2008 inthree key categories for its marketing initiatives

y ICICI Prudential Life was awarded the INDYs Award for Excellence in MassCommunication in the category of Most Creative Advertisement-Television

y India's Most Customer Responsive Insurance Company - Avaya Global Connect -Economic Times Customer Responsiveness Awards, 2007

y Ms. Shikha Sharma, MD & CEO, ICICI Prudential Life Insurance was adjudged theEntrepreneur of the Year-Manager at the Ernst and Young Entrepreneur Awards 2007

y Ms. Shikha Sharma, MD & CEO, ICICI Prudential Life Insurance was awarded theOutstanding Businesswoman of the Year at CNBC TV18's India Business LeaderAwards 2007

y ICICI Prudential Life Insurance won the award for the Best Life Insurer-Runner up at

the Outlook Money & NDTV Profit Awards 2007y ICICI Prudential Lifes, retirement solutions campaign for the year 2006-07 was

awarded the Bronze Effy trophy in the services category.It also won the Brand EquityBravery Award 2007, instituted by Ad club.

y ICICI Prudential Lifes website, www.iciciprulife.com was awarded the best websiteamong private life insurers at the Web 18 and Frost & Sullivan Genius of the WebAwards 2007 for commendable work in the online.

PROBLEMS OFTHE ORGANISATION:

Multiple players in the life insurance so, ICICI Prudential faces very tough competition fromother leaders in the industry. The ICICI Prudential needs to work hard in order to staycompetitive insurance market. Further, the ICICI Prudential should appoint professionalagent who should be able to provide customer with a comparison of multiple schemes andalso explain them in simple terms, so that customer able to make an informed decision.

S.W.O.T. ANALYSIS

Strengths

The biggest strength of this organization is the:

y Money power, which makes them ignorant about the gestation period.

y Brand image, Business experience, and Innovative products

y The agents are very selectively chosen have excellent communication skills.

y Service quality, which is the crux of their mission.

y Large network branches which is helped to customer for the payment


30/31




Institute Of Insurance And Ris 0 Management

Page|27

Weaknesses

y High targets for financial advisors and for the sales departments.

y Many competitors in the market offer same product by the little difference in thepremium and offerings.

y Sustainable to risk associated with investments in money market.

y Try to catch middle-lower level people also.

Opportunity

y Huge market is literally untapped; out of estimated 320 millions insurable marketsonly 20% of the population is insured.

y Health insurance and pension schemes, an estimated market potential ofapproximately $15 billion.

y ICICI Prudential should give the insurance coverage both to the parent and child sothat their life could be covered in both cases. The customer doesnt mind paying some

extra premium for that.

Threats

y Players like Bajaj and Birla Sun life with low premium for the similar plans.

y Entry of many other private companies with equally strong experience and financialstrength of foreign partners making the competition difficult and saturating the urbanmarkets.

y Current Govt. policies do not encourage gross domestic savings. If the tax liability ofthe service class rises, the customer will have little money to invest.

y LIC has woken up from sleep and is following competitive strategies. Its huge surplusin Life Fund gives a capability to lodge Price war.

RECOMMENDATIONS

The insurance companies should now try to identify the gap between current level ofcustomer service and customer expectations. Some of the strategies being recommended are

as follows:

y Product Differentiation: Offering a product that is distinctly different from otherproducts available in the market.

y Innovativeness: Identifying means of a delightful customer experience.

y Riders: These are additional offerings along with the main product.

y Flexibility: The companies should make their products flexible for the convenience oftheir customer.

y Hassle Free Service: All bureaucracy in customer interactions should be eliminated.

y Proper Policy Documentation: Wrong interpretations/ non-awareness of policydocument by the customer may have serious implications in the long term and the

possibility of the same should be alleviated by the insurance companies.


31/31




Institute Of Insurance And Ris 1 Management

BIBLIOGRAPHY

y Insurance Advisors Manuals and Study Material of ICICI Prudential.

y NISSparta Ltd. (New Delhi)

y Insurance Watch and other Magazines.

y Economic Times

y www.google.com

y www.icicipru.com

y www.bimaonline.com

y www.moneycontrol.com

y www.licindia.com

Documents

ICICI PRU overview