Traditional Plans of Tata AIG

A SUMMER TRAINING PROJECT REPORT

ON

“TRADITIONAL PLANS OF TATA AIG LIFE INSURANCE COMPANY”

Submitted in partial fulfillment of the requirement for the award of

BACHELOR OF BUSINESS ADMINISTRATION

(BANKING & INSURANCE)

Submitted By:PRIYA SINGH (0041931808)5th semester

Under the Guidance of:Mr. VIKRANT AGARWAL

Kasturi Ram College of Higher Education(Affiliated to Guru Gobind Singh Indraprastha University)

Narela, Delhi-110040

CHAPTER-1

INTRODUCTION TO INSURANCE

1.1 INTRODUCTION

"Insurance is a contract between two parties whereby one party called insurer undertakes

in exchange for a fixed sum called premiums, to pay the other party called insured a fixed

amount of money on the happening of a certain event." Insurance may be described as a

social device to reduce or eliminate risk of life and property. Under the plan of insurance,

a large number of people associate themselves by sharing risk, attached to individual.

With the help of Insurance, large number of people exposed to a similar risk makes

contributions to a common fund out of which the losses suffered by the unfortunate few,

due to accidental events, are made good. Insurance is a tool by which fatalities of a small

number are compensated out of funds collected from plenteous. Gradually as competition

increased benefits given by industry to its customers increased by leaps and bounds.

Insurance is a basic form of risk management which provides protection against possible

loss to life or physical assets. Person who seeks protection against such loss is termed as

insured, and company that promises to honor claim, in case such loss is actually incurred

by insured, is termed as Insurer. In order to get insurance, insured is required to pay to

insurance company a certain amount called premium. Premium is collected by insurance

companies which acts as trustee to pool created through contributions made by persons

seeking to protect themselves from common risk. Any loss to the insured in case of

happening of an uncertain event is paid out of this pool. Insurance business is divided

into four classes:

• Life Insurance

• Fire Insurance

• Marine Insurance

• Miscellaneous Insurance.

Insurance is a mechanism that helps to reduce the effects of adverse situations in the

economical way. It promises to pay to the owner or beneficiary of the asset, a certain sum

if the loss occurs.

What Is Insurance?

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

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

to the owner, because he expects to get some benefits from it because it meets some of

his needs. This benefit may be an income or in some other form.

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

generated. In the case of a motor car, it provides comfort and convenience in

transportation, there is no direct income. Both are assets and provide benefits.

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

the benefits, after that, the benefit may not be available. There is a life-time for a machine

in a factory or a cow or a motor car. None of them will last for ever. The owner is aware

of this and he can so manage his affairs that by the end of that period or life-time, a

substitute is made available. Thus, he makes sure that the benefit is not lost. However, the

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

make it incapable of giving the benefits. An epidemic may kill the cow suddenly. In that

case, the owner and those enjoying the benefits there from, would be deprived of

the benefits. The planned substitute would not have been ready. There is an adverse or

unpleasant situation. Here, insurance helps to reduce the effects of such adverse

situations.

Concept of Insurance

Insured, are you? The functions of Insurance will give you an idea on how to go ahead

with the approach of insurance and what type of insurance to choose. In a layman's

words, insurance means, ‘a guard against pecuniary loss arising on the happening of an

unforeseen event’. In developing economies, the insurance sector still holds a lot of

potential which can be tapped. Majority of the people in the developing countries remains

unaware of the functions and benefits of insurance and it is for this reason that the

insurance sector is still to grow.

Tangible or intangible – an individual can insure anything! Be it a house, car, factory, or

the voice of a singer, leg of a footballer, and the hand of an author.....etc. It is possible to

insure all these as they have the possibility of becoming non functional by any disaster or

an accident.

1.2 FUNCTION OF INSURANCE

Primary Functions

Secondary Functions

Other Functions

Primary Functions:

1. Providing protection – The elementary purpose of insurance is to allow security

against future risk, accidents and uncertainty. Insurance cannot arrest the risk

from taking place, but can for sure allow for the losses arising with the risk.

Insurance is in reality a protective cover against economic loss, by apportioning

the risk with others.

2. Collective risk bearing – Insurance is an instrument to share the financial loss. It

is a medium through which few losses are divided among larger number of

people. All the insured add the premiums towards a fund and out of which the

persons facing a specific risk is paid.

3. Evaluating risk – Insurance fixes the likely volume of risk by assessing diverse

factors that give rise to risk. Risk is the basis for ascertaining the premium rate as

well.

4. Provide Certainity – Insurance is a device, which assists in changing uncertainty

to certainty.

Secondary Functions:

1. Preventing losses – Insurance warns individuals and businessmen to embrace

appropriate device to prevent unfortunate aftermaths of risk by observing safety

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

2. Covering larger risks with small capital – Insurance assuages the

businessmen from security investments. This is done by paying small amount

of premium against larger risks and dubiety.

3. Helps in the development of larger industries – Insurance provides an

opportunity to develop to those larger industries which have more risks in their

setting up.

Others Functions:

1. Is a savings and investment tool – Insurance is the best savings and

investment option, restricting unnecessary expenses by the insured. Also to

take the benefit of income tax exemptions, people take up insurance as a good

investment option.

2. Medium of earning foreign exchange – Being an international business, any

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

policies and a different other ways.

3. Risk Free trade – Insurance boosts exports insurance, making foreign trade

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

cover.

1.3 LIFE INSURANCE

“Life insurance” is a contract between the policy owner and the insurer, where the insurer

agrees to pay a designated beneficiary a sum of money upon the occurrence of the

insured individual's or individuals' death or other event, such as terminal illness or critical

illness. In return, the policy owner agrees to pay a stipulated amount (at regular intervals

or in lump sums). There may be designs in some countries where bills and death expenses

plus catering for after funeral expenses should be included in Policy Premium. In the

United States, the predominant form simply specifies a lump sum to be paid on the

insured's demise.

The value for the policyholder is derived, not from an actual claim event, rather it is the

value derived from the 'peace of mind' experienced by the policyholder, due to the

negating of adverse financial consequences caused by the death of the Life Assured.

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; for example claims relating to suicide, fraud, war, riot and civil

commotion.

Life-based contracts tend to fall into two major categories:

1. Protection policies - designed to provide a benefit in the event of specified event,

typically a lump sum payment. A common form of this design is term insurance.

2. Investment policies - where the main objective is to facilitate the growth of

capital by regular or single premiums. Common forms (in the US anyway)

are whole life, universal life and variable life policies.

1.4. ROLES OF THE LIFE INSURANCE

http://en.wikipedia.org/wiki/Variable_universal_life_insurance

http://en.wikipedia.org/wiki/Universal_life_insurance

http://en.wikipedia.org/wiki/Whole_life_insurance

http://en.wikipedia.org/wiki/Investment

http://en.wikipedia.org/wiki/Safety

http://en.wikipedia.org/wiki/Critical_illness

http://en.wikipedia.org/wiki/Critical_illness

http://en.wikipedia.org/wiki/Terminal_illness

http://en.wikipedia.org/wiki/Death

http://en.wikipedia.org/wiki/Beneficiary

http://en.wikipedia.org/wiki/Insurance

1. Life insurance as an investment: - Insurance products yield more than any other

investment instruments and it also provides added incentives or bonus offered by

insurance companies.

2. Life insurance as risk cover: - Insurance is all about risk cover and protection of

life. Insurance provides a unique sense of security that no other form of invest can

provide.

3. Life insurance as tax planning: - Insurance serves as an excellent tax saving

mechanism

Role of insurance in economic development:

Entrepreneurs manage the risk of accidental loss by weighing the costs and benefits of

each alternative. In a structured risk management process, this involves:

(1) Identifying the exposures to accidental loss;

(2) Evaluating alternative techniques for treating each loss exposure;

(3) Choosing the best alternative; and

(4) Monitoring the results to refine the choices.

Those who do not apply a structured process still make decisions about risk, although

sometimes by default rather than design. The scope of an economy’s insurance market

affects both the range of available alternatives and the quality of information to support

decisions. For example, a manufacturer might produce only for the local market, forgoing

more lucrative opportunities in distant markets in order to avoid the risk of losing goods

in shipment. Transport insurance can mitigate this loss exposure and enable the

manufacturer to expand. Similarly, to avoid the risk of total loss from drought, a

commercial farmer may keep half of his seed in reserve. Crop insurance can protect

against drought and permit all of the seed to be planted for a smaller premium than the

cost of holding half in reserve. Thus public policies that encourage insurance operations

improve the economy’s productivity by broadening the range of investments. Insurers

also contribute specialized expertise in the identification and measurement of risk. This

expertise enables them to accept carefully specified risks at lower prices than non-

specialists. They also have an incentive to collect and analyze information about loss

exposures, since the more precisely they measure the cost of risk, the more they can

expand. As a result, the insurance market generates price signals to the entire economy,

helping to allocate resources to more productive uses. Insurers also have an incentive to

control losses, which is a significant social benefit. By offering discounts for seat belts,

smoke detectors, or other measures that reduce the frequency or severity of losses, they

lower their eventual claims costs, in the process saving lives and reducing injuries. On the

investment side, due to the long term nature of their liabilities, sizeable reserves, and

predictable premiums, life insurance providers can serve an important function as

institutional investors providing capital to infrastructure and other long term investments

as well as professional oversight to these investments. Of course, these benefits are fully

realized only in markets where insurance providers invest a substantial portion of their

portfolios domestically. The net result of well functioning insurance markets should be

better pricing of risk, greater efficiency in the overall allocation of capital and mix of

economic activities, and higher productivity. Importantly, these unique functions of

insurance should be complementary to banking and financial sector deepening more

broadly. For instance, insurance facilitates credit transactions such as the purchase of

homes and cars and business operations, while depending in turn on well functioning

payment systems and robust investment opportunities.

1.5 IMPORTANCE OF THE LIFE INSURANCE

1. Protection against untimely death: - Life insurance provides protection to the

dependents of the life insured and the family of the assured in case of his untimely

death. The dependents or family members get a fixed sum of money in case of

death of the assured.

2. Saving for old age: - After retirement the earning capacity of a person reduces.

Life insurance enables a person to enjoy peace of mind and a sense of security in

his/her old age.

3. Promotion of savings: - Life insurance encourages people to save money

compulsorily. When life policy is taken, the assured is to pay premiums regularly

to keep the policy in force and he cannot get back the premiums, only surrender

value can be returned to him. In case of surrender of policy, the policyholder gets

the surrendered value only after the expiry of duration of the policy.

4. Initiates investments: - Life Insurance Corporation encourages and mobilizes the

public savings and canalizes the same in various investments for the economic

development of the country. Life insurance is an important tool for the

mobilization and investment of small savings.

5. Credit worthiness: - Life insurance policy can be used as a security to raise

loans. It improves the credit worthiness of business.

6. Social Security: - Life insurance is important for the society as a whole also. Life

insurance enables a person to provide for education and marriage of children and

for construction of house. It helps a person to make financial base for future.

7. Tax Benefit: - Under the Income Tax Act, premium paid is allowed as a

deduction from the total income under section 80C

1.6 INSURANCE CYCLE

Lloyd's Franchise Performance Director Rolf Tolle stated in 2007 that “mitigating the

insurance cycle was the “biggest challenge” facing managing agents in the next few

years”.

All industries experience cycles of growth and decline, 'boom and bust'. These cycles are

particularly important in the insurance and re-insurance industry as they are especially

unpredictable.

Lloyd's of London research in 2006 revealed, for the second year running, that Lloyd’s

underwriters see managing the insurance cycle as the top challenge for the insurance

industry, and nearly two-thirds believe that the industry at large is not doing enough to

respond to the challenge.

The Insurance Cycle affects all areas of insurance except life insurance, where there is

enough data and a large base of similar risks (i.e. people) to accurately predict claims,

and therefore minimize the risk that the cycle poses to business.

History:

The insurance cycle is a phenomenon that been recognized since at least the 1920s. Since

then it has been considered an insurance 'fact of life'. The corporate culture that

dominates insurance assumes that inherent uncertainty of the business must logically lead

to a cyclical business model. Lloyd's counters that this has become “a self-fulfilling

prophecy”.

More recently, insurers have attempted to model the cycle and base their policy pricing

and risk exposure accordingly.

Description of the cycle:

For the sake of argument lets start from a 'soft' period in the cycle, that is a period in

which premiums are low, capital base is high and competition is high. Premiums continue

to fall as naive insurers offer cover at unrealistic rates, and established businesses are

forced to compete or risk losing business in the long term.

The next stage is precipitated by a catastrophe or similar significant loss, for

example Hurricane Andrew or the attacks on the World Trade Center. The graph below

shows the effect that these two events had on insurance premiums.

http://en.wikipedia.org/wiki/World_Trade_Center

http://en.wikipedia.org/wiki/Hurricane_Andrew

http://en.wikipedia.org/wiki/Business_model

http://en.wikipedia.org/wiki/Organizational_culture

http://en.wikipedia.org/wiki/Life_insurance

http://en.wikipedia.org/wiki/Insurance_industry

http://en.wikipedia.org/wiki/Insurance_industry

http://en.wikipedia.org/wiki/Lloyd's_of_London

http://en.wikipedia.org/wiki/Reinsurance

After a major claims burst, less stable companies are driven out of the market which

decreases competition. In addition to this, large claims have left even larger companies

with less capital. Therefore, premiums rise rapidly. The market hardens,

and underwriters are less likely to take on risks.

In turn, this lack of competition and high rates looks suddenly very profitable, and more

companies join the market whilst existing business begin to lower rates to compete. This

causes a market saturation and Insurance Cycle begins again.

Dealing with the insurance cycle:

Whilst many underwriters believe that the cycle is out of their hands, Lloyd’s is trying to

push for more proactive management of the ups and downs of the industry. In 2006 they

published their ‘Seven Steps’ to managing the insurance cycle:

1. Don’t follow the herd. Insurers need to be prepared to walk away from markets when

prices fall below a prudent, risk-based premium.

2. Invest in the latest risk management tools. Insurers must push for continuous

improvement of these tools based on the latest science around issues such as climate

change, and make full use of them to communicate their pricing and coverage decisions.

3. Don’t let surplus capital dictate your underwriting. An excess of capital available

for underwriting can easily push an insurer to deploy the capital in unsustainable ways,

rather than having that capital migrate to other uses such as hedge funds and equities, or

returning it to shareholders.

4. Don’t be dazzled by higher investment returns. Don’t let higher investment returns

replace disciplined underwriting as base rates creep up on both sides of the Atlantic.

Notionally, splitting the business into insurance and asset management operations, and

monitoring each separately, is one way to achieve this.

5. Don’t rely on “the big one” to push prices upwards. The spectacular insured loss

should not be used as an excuse to raise prices in unrelated lines of business. Regulators,

rating agencies, and analysts - not to mention insurance buyers – are increasingly

resisting such behaviour.

http://en.wikipedia.org/wiki/Investment_management

http://en.wikipedia.org/wiki/Hedge_fund

http://en.wikipedia.org/wiki/Climate_change

http://en.wikipedia.org/wiki/Climate_change

http://en.wikipedia.org/w/index.php?title=The_Ups_and_Downs&action=edit&redlink=1

http://en.wikipedia.org/wiki/Market_saturation

http://en.wikipedia.org/wiki/Underwriter

6. Redeploy capital from lines where margins are unsustainable. There is little that

individual insurers can do to alter overall supply-and-demand conditions. But insurers

can set up internal monitoring systems to ensure that they scale back in lines in which

margins have become unsustainable and migrate to other lines.

7. Get smarter with underwriter and manager incentives. Incentives for key staff

should be structured to reward efficient deployment of capital, linking such rewards to

target shareholder returns rather than volume growth.

The Lloyd’s Managing Cycle report has several problems. It focuses on the industry as a

whole being able to work together to reduce the effect of market fluctuations. However,

this is somewhat unrealistic, as if underwriters do not write business in a soft market (i.e.

at cheap prices for the customer), it will be hard to win this business back in a hard

market due to loyalty issues.

Rolf Tolle asserts that “There is nothing complex about the cycle. It is about having the

courage of your convictions to act with strength. Swiss Re argue that instead of ‘beating’

the cycle, insurers should learn to anticipate its fluctuations. “Cycle management is

essentially proper timing. Monitoring the market, predicting market trends and accurately

assessing prices play an important role”.

Swiss Re give several examples of potential business strategies. One is to write risks at a

roughly fixed rate. This is clearly not practicable as it does not allow for the cyclical

nature of the market. Another is to fail to react fast enough to changes in the market,

which leaves a company even more exposed. The recommended strategy is one that relies

on prediction of the business cycle and setting premiums based on models and

experience.

The future of the insurance cycle:

The unpredictable nature of the insurance industry makes it very unlikely that the cycle

can be eliminated. For several years Lloyd's have been urging caution in soft periods and

restraint in hard periods. We are currently entering a soft period of high competition and

falling premiums. This suggests that the free market has not heeded the warnings of

http://en.wikipedia.org/wiki/Free_market

http://en.wikipedia.org/wiki/Swiss_Re

http://en.wikipedia.org/wiki/Market_trends

http://en.wikipedia.org/w/index.php?title=Rolf_Tolle&action=edit&redlink=1

http://en.wikipedia.org/wiki/Supply_and_demand

previous periods. Having said this, the insurance industry as a whole is several hundred

years old and has survived several other softening and hardening periods.

1.7 OBJECTIVES

Each research study has its own specific purpose. It is like to discover to Question

through the application of scientific procedure. But the main aim of our research to find

out the truth that is hidden and which has not been discovered as yet. Our research study

has two objectives:-

PRIMARY OBJECTIVE:

How TATA AIG Ltd is best services providers as a insurance company in the Tri-city

region.

SECONDARY OBJECTIVE: -

To know about the awareness towards insurance companies and their products

To study about the competitive position of TATA AIG Ltd in Competitive

Market.

To study about the effectiveness & efficiency of TATA AIG Ltd in relation to its

competitors

To study about whether people are satisfied with TATA AIG Services &

Management System or not

To study about the difficulties faced by persons while dealing with TATA AIG

1.8 SCOPE OF THE STUDY

A big boom has been witnessed in insurance sector in Indian Economy in

recent times..

The study deals with TATA AIG in focus with marketing strategies of the

company and their impact on indian market .

The study then goes to evaluate and analyse the findings so as to present a clear

outlook of the marketing strategies and the growth of the insurance sector .

1.9 METHODOLOGY

Step1: Research Methodology:

It is the highly intellectual human activity used in investigation and deals in the manner

in which how data is collected and analysed

Step 2: Develop the research plan:

It includes the following methods?

1. observation

2. surveys

3. behavioral data

4. experiments

Step 3: Research design

Research design provides the glue that holds the research project together. A design is

used to structure the research, to show how all of the major parts of the research project --

the samples or groups, measures, treatments or programs, and methods of assignment --

work together to try to address the central research questions. Here, after a brief

introduction to research design, I'll show you how we classify the major types of designs.

You'll see that a major distinction is between the experimental designs that use random

assignment to groups or programs and the quasi-experimental designs that don't use

random assignment. People often confuse what is meant by random selection with the

idea of random assignment. Understanding the relationships among designs is important

in making design choices and thinking about the strengths and weaknesses of different

designs.

Step 4: Data source:

http://www.socialresearchmethods.net/kb/desrel.php

http://www.socialresearchmethods.net/kb/quasiexp.php

http://www.socialresearchmethods.net/kb/desexper.php

http://www.socialresearchmethods.net/kb/destypes.php

http://www.socialresearchmethods.net/kb/desintro.htm

There are 2 types of data source collection which are as follows:

a. primary data : This type of data is collected by the researcher himself and is

done through interviews and questionnaires

b. secondary data is the data when it is not collected by the researcher and is

collected by various other methods or with the help of other projects

Step 5: Research instruments: In this, questionnaire is to be filled on the basis of

responses of the customers and the sample size of the other people

a. Sample unit: This is that element or set of elements considered for selection in some

stage of sampling (same as the elements, in a simple single-stage sample). In a multi-

stage sample, the sampling unit could be blocks, households, and individuals within the

households.

b. Sampling frame: This is the actual list of sampling units from which the sample, or

some stage of the sample, is selected. It is simply a list of the study population.

c. Sample design: This refers to a set of rules or procedures that specify how a sample is

to be selected. This can either be probability or non-probability.

d. Sample size: The number of elements in the obtained sample.

Area of study: South Delhi

Time of study: 8 weeks

Advantages of Sampling

i. Sampling saves time and money

ii. Sampling saves labor

Step 7: Analyzing information:

To extract findings from the collected data . It includes the formatting and tabulation of

data by the researcher which make pie charts on the basis of analyzed data.

1.10 LIMITATIONS OF THE STUDY

CHAPTER-2

INTRODUCTION TO INDIAN INSURANCE INDUSTRY

2.1 INDIAN INSURANCE INDUSTRY

The Insurance sector in India governed by Insurance Act, 1938, the Life Insurance

Corporation Act, 1956 and General Insurance Business (Nationalisation) Act, 1972,

Insurance Regulatory and Development Authority (IRDA) Act, 1999 and other related

Acts. With such a large population and the untapped market area of this population

Insurance happens to be a very big opportunity in India. Today it stands as a business

growing at the rate of 15-20 per cent annually. Together with banking services, it adds

about 7 per cent to the country’s GDP .In spite of all this growth the statistics of the

penetration of the insurance in the country is very poor. Nearly 80% of Indian

populations are without Life insurance cover and the Health insurance. This is an

indicator that growth potential for the insurance sector is immense in India. It was due to

this immense growth that the regulations were introduced in the insurance sector and in

continuation “Malhotra Committee” was constituted by the government in 1993 to

examine the various aspects of the industry. The key element of the reform process was

Participation of overseas insurance companies with 26% capital. Creating a more

efficient and competitive financial system suitable for the requirements of the economy

was the main idea behind this reform.

Since then the insurance industry has gone through many sea changes .The competition

LIC started facing from these companies were threatening to the existence of LIC .since

the liberalization of the industry the insurance industry has never looked back and today

stand as the one of the most competitive and exploring industry in India. The entry of the

private players and the increased use of the new distribution are in the limelight today.

The use of new distribution techniques and the IT tools has increased the scope of the

industry in the longer run.

2.2 HISTORY OF INSURANCE SECTOR

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

1818 with the establishment of the Oriental Life Insurance Company in Calcutta. Some of

the important milestones in the life insurance business in India are given in the table 1.

Table 1: Milestone’s in the life insurance business in India

Year Milestones in the life insurance business in India

1912 The Indian Life Assurance Companies Act enacted as the first statute to

regulate the life insurance business

1928 The Indian Insurance Companies Act enacted to enable the government

to collect statistical information about both life and non-life insurance

businesses

1938 Earlier legislation consolidated and amended to by the Insurance Act

with the objective of protecting the interests of the insuring public.

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

central government and nationalized. LIC formed by an Act of

Parliament, viz. LIC Act, 1956, with a capital contribution of rs. 5crore

from the Government of India.

The General insurance business in India, on the other hand, can trace its roots to the

Triton Insurance Company Ltd., the first general insurance company established in the

year 1850 in Calcutta by the British. Some of the important milestones in the general

insurance business in India are given in the table 2.

Table 2: Milestone’s in the general insurance business in India

Year Milestones in the general insurance business in India

1907 The Indian Mercantile Insurance Ltd. set up, the first company to transact

all classes of general insurance business

1957 General Insurance Council, a wing of the Insurance Association of India,

frames a code of conduct for ensuring fair conduct and sound business

practices

1968 The Insurance Act amended to regulate investments and set minimum

solvency margins and the Tariff Advisory Committee set up.

1972 The General Insurance Business (Nationalization) Act, 1972 nationalized

the general insurance business in India with effect from 1st January 1973.

107 insurers amalgamated and grouped into four companies viz. the

National Insurance Company Ltd., the New India Assurance Company

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

Insurance Company Ltd. GIC incorporated as a company.

2.3 INDIAN INSURANCE MARKET

Insurance has a long history in India. Life Insurance in its current form was introduced in

1818 when Oriental Life Insurance Company began its operations in India. General

Insurance was however a comparatively late entrant in 1850 when Triton Insurance

company set up its base in Kolkata. History of Insurance in India can be broadly

bifurcated into three eras: a) Pre Nationalization b) Nationalization and c) Post

Nationalization. Life Insurance was the first to be nationalized in 1956. Life Insurance

Corporation of India was formed by consolidating the operations of various insurance

companies. General Insurance followed suit and was nationalized in 1973. General

Insurance Corporation of India was set up as the controlling body with New India, United

India, National and Oriental as its subsidiaries. The process of opening up the insurance

sector was initiated against the background of Economic Reform process which

commenced from 1991. For this purpose Malhotra Committee was formed during this

year who submitted their report in 1994 and Insurance Regulatory Development Act

(IRDA) was passed in 1999. Resultantly Indian Insurance was opened for private

companies and Private Insurance Company effectively started operations from 2001.

The introduction of private players in the industry has added value to the industry. The

initiatives taken by the private players are very competitive and have given immense

competition to the on time monopoly of the market LIC. Since the advent of the private

players in the market the industry has seen new and innovative steps taken by the players

in this sector. The new players have improved the service quality of the insurance. As a

result LIC down the years have seen the declining phase in its career. The market share

was distributed among the private players. Though LIC still holds the 75% of the

insurance sector but the upcoming natures of these private players are enough to give

more competition to LIC in the near future. LIC market share has decreased from 95%

(2002-03) to 81 %( 2004-05).The following companies has the rest of the market share of

the insurance industry. Table 3 shows the mane of the player in the market.

Insurance Market-Present:

The insurance sector was opened up for private participation four years ago. For years

now, the private players are active in the liberalized environment. The insurance market

have witnessed dynamic changes which includes presence of a fairly large number of

insurers both life and non-life segment. Most of the private insurance companies have

formed joint venture partnering well recognized foreign players across the globe.

There are now 29 insurance companies operating in the Indian market – 14 private life

insurers, nine private non-life insurers and six public sector companies. With many more

joint ventures in the offing, the insurance industry in India today stands at a crossroads as

competition intensifies and companies prepare survival strategies in a detariffed scenario.

There is pressure from both within the country and outside on the Government to increase

the foreign direct investment (FDI) limit from the current 26% to 49%, which would help

JV partners to bring in funds for expansion.

There are opportunities in the pensions sector where regulations are being framed. Less

than 10 % of Indians above the age of 60 receive pensions. The IRDA has issued the first

license for a standalone health company in the country as many more players wait to

enter. The health insurance sector has tremendous growth potential, and as it matures and

new players enter, product innovation and enhancement will increase. The deepening of

the health database over time will also allow players to develop and price products for

larger segments of society.

State Insurers Continue To Dominate There may be room for many more players in a

large underinsured market like India with a population of over one billion. But the reality

is that the intense competition in the last five years has made it difficult for new entrants

to keep pace with the leaders and thereby failing to make any impact in the market.

Also as the private sector controls over 26.18% of the life insurance market and over

26.53% of the non-life market, the public sector companies still call the shots.

The country’s largest life insurer, Life Insurance Corporation of India (LIC), had a share

of 74.82% in new business premium income in November 2005.

Similarly, the four public-sector non-life insurers – New India Assurance, National

Insurance, Oriental Insurance and United India Insurance – had a combined market share

of 73.47% as of October 2005. ICICI Prudential Life Insurance Company continues to

lead the private sector with a 7.26% market share in terms of fresh premium, whereas

ICICI Lombard General Insurance Company is the leader among the private non-life

players with a 8.11% market share. ICICI Lombard has focused on growing the market

for general insurance products and increasing penetration within existing customers

through product innovation and distribution.

Reaching Out To Customers No doubt, the customer profile in the insurance industry is

changing with the introduction of large number of divergent intermediaries such as

brokers, corporate agents, and bank assurance.

The industry now deals with customers who know what they want and when, and are

more demanding in terms of better service and speedier responses. With the industry all

set to move to a detariffed regime by 2007, there will be considerable improvement in

customer service levels, product innovation and newer standards of underwriting.

Intense Competition In a detariffed environment, competition will manifest itself in

prices, products, underwriting criteria, innovative sales methods and creditworthiness.

Insurance companies will vie with each other to capture market share through better

pricing and client segmentation.

The battle has so far been fought in the big urban cities, but in the next few years,

increased competition will drive insurers to rural and semi-urban markets.

Global Standards While the world is eyeing India for growth and expansion, Indian

companies are becoming increasingly world class. Take the case of LIC, which has set its

sight on becoming a major global player following a Rs280-crore investment from the

Indian government. The company now operates in Mauritius, Fiji, the UK, Sri

Lanka, Nepal and will soon start operations in Saudi Arabia. It also plans to venture into

the African and Asia-Pacific regions in 2006.

The year 2005 was a testing phase for the general insurance industry with a series of

catastrophes hitting the Indian sub-continent.

However, with robust reinsurance programes in place, insurers have successfully

managed to tide over the crisis without any adverse impact on their balance sheets.

With life insurance premiums being just 2.5% of GDP and general insurance premiums

being 0.65% of GDP, the opportunities in the Indian market place is immense. The next

five years will be challenging but those that can build scale and market share will survive

and prosper.

How big the insurance market is?

The insurance sector was opened up for private participation four years ago. For years

now, the private players are active in the liberalized environment. The insurance market

have witnessed dynamic changes which includes presence of a fairly large number of

insurers both life and non-life segment. Most of the private insurance companies have

formed joint venture partnering well recognized foreign players across the globe. There

are now 29 insurance companies operating in the Indian market – 14 private life insurers,

nine private non-life insurers and six public sector companies. With many more joint

ventures in the offing, the insurance industry in India today stands at a crossroads as

competition intensifies and companies prepare survival strategies in a detariffed scenario.

There is pressure from both within the country and outside on the Government to increase

the foreign direct investment (FDI) limit from the current 26% to 49%, which would help

JV partners to bring in funds for expansion. There are opportunities in the pensions sector

where regulations are being framed. Less than 10 % of Indians above the age of 60

receive pensions. The IRDA has issued the first license for a standalone health company

in the country as many more players wait to enter. The health insurance sector has

tremendous growth potential, and as it matures and new players enter, product innovation

and enhancement will increase. The deepening of the health database over time will also

allow players to develop and price products for larger segments of society. Insurance is a

Rs.400 billion business in India, and together with banking services adds about 7% to

India's Gap.

Indian Scenario:

Indian economy is the 12th largest in the world, with a GDP of $1.25 trillion and 3rd

largest in terms of purchasing power parity. With factors like a stable 8-9 per cent annual

growth, rising foreign exchange reserves, a booming capital market and a rapidly

expanding FDI inflows, it is on the hinge of an ever increasing growth curve. Indians

have a tendency to invest in properties and gold followed by bank deposits. They

selectively invest in shares also but the percentage is very small--4-5%. This in itself is an

indicator that growth potential for the insurance sector is immense. It’s a business

growing at the rate of 15-20% per annum and presently is of the order of $47.9 billion.

India is a vast market for life insurance that is directly proportional to the growth in

premiums and an increase in life density. With the entry of private sector players backed

by foreign expertise, Indian insurance market has become more vibrant. Competition in

this market is increasing with company’s continuous effort to lure the customers with

new product offerings. However, the market share of private insurance companies

remains very low -- in the 10-15% range. Even to this day, Life Insurance Corporation

(LIC) of India dominates Indian insurance sector. The heavy hand of government still

dominates the market, with price controls, limits on ownership, and other restraints. The

upward growth trend started from 2000 was mainly due to economic policies adopted by

the then Indian government. This year saw initiation of an era of economic liberalization

and globalization in the Indian economy followed by several reforms and long-term

policies that created a perfect roadmap for the success of Indian financial markets.

The general insurance industry grew by 16% in 2006-07 as private insurers

continued their robust performance, while public sector players like New India Assurance

and Oriental Insurance improved their show. Despite continuous fall in business of

government-owned National Insurance, the 12 non-life insurers collected Rs 20,378 crore

in first year premium in the last fiscal compared to Rs 17,531 crore collected in2005-06,

according to data compiled by regulator IRDA.New India Assurance collected Rs 4,762

crore in premium and continued to lead the non-life sector by cornering 23.36% of the

market. National Insurance was at the second spot by collecting Rs 3,524 crore in

premium, a decline of 7%, but had a market pie of 17.29%.Oriental Insurance mopped up

Rs 3,518 crore in premium income after logging 16.6% growth in business to corner a

market share of 17.26%. Another PSU insurer United India grew by a modest 6.8% to

collect Rs 3,147 crore in premium and had 15.44% of the market. The eight private

players expanded their business by52% to collect Rs 5,427 crore in premium income and

increased their combined market share to 26.6% from20.2% a year ago ICICI Lombard

led the private players by logging 80% growth in premium at Rs1,592crore, followed by

Bajaj Allianz, which grew by 50% to collect Rs. 1,287 crore in premium. ICICI Lombard

had a market share of 7.81% and Bajaj Allianz had 6.31% of the market

2.4 PRESENT SCENARIO OF INSURANCE INDUSTRY

India with about 200 million middle class household shows a huge untapped

potential for players in the insurance industry. Saturation of markets in many

developed economies has made the Indian market even more attractive for global

insurance majors. The insurance sector in India has come to a position of very

high potential and competitiveness in the market. Indians, have always seen life

insurance as a tax saving device, are now suddenly turning to the private sector

that are providing them new products and variety for their choice.

Consumers remain the most important centre of the insurance sector. After the

entry of the foreign players the industry is seeing a lot of competition and thus

improvement of the customer service in the industry. Computerization of

operations and updating of technology has become imperative in the current

scenario. Foreign players are bringing in international best practices in service

through use of latest technologies

The insurance agents still remain the main source through which insurance

products are sold. The concept is very well established in the country

like India but still the increasing use of other sources is imperative. At present the

distribution channels that are available in the market are listed below.

Direct selling

Corporate agents

Group selling

Brokers and cooperative societies

Banc assurance

Customers have tremendous choice from a large variety of products from pure

term (risk) insurance to unit-linked investment products. Customers are offered

unbundled products with a variety of benefits as riders from which they can

choose. More customers are buying products and services based on their true

needs and not just traditional money back policies, which is not considered very

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

investment plans in the market. However, there are still some key new products

yet to be introduced - e.g. health products.

The rural consumer is now exhibiting an increasing propensity for insurance

products. A research conducted exhibited that the rural consumers are willing to

dole out anything between Rs 3,500 and Rs 2,900 as premium each year. In the

insurance the awareness level for life insurance is the highest in rural India, but

the consumers are also aware about motor, accidents and cattle insurance. In a

study conducted by MART the results showed that nearly one third said that they

had purchased some kind of insurance with the maximum penetration skewed in

favor of life insurance. The study also pointed out the private companies have

huge task to play in creating awareness and credibility among the rural populace.

The perceived benefits of buying a life policy range from security of income bulk

return in future, daughter's marriage, children's education and good return on

savings, in that order, the study adds.

2.5 ROLE OF IRDA

Section 14 of IRDA Act, 1999 lays down the duties, powers and functions of IRDA.

(1) Subject to the provisions of this Act and any other law for the time being in force, the

Authority shall have the duty to regulate, promote and ensure orderly growth of the

insurance business and re-insurance business.

(2) Without prejudice to the generality of the provisions contained in sub-section, the

powers and functions of the Authority shall include, -

(a) issue to the applicant a certificate of registration, renew, modify, withdraw,

suspend or cancel such registration;

(b) protection of the interests of the policy holders in matters concerning assigning of

policy, nomination by policy holders, insurable interest, settlement of insurance claim,

surrender value of policy and other terms and conditions of contracts of insurance;

(c) specifying requisite qualifications, code of conduct and practical training for

intermediary or insurance intermediaries and agents;

(d) specifying the code of conduct for surveyors and loss assessors;

(e) promoting efficiency in the conduct of insurance business;

(f) promoting and regulating professional organizations connected with the insurance and

re-insurance business;

(g) levying fees and other charges for carrying out the purposes of this Act;

(h) calling for information from, undertaking inspection of, conducting enquiries and

investigations including audit of the insurers, intermediaries, insurance intermediaries

and other organizations connected with the insurance business;

(i) control and regulation of the rates, advantages, terms and conditions that may be

offered by insurers in respect of general insurance business not so controlled and

regulated by the Tariff Advisory Committee under section 64U of the Insurance Act,

1938 (4 of 1938);

(j) specifying the form and manner in which books of account shall be maintained and

statement of accounts shall be rendered by insurers and other insurance intermediaries;

(k) regulating investment of funds by insurance companies;

(l) regulating maintenance of margin of solvency;

(m) adjudication of disputes between insurers and intermediaries or insurance

intermediaries; (n) supervising the functioning of the Tariff Advisory Committee;

(o) specifying the percentage of premium income of the insurer to finance schemes for

promoting and regulating professional organizations referred to in clause (f);

(p) specifying the percentage of life insurance business and general insurance business to

be undertaken by the insurer in the rural or social sector; and

(q) exercising such other powers as may be prescribed.

2.6 NAME OF DIFFERENT INSURANCE COMPANIES

Name of the insurance company and the share holding pattern

Name of the Insurance Company Shareholding

Agricultural Insurance Co Bank and Public Ins Co

Bajaj Allianz General Insurance Co. Ltd. Privately Held

Cholamandalam MS General Insurance Co. Ltd. Privately Held

Export Credit Guarantee Company Public Sector

HDFC Chubb General Insurance Co. Ltd. Privately Held

ICICI Lombard General Insurance Co. Ltd. Privately Held

IFFCO-Tokio General Insurance Co. Ltd. Privately Held

National Insurance Co. Ltd. Public Sector

New India Assurance Co. Ltd. Public Sector

Oriental Insurance Co. Ltd. Public Sector

Reliance General Insurance Co. Ltd. Privately Held

Royal Sundaram Alliance General Insurance Co.

Ltd.Privately Held

Tata AIG General Insurance Co. Ltd. Privately Held

United India Insurance Co. Ltd. Public Sector

There are a total of 13 life insurance companies operating in India, of which one is a

Public Sector Undertaking and the balance 12 are Private Sector Enterprises.

List of Companies are indicated below:-

Name of the life insurance company and share holding pattern

Name of the company Nature of Holding

Allianz Bajaj Life Insurance Co Private

Aviva Life Insurance Private

Birla Sun Life Insurance Co Private

HDFC Standard Life Insurance Co Private

ICICI Prudential Life Insurance Co Private

ING Vysya Life Insurance Co. Private

Life Insurance Corporation of India Public

Max New York Life Insurance Co. Private

MetLife Insurance Co. Private

Om Kotak Mahindra Life Insurance Private

Reliance insurance Private

SBI Life Insurance Co Private

TATA- AIG Life Insurance Company Private

Name of the player market share (%)

Name of the Player Market share (%)

LIFE INSURANCE CORPORATION OF INDIA 82.3

ICICI PRUDENTIAL 5.63

BIRLA SUN LIFE 2.56

BAJAJ ALLIANZ 2.03

SBI LIFE INSURANCE 1.80

HDFC STANDARD 1.36

TATA AIG 1.29

MAX NEW YARK 0.90

AVIVA 0.79

OM KOTAK MAHINDRA 0.51

ING VYSYA 0.37

MET LIFE 0.21

2.7 APPLICATION OF INFORMATION TECHNOLOGY IN INSURANCE

SECTOR

There is a evolutionary change in the technology that has revolutionized the entire

insurance sector. Insurance industry is a data-rich industry, and thus, there is a need to

use the data for trend analysis and personalization.

With increased competition among insurers, service has become a key issue. Moreover,

customers are getting increasingly sophisticated and tech-savvy. People today don’t want

to accept the current value propositions, they want personalized interactions and they

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

The insurance companies today must meet the need of the hour for more and more

personalized approach for handling the customer. Today managing the customer

intelligently is very critical for the insurer especially in the very competitive

environment. Companies need to apply different set of rules and treatment strategies to

different customer segments. However, to personalize interactions, insurers are required

to capture customer information in an integrated system.

With the explosion of Website and greater access to direct product or policy information,

there is a need to developing better techniques to give customers a truly personalized

experience. Personalization helps organizations to reach their customers with more

impact and to generate new revenue through cross selling and up selling activities. To

ensure that the customers are receiving personalized information, many organizations are

incorporating knowledge database-repositories of content that typically include a search

engine and lets the customers locate the all document and information related to their

queries of request for services. Customers can hereby use the knowledge database to

mange their products or the company information and invoices, claim records, and

histories of the service inquiry. These products also may be able to learn from the

customer’s previous knowledge database and to use their information when determining

the relevance to the customers search request.

CHAPTER-3

INTRODUCTION TO TATA AIG

3.1 TATA AIG INSURANCE COMPANY

Tata Enterprises with 82 companies, spread over seven sectors and with an annual

turnover exceeding US $8.8 billion, employs more than 262,000 people. Tata Group has

shown over years that it is a value driven company and has pioneering contributions in

various fields including insurance, aviation, iron and steel. Interims of capital market

performance as many as 40 listed Tata companies account for nearly 5% of the total

market capitalization of all listed companies. The Group has had a long association with

India's insurance sector having been the largest insurance company in India prior to the

nationalization of insurance.

3.2 THE TATA GROUP

Tata is a rapidly growing business group based in India with significant international

operations. Revenues in 2007-08 are USD 62.5 billion (around Rs. 251,543 crores), of

which 61% was from business outside India. The Group’s Net Profit for 2007-08 is USD

5.4 billion (around Rs. 21,578 crores). The Group employs around 350,000 people

worldwide. The Tata name has been respected in India for 140 years for its adherence to

strong values and business ethics. The business operations of the Tata Group currently

encompass seven business sectors - Communications and Information Technology,

Engineering, Materials, Services, Energy, Consumer Products and Chemicals. The

Group's 28 publicly listed enterprises have a combined market capitalisation of around

$60 billion, among the highest among Indian business houses, and a shareholder base of

2.9 million. The major companies in the Group include Tata Steel, Tata Motors, Tata

Consultancy Services (TCS), Tata Power, Tata Chemicals, Tata Tea, Indian Hotels, Tata

Tele services and Tata Communications.

3.3 TATA GROUP IN INSURANCE

Tata AIG General Insurance Company Ltd, and Tata AIG Life Insurance Company Ltd.,

(collectively "Tata AIG") are joint venture companies between the Tata group India's

most trusted industrial house and American International Group, Inc. (AIG), the leading

U. S. based international insurance and financial services organization. The Late Sir

Dorab Tata, was the founder Chairman of New India Assurance Co. Ltd., a group

company incorporated way back in 1919. Government of India took over the

management of this company as apart of nationalization of general insurance companies

in 1972. Not deterred by the move, Tata group have ventured into risk management

services having tied up with AIG group, back in 1977, with the incorporation of Tata

AIG Risk Management Services Pvt. Ltd. The Tata Group is one of India's largest and

most respected business conglomerates, with revenues in 2006-07 of $28.8 billion

(Rs129,994 crore), the equivalent of about3.2 per cent of the country's GDP, and a

market capitalization of $72.2 billion as on December 6, 2007. Tata companies together

employ some 289,500 people.

3.4 AIG

American International Group, Inc. (AIG), is a major American insurance corporation

based at the American

International Building in New York City. The British headquarters are located on

Fenchurch Street in London, continental Europe operations are based in La Defense,

Paris, and its Asian HQ is in Hong Kong. According to the 2008 Forbes Global 2000 list,

AIG was the 18th-largest company in the world.

Company Background: AIG’s history dates back to 1919, when Cornelius Vander Starr

established an insurance agency in Shanghai, China. Starr was the first Westerner in

Shanghai to sell insurance to the Chinese. • In 1962, Starr gave management of the

company's less than successful U.S. holdings to MauriceR. \"Hank\" Greenberg, who

shifted the company's U.S. focus from personal insurance to high.1969.American

International Group, Inc is the leading U.S. based international insurance and financial

services organization and the largest underwriter of commercial and industrial insurance

in the United States. Its member companies write a wide range of commercial and

personal insurance products through a variety of distribution channels in over 130

countries and jurisdictions throughout the world. AIG's Life Insurance operations

comprise of the most extensive worldwide network of any life insurer. AIG's global

businesses also include financial services and asset management, including aircraft

leasing, financial products, trading and market making, consumer finance, savings

products.

3.5 THE JOINT VENTURE

Tata AIG Life Insurance Co. Ltd. is capitalized at Rs. 185 crores of which 74 per cent

has been brought in by Tata Sons and the American partner brings in the balance 26 per

cent. Mr. George Oommen has been named managing director of Tata AIG Life. Tata-

AIG plans to provide broad array of life insurance plans to cover to both individuals and

groups. The company headquartered in Mumbai, with branch operations in Delhi,

Chennai, Hyderabad, Bangalore Calcutta, Pune and Chandigarh.

3.6 ABOUT TATA-AIG

Tata AIG Insurance Solutions is one of the leading insurance companies that provide

both life insurance as well as general insurance. This pioneer company is a joint

collaboration between the American International Group, Inc. (AIG) and Tata Group.

They own the company in the ratio of 26:74. It is a leading financial institution that has

carved a niche for itself all over the world. Tata AIG Insurance provides facilities to both

corporate and individuals. Starting its operations on April 1, 2001, it seeks to serve

different categories of people. It acquired its license for carrying out operations in India

on February 12, 2001. Tata AIG Insurance Solutions is one of the most prestigious

organizations in the business world. It employs thousands of employees and offers

various opportunities to people to build a prospective career. As a leading name in the

financial world, it identifies the potential and experience of the individual. This insurance

company identifies the clients needs and works accordingly. It stresses on innovative

aspect and opening of new markets. It believes in new economy and latest Internet

technology. Tata AIG Insurance offers a number of products for the General Insurance

holders. General insurance products include:

• Individual insurance

• Small business insurance

• Corporate insurance

Tata AIG Insurance offers flexible life insurance to the individuals, business organization

and other association. For the corporate, there are various insurance products like group

pensions, employee benefits, work place solutions and credit life. For the individuals,

Tata AIG Insurance offers various products for adults, children and for retirement

planning.

CHAPTER-4

TATA AIG PRODUCTS

PRODUCTS (in brief):

4.1 PRODUCTS FOR ADULTS

The company has a slew of life insurance of plans for adults as follows.

1. Life Assure Lifeline Plans: High coverage at an affordable cost

2. Life Assure Growth Plans: It is an Endowment policy which keeps your money safe

and has it grow

3. Life Assure 21 years Money Saver: Cash payments at the end of every 3 years.

Life insurance coverage plus the flexibility of periodic payments.

4. Life Assure Golden Years Plan: It is an Endowment policy which gives Safety as well

as returns.

5. Life Easy Retire: It is an Annuity plan with Return of Purchase Price Single premium

payment.

6. Life Invest Assure Health: It is a Unit linked investment plan and helps to achieve

financial goals along with a comprehensive health policy.

7. Life Hospi CashBack: It gives multiple claims against unforeseen hospitalization

expenses.

8. Life Health Investor: Benefit on diagnosis of 12 critical illnesses. It provides cover in

case of unfortunate death.100% return of premium in case of no claims.

9. Life Invest Assure II: Life cover plus high returns.

10. Life Invest Assure Apex: Unit-linked life insurance plan. Guaranteed Maturity Unit

Price.

11. Life Invest Assure Care: Non-participating unit linked insurance plan

Inbuilt Critical Illness benefit .

12. Life Invest Assure Flexi: Unit linked endowment plan. Helps one achieve financial

goals

13. Life Invest Assure Gold: There is a flexibility to invest more money. It takes care of

emergency cash requirements

14. Life Life Plus: If you outlive the term get premium back. In case of death by natural

causes get sum assured.

15. Life MahaLife Gold: Good for retirement planning. Provides for steady income and

insurance coverage.

16. Life Raksha: Large cover at a small premium.

17. Life Shubh Life: Life insurance protection and high returns.

18. Life Health First: Covers health contingencies.

19. Life Health Protector: Covers cost of major surgery or treatment.

4.2 CHILDREN FUTURE PLANNING

To ensure your children lead happy and successful lives, it’s important to plan now so

that they will have the financial support they need in the future.

Tata AIG has a range of flexible insurance products to help you secure your children’s

financial future.

Tata AIG provides products for children’s which include the following:

Tata AIG Life Invest Assure Superstar

Tata AIG Life Invest Assure Superstar is a non- participating unit linked endowment plan

that allows you to secure a financial future for your child.

Tata AIG Life United Ujjwal Bhawishya Plus

This is a unit linked endowment plan which provides you the assurance to realize your

child’s dreams.

Tata AIG Life Assure Career Builder

This money-back policy provides financial assistance at key stages of your child’s life,

from education to their first steps into a new career.

Tata AIG Life Assure Educare at 18 & Tata AIG Life Assure Educare at 21

This first of its kind juvenile endowment policy is geared toward funding your child’s

education. You can choose between Assure Educare 18 and Assure Educare 21,

depending on your child’s needs.

Tata AIG Life Assure 21 years Money Saver

This savings plan provides you with cash payments in the form of survival benefits at

regular intervals to fund your child’s needs at critical milestones or support your financial

obligations. You get the dual benefits of life insurance coverage plus the flexibility of

periodic payments.

Tata AIG Life MahaLife Gold

This unique policy ensures that your child will have a steady income and insurance

coverage for life! Premiums are payable only for the first 15 years.

Tata AIG Life Starkid

An exceptional endowment policy that ensures you can afford to give your child the very

best for his career & marriage. Get more details like Key features, Tax Benefits, Riders

and Age Eligibility about any of above mention products for children.

4.3 MICRO INSURANCE PLANS

Micro Insurance is the process of delivering and servicing relevant and affordable life

insurance products to the low-income socio economic strata. The focus of Tata AIG

Life’s Micro insurance program is rural India, where traditionally the far-flung, lower and

lower middle-income segments have had limited access to life insurance services.

How do Tata operate there?

It operates in 11 states with a specific relationship management team for each state. A

dedicated & trained sales and marketing team manages the front end of the Micro

insurance program. Its micro insurance distribution model collaborates with NGO’s

(Non-governmental organizations) and Rural organizations with community level SHG

(Self Help Group) women advisors who provide insurance advisory services to the rural

customers at their doorstep.

The grassroots level agents explain the product details in the local language of the

customer, thereby enabling the customer to make a decision. The training programs,

brochures, contract documents, and application forms are available in 8 different

languages other than English and Hindi.

Cost of Micro Insurance plans:

Tata AIG Life Micro insurance plans are available with or without survival benefits and

with death benefits ranging from Rs.5,000 to Rs.50,000. With premiums as low as Rs.5**

per month, there is now an affordable life insurance product for nearly every rural

household in India.

Term Plans

Tata AIG Life Assure One year/ Five Years/10 Years/ 15 Years / 20 Years / 25

Years Lifeline Plans, and Term to age 60 known as Assure Lifeline to Age 60

Tata AIG Life Raksha.

Money back Plans

Tata AIG Life Assure 21 years Money Saver

Pension Plans

Tata AIG Life Nirvana

Tata AIG Life Nirvana Plus

Health Plans

Tata AIG Life Health First

Tata AIG Life Health Investor

Tata AIG Life Health Protector - 5 Year Guaranteed Renewal Accident and

Health Plan

Tata AIG Life Hospi CashBack

Endowment Plans

Tata AIG Life Assure 10 Years / 20 Years / 30 Years Security & Growth Plans

Tata AIG Life Assure Golden Years Plan

Tata AIG Life Shubhlife

Wholelife Plans

Tata AIG Life Mahalife Gold

Annuity Plans

Tata AIG Life Easy Retire

Children Plans

Tata AIG Life Assure Career Builder

Tata AIG Life Assure Educare at 18 & Assure Educare at 21

Tata AIG Life Starkid

Unit Linked Plans

Tata AIG Life Invest Assure Superstar

Tata AIG Life Invest Assure Sampatti

Tata AIG Life Invest Assure Insta+

Tata AIG Life Invest Assure Optima Plus

Tata AIG Life Invest Assure Swarna Jeevan Plus

4.4 RETIREMENT PLANNING

The estimated lifespan of an averagely healthy person is around 75 years. This means that

you will have to fund your lifestyle for 20 years without a regular salary if you plan to

retire at the age of 55.

We can truly make our retirement years into Golden years by following Retirement plans:

Tata AIG Life Apex Pension Plans:

These plans provide a platform ensuring the upside potential of the equity markets while

safeguarding the investors interest by offering a highest NAV guarantee on maturity.

Tata AIG Life Assure Golden Years Plan:

This endowment policy gives safety AND returns. In case of death, the dependants get

the sum assured otherwise the savings grow. If insured survives, he still gets that sum

assured along with a whole host of bonuses.

Tata AIG Life Easy Retire:

This is an immediate annuity plan with Return of Purchase Price (RoPP) which can be

purchased through a single premium payment. The plan provides for annuity payments

which are paid throughout the life time of an annuitant.

Tata AIG Life MahaLife Gold :

This distinctive policy is the ideal planning vehicle to fund the retirement. It provides us a

steady income and insurance coverage for life! Premiums are payable only for the first 15

years.

Tata AIG Life Nirvana:

The highly flexible Nirvana retirement plan lets you choose your retirement age (from 50

to 65 years).

Tata AIG Life Nirvana Plus:

This is India’s first and only pension policy with a guaranteed addition of 10 percent of

sum assured every 5 years. We can choose from three levels of cover, and also decide the

age we want to retire.

Tata AIG Life Invest Assure Swarna Jeevan Plus:

This is a unit linked non participating pension plan. This plan helps to invest money,

build and multiply capital.

Tata AIG Life Invest Assure Future Plus:

This is a Unit Linked pension plan with a single purpose - to preserve and multiply your

happiness even after you stop working. Invest Assure Future Plus is built as a custom-

made retirement solution to meet the needs of capital accumulation, growth and indeed,

multiplication.

4.5 POLICIES AVAILABLE AT TATA AIG

1. Tata AIG Life Navkalyan Yojana

2. Tata AIG Life Ayushman Yojana

3. Tata AIG Life Sampoorn Bima Yojana

4. Tata AIG Life Sumangal Bima Yojana

1. Tata AIG Life Ayushman Yojana

It is a single premium plan where the policyholder pays the premium at the beginning of

the policy term. This is especially useful for those rural people who have a seasonal

income.

Key features include:

Policy Term : 10 years

Coverage Limits : Minimum Death Benefit (Sum Assured): Rs.5,000/-

Maximum Death Benefit (Sum Assured): Rs.50,000/-

http://www.tata-aig-life.com/MicroInsurance/SumangalBimaYojana/solutionSumangalBimaYojana.htm

http://www.tata-aig-life.com/MicroInsurance/SampoornBimaYojana/solutionSampoornBimaYojana.htm

http://www.tata-aig-life.com/MicroInsurance/AyushmanYojana/solutionAyushmanYojana.htm

http://www.tata-aig-life.com/MicroInsurance/NavkalyanYojana/solutionNavkalyanYojana.htm

Death Benefit : Sum assured to the policyholder’s nominee

Maturity Benefit: On survival, 125% of the single premium paid.

Tax Benefits and Age Eligibility:

Premiums paid under this plan are eligible for tax benefits to the extent of 20% of

Sum Assured as per the Income Tax Act, 1961 and are subject to amendments

made therein from time to time.*

Anyone between ages 18 and 60 can apply for this policy.

2. Tata AIG Life Sampoorn Bima Yojana

It is a low cost insurance plan where the policyholder receives all the premiums paid

during the policy term upon survival until the term of the policy. Here, Premiums are

payable for only 10 years, while the coverage is up to 15 years.





Premium payment frequency : Monthly, quarterly, half yearly & yearly

Death Benefits : Sum assured is paid to the policyholder’s nominee

Maturity benefit: At the end of the 15 years, all the premiums paid will be

returned to the policyholder.


Premiums paid under this plan are eligible for tax benefits as per the Income Tax

Act, 1961 and are subject to any amendments made therein from time to time.*


3. Tata AIG Life Sumangal Bima Yojana

It is to encourage regular long term savings from those who prefer to set aside some

money and get periodic returns, while enjoying the benefits of insurance protection. Tata

AIG Life Insurance Company introduces "Tata AIG Life Sumangal Bima Yojana”, a

limited premium pay money back plan.

In this plan, we have to pay premium for 10 years and we get insurance protection for 15

years. Enjoy total guaranteed returns of 120% of the total policy premium at specified

intervals during term of the policy.



Premium Paying term : 10 years




Survival Benefit: We shall pay you the survival benefits as below, if you have

paid all due premiums.

Policy Anniversary Year end Guaranteed Pay outs

6th 10% of (*Total Policy Premium)



Payment of Survival Benefits will not reduce the death benefit. Survival benefits

are not payable during Auto cover period.

Death Benefit :Death Benefit will be paid to the nominee i.e. Sum assured in the

event of the Insured’s unfortunate death during the term of the policy and

provided the policy is in force on the date of death of the policy holder. Any

unpaid premiums and any balance of premium due for the full policy year in

which death occurs shall be deducted from the death benefit payable.

Maturity benefit: It shall pay the Maturity Benefit i.e. 60% of the total Policy

Premium, if we have paid all due premiums.

Rider: Option to attach Tata AIG Life Accidental Death Benefit Limited

Underwriting Rider for a Coverage Amount of at least Rs. 10,000 at a nominal

extra charge. An additional amount equal rider Sum Assured becomes payable in

the event of death of insured due to an accident. The rider shall not be available

during Auto cover period. This benefit is available during premium paying term

only.



Act, 1961 and are subject to any amendments made therein from time to time.*


4. Tata AIG Life Navkalyan Yojana

It is a regular premium payment, low cost term plan for the rural adults who seek life

insurance protection without any maturity benefit.






Death Benefit : Sum assured to the policyholder’s nominee

Maturity benefit : None

Rider: Option to attach Accident Death Benefit Rider for issue ages 18 to 55 years

at a nominal extra charge.



Act, 1961 and are subject to any amendments made therein from time to time.


CHAPTER-5

TRADITIONAL PLANS OF TATA AIG

1. Tata AIG Life Shubh Life

2. Tata AIG Life Life plus

3. Tata AIG Life Assure 21 years Money Saver

http://www.tata-aig-life.com/Individual/Children/childrenAssureMoneySaver.htm

4. Tata AIG Life Assure Career builder

5. Tata AIG Life Mahalife Gold

5.1 SHUBH LIFE

Have you been delaying getting life insurance because you cannot afford to pay high

monthly premiums? Then we have the ideal product for you.

Shubh Life provides you 100% life insurance protection and a range of bonuses but the

premiums you pay are among the lowest of any similar endowment policy.


Term policies just give you death cover. This policy gives you bonuses along with

death cover.

You can choose a term of 10, 15, 20, 25 or 30 years.

Apart from full premium paying term, you can pay your premiums over 3, 5, 7 or

10 years.

Guaranteed addition of 3% of sum assured of the Basic Policy is added on the

first (1st) policy anniversary and on every alternate policy anniversary thereafter

up till a maximum of half the policy term. The GA will be payable if the insured

dies while the policy has been in force or if the policy matures.

A simple reversionary bonus will be credited from the sixth policy anniversary

until the end of the plan term depending on the performance of our Company.

Tax Benefits, Riders and Age Eligibility:

Premiums paid under this plan are eligible for tax benefits under Section 80C of

the Income Tax Act, 1961. Any sum received under this plan is exempt from tax

under section 10(10D) of the Income Tax Act, 1961.*

Attach Disability, Accident, Term, Waiver of premium and Critical Illness riders

to this policy for added protection.

10 Years 18 to 65 Years





5.2 LIFE PLUS

If you outlive the 20-year term of a Life Plus policy, all of your premium payments

will be refunded; if you die by natural causes while the policy is in force, your

beneficiaries will receive the sum assured; should you die due to accidental causes,

your beneficiaries will receive double the sum assured.


All premiums paid are returned (without interest) in the event you outlive the

policy’s 20-year term.

Premiums are payable only for the first 15 years of the 20-year term.





Policy available for persons between 18 and 60 years of age.

Illustration for Sum Assured of Rs. 2 lakhs

Age Annual Premium Death BenefitAccidental Death

Benefit*Maturity

25 3,482 2,00,000 2,00,000 52,230

35 4,562 2,00,000 2,00,000 68,430

45 7,270 2,00,000 2,00,000 1,09,050

5.3 ASSURE 21 YEARS MONEY SAVER

This savings plan gives you the cash payments at specified intervals to fund your

family’s needs at critical milestones or support your financial obligations. You get the

dual benefits of life insurance coverage plus the flexibility of periodic payments


10% of the sum assured is paid on survival on the 3rd /6th /9th /12th /15th and

18th policy anniversaries.

40% of the sum assured will be paid on maturity (i.e. on the 21st anniversary of

this policy).

The entire sum assured is distributed to your beneficiaries, irrespective of cash

payments already made, in the unfortunate event of your death before the end of

the policy’s term.

A 10% Guaranteed Addition is payable on death or maturity, if the policy has

been enforce for 10 years.

A reversionary and terminal bonus payable on death or maturity. Terminal bonus

is available only if policy is in force for more than 10 years.

Bonuses are paid depending on performance of the company.





5.4 ASSURE CARRIER BUILDER

Tata AIG Life's Assure Career Builder is a juvenile insurance product designed to

provide your children with the financial support they’ll need at important junctures in

their life.


Lump sum payments at various stages of your child’s life: 20% of sum assured on

your child’s 18th birthday, 20% on his/her 21st birthday, 20% on his/her 24th

birthday and the remaining 40% when the policy matures on your child’s 27th

birthday.

Periodic payments against the policy do not affect the full payment of the sum

assured in case of the insured’s death.

A guaranteed addition of 10% of the sum assured to be paid at the time of

maturity or death (policy must be in force for a minimum 10 years).

A compound reversionary bonus, as declared by the Company, is credited to the

policy on the policy anniversary.

A terminal bonus payable on death or maturity (policy must be in force for a

minimum 10 years).


Compound reversionary bonus and terminal bonus are non-guaranteed and

depend on the performance of the Company.

Assure Career Builder is supported by a money-back guarantee. If you change

your mind, simply return the policy document within 15 days of receipt and your

premiums will be refunded (minus a nominal deduction to cover administrative

charges).




You can attach the Payer Benefit Rider at a nominal extra cost, which waives all

future payments for this policy in the event of your unfortunate death or disability.

Minimum entry age is 0 years, with a maximum of 15 years. The policy matures

at age 27.

5.4 MAHALIFE GOLD

This unique policy is an ideal planning vehicle to fund your retirement. It provides a

steady income and insurance coverage for life. Premiums are payable only for the

first 15 years, and can be used to cover the future expenses of your children.


A guaranteed annual coupon of 5% of the sum assured every year for the rest of

the insured’s term from the 10th policy anniversary.

Yearly cash dividends are available from the 6th policy anniversary onwards

(depending on Company performance).

The entire sum assured is paid tax-free as per current Income Tax Laws.


The guaranteed 5% coupon and non-guaranteed cash dividends are tax free as per

current Income Tax Laws.




Disability, Accident, Term and Critical Illness riders are available for added

protection at a nominal extra cost. (For juveniles, only Pay or Benefit Rider is

available).

CHAPTER-6

COMPARATIVE ANALYSIS

6.1 HDFC Standard Life Insurance Company Ltd.

HDFC Standard Life Insurance Company Ltd. is one of India’s leading private life

insurance companies, which offers a range of individual and group insurance solutions. It

is a joint venture between Housing Development Finance Corporation Limited (HDFC

Ltd.), India’s leading housing finance institution and The Standard Life Assurance

Company, a leading provider of financial services from the United Kingdom. Their

cumulative premium income, including the first year premiums and renewal premiums is

Rs. 672.3 for the financial year, Apr-Nov 2005. They have managed to cover over

11,00,000 individuals out of which over 3,40,000 lives have been covered through our

group business tie-ups.

6.2 Max New York Life Insurance Co. Ltd.

Max New York Life Insurance Company Limited is a joint venture that brings together

two large forces - Max India Limited, a multi-business corporate, together with New

York Life International, a global expert in life insurance. With their various Products and

Riders, there are more than 400 product combinations to choose from. They have a

national presence with a network of 57 offices in 37 cities across India.

6.3 ICICI Prudential Life Insurance Company Ltd.

ICICI Prudential Life Insurance Company is a joint venture between ICICI Bank, a

premier financial powerhouse and Prudential plc, a leading international financial

services group headquartered in the United Kingdom. ICICI Prudential was amongst the

first private sector insurance companies to begin operations in December 2000 after

receiving approval from Insurance Regulatory Development Authority (IRDA). The

company has a network of about 56,000 advisors; as well as 7 bank assurance and 150

corporate agent tie-ups.

6.4 Om RELIANCE Mahindra Life Insurance Co. Ltd.

RELIANCE Mahindra Old Mutual Life Insurance Ltd. is a joint venture between

RELIANCE Mahindra Bank Ltd. (KMBL), and Old Mutual plc.

6.5 Birla Sun Life Insurance Company Ltd.

Birla Sun Life Insurance Company is a joint venture between Aditya Birla Group and

Sun Life financial Services of Canada.

6.6 SBI Life Insurance

SBI Life Insurance is a joint venture between the State Bank of India and BNP Paribas

Assurance. SBI Life Insurance is registered with an authorized capital of Rs 2000 crores

and a Paid-up capital of Rs 1000 Crores. SBI owns 74% of the total capital and BNP

Paribas Assurance the remaining 26%.

State Bank of India enjoys the largest banking franchise in India. Along with its 7

Associate Banks, SBI Group has the unrivalled strength of over 14,500 branches across

the country, arguably the largest in the world. BNP Paribas Assurance is the insurance

arm of BNP Paribas - Euro Zone’s leading Bank. BNP Paribas, part of the world's top 10

group of banks by market value and part of Europe top 3 banking companies, is one of

the oldest foreign banks with a presence in India dating back to 1860. BNP Paribas

Assurance is the forth largest life insurance company in France, and a worldwide leader

in Creditor insurance products offering protection to over 50 million clients. BNP Paribas

Assurance operates in 42 countries mainly through the bank assurance and partnership

model.

SBI Life has a unique multi-distribution model encompassing Bank assurance, Agency

and Group Corporates.

SBI Life extensively leverages the SBI Group as a platform for cross-selling insurance

products along with its numerous banking product packages such as housing loans and

personal loans. SBI’s access to over 100 million accounts across the country provides a

vibrant base for insurance penetration across every region and economic strata in the

country ensuring true financial inclusion.

6.7 Allianz Bajaj Life Insurance Company Ltd.

Bajaj Allianz Life Insurance Company Limited is a Union between Allianz SE, one of the

world’s largest Life Insurance companies and Bajaj Auto, one of the biggest 2- &- 3

wheeler manufacturers in the world.

Allianz SE is a leading insurance conglomerate globally and one of the largest asset

managers in the world, managing assets worth over a Trillion Euros (Over R. 55,00,000

crores). Allianz SE has over 115 years of financial experience in over 70 countries.

Bajaj Auto is one of the most trusted name is Indian auto for over 55 years. At Bajaj

Allianz customer delight is our guiding principle. Ensuring world-class solutions by

offering customized products with transparent benefits, supported by best technology is

our business philosophy.

OTHER PLAYERS:

Tata AIG Life Insurance Company Ltd

ING Vysya Life Insurance Company Private Limited

Met life India Insurance Company Pvt. Ltd.

AMP SANMAR Assurance Company Ltd.

Dabur CGU Life Insurance Company Pvt. Ltd.

6.8 COMPARISON OF TATA AIG AND HDFC STANDARD LIFE

INSURANCE

RIDERS AND BONUSES

HDFC STANDARD LIFE

INSURANCE

TATA AIG LIFE

INSURANCE

Free Look Period 15 days 15 days

Reversionary BONUS Based on company’s Based on company’s

performance performance

Terminal Bonus Based on company’s

performance

Based on company’s

performance

Top Up Min.Rs.5000 Min.Rs.5000

RIDERS

Critical Illness(CI)

Benefits

Gives on Diagnosis of

anyone on 6 critical illness

Gives on Diagnosis of

anyone on 12 critical illness

Additional Term

Benefit(ATB)

Provides Provides

Accidental Death

Benefit(ADB)

Provides Provides

Double Benefit Provides Does not Provide

Triple Benefit Provides Does not Provide

Payer Benefit Rider

(PBR)

Does not Provide Provides

Waiver of Premium

(WOB)Benefit

Provides Provides

POINTS OF DIFFERENCE

HDFC STANDARD LIFE

INSURANCE

TATA AIG LIFE

INSURANCE

Grace Period 15 Days 31 Days

Policy Administration

Charge

Rs. 60 per month Rs. 55 per month

Guaranteed Bonus Does not Give 10% on sum assured after

10 year

Loyalty Bonus 0.1% every year 0.25% after every 4th year

Fund Switching Charge Total 24 free switches in a

policy after this Rs.100 per

switch

4 free switches per year

after this Rs.250per switch

Guaranteed Surrender

Value

50% of all premium paid

excluding 1st premium

30% of all premium paid

excluding 1st premium

Fund Management

Charge

0.80% per annum on the

fund value

1.75% per annum on the

fund value

Premium Redirection

Charge

Total 12 free premium

Redirection in a policy after

this Rs.250 per premium

redirection

First 2 premium Redirection

in a year is free after this

Rs.1000 per premium

Redirection

Last Year Return 42.70% 72%

We see that both the life insurance companies’ products are almost same. They have

same charges, fees and deductions. There is slightly difference in charges and maximum

limits of all charges are fixed by IRDA. Before buying any life insurance policy one

should check charges and fees on policy and company’s overall performance and return

given to its consumer. But in case of Bonuses, and last year return TATA AIG is best.

CONCLUSION AND RECOMMENDATIONS

CONCLUSION

There is a probability of a spurt in employment opportunities. A number of web-sites are

coming up on insurance, a few financial magazines exclusively devoted to insurance and

also a few training institutes being set up hurriedly. Many of the universities and

management institutes have already started or are contemplating new courses in

insurance. Life insurance has today become a mainstay of any market economy since it

offers plenty of scope for garnering large sums of money for long periods of time. A

well-regulated life insurance industry which moves with the times by offering its

customers tailor-made products to satisfy their financial needs is, therefore, essential if

we desire to progress towards a worry-free future.

RECOMMENDATIONS

The company should concentrate more on sales and marketing department so that

more and more products can be sold out.

Advertisements should be the best method to advertise the products and popular

among the public

Cheaper products should be introduced by the company so that it can reach the

middle class public

Transparency should be made in between the product details and the original

product sold to the customers.

Company –customer ratio should be maintained

QUESTIONNAIRE

1. From where have you hear the name of TATA AIG Life Insurance?

Newspapers

Television

Internet

From friends

2. Which product of the company do you like the most?

Maha Life

Assure Golden Years Plan

Life Plus

TATA AIG Health First

3. What do you like most in Maha Life Plus?

Only for children purposes

Withdrawal option

Flexibility to choose any fund

High savings and bonuses

4. According to you in Tata AIG Life Insurance company can you Invest your

Money?

Yes

No

Risky sometimes

Can’t say

5. which plan would you choose for the purpose of high returns and savings

ULIP plans

Money-Back Plans

Endowment plans

Retirement or Pension Plans

6. Are you satisfied with the Services given by the company in buying a Policy or

taking a Claim

Yes

No

Very poor

Excellent

7. Do You think the charges applied to Your Policy by the company is valid or not?

No,its too high

Yes

No, charges should be applied

Can’t say

Documents

Traditional Plans of Tata AIG