Achin Report 1

8/3/2019 Achin Report 1

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`SUMMER TRAINING PROJECT REPORT ON

RELIANCE LIFE INSURANCE COMPANY LIMITED

“RECRUIT TEAM & SALE OF FINANCIAL PRODUCT”

MASTER OF BUSINESS ADMINISTRATION

SUBMMITED TO

MR. PRAKASH KUNDANANI

(PROJECT GUIDE)

SUBMITTED BY

ACHIN PURWAR

MBA 3rd SEM

(MARKETING & HUMAN RESOURCE)

ROLL NO-0901170006

UNITED INSTITUTE OF MANAGEMENT,

ALLAHABAD



DECLARATION

I ACHIN PURWAR hereby declare that the research project report entitled “Sale of

Financial Product” has written by me at Reliance Life Insurance. During 12 June to 25

July 2010 and has not submitted anywhere in any manner.

ACHIN PURWAR

Roll no-0901170006



ACKNOWLEDGEMENT

Presenting a Summer Training project of this type is an arduous task, demanding a lot

of time. I cannot in full measure reciprocate the kindness shown and contribution made

by various persons in this endeavor. I will remember all of them with gratitude.

My sincere thanks towards Mr. VINOD KUMAR (Reliance Life Insurance,

S.S.M. AURAIYA) for giving me a chance to take this project and for her valuable

guidance, which helped me on all those points, which I needed to include in, with full

intensity, for his significant support extended for the successful completion of the

project.

I am extremely gratified to MR. VINOD KUMAR who was extremely helpful

in offering his professional expertise and bestowing me practical knowledge in all

spheres related to the whole organization working.

I am always thankful to my God, for always being with me and showing

me the right ways, my family members, for always doing favors to me and my friends

and colleagues consistently helped with encouragement and criticism throughout the

project work.

ACHIN PURWAR



PREFACE

Anil Dhirubhai Ambani Group (ADAG) announces the acquisition of 100 Percent

shareholding in AMP Sanmar Life Insurance Company Limited. Reliance Life

Insurance Company Limited is officially launched on February 1, 2006. This was after

obtaining the required regulatory approvals from the Registrar of Companies and the

Insurance Regulatory and Development Authority. Reliance Life Insurance is the part

of the Reliance Capital.

Reliance Life Insurance has plenty of plans on the anvil. It has also 118 branches, with

strong presence in South and a bouquet of products catering savings protection and

investment need of individuals and corporate. The head-office of it is at Chennai.

The company has already added 600 employees in addition to the 1000 plus staff of the

erstwhile AMP Sanmar Life Insurance Company Limited. Reliance Life Insurance aims

to be the consumer’s preferred life insurer by understanding and meeting his needs.

Think Bigger, Think Better!



CONTENTS

PART-1

ABOUT INSURANCE INDUSTRY-

a) MEANING OF INSURANCE

b) HISTORY OF INSURANCE

c) IMPORTANCE OF INSURANCE

INTRODUCTION OF IRDA

ABOUT LIFE INSURANCE-

a) HISTORY OF LIFE INSURANCEb) KEY FEATURES OF LIFE INSURANCE

c) BENEFITS OF LIFE INSURANCE

INTRODUCTION OF THE COMPANY

OUR FOUNDER

VISION & MISSION

CHAIRMAN’S PROFILE

DEPARTMET OF THE COMPANY

RECRUITMENT OF ADVISOR



POPULAR RELIANCE LIFE INSURANCE PRODUCTS

COMPETITORS OF COMPANY

COMPERATIVE STUDY

PART-2

OBJECTIVE OF STUDY

RESEARCH METHODOLOGY

DATA ANALYSIS & INTERPRETATION

FINDING & CONCLUSION

SUGESSION & RECOMMANDATION

LIMITATION

BIBLIOGRAPHY

ANNEXURE



INSURANCE INDUSTRY

MEANING OF INSURANCE- Insurance is a policy from a large financial

institution that offers a person, company, or other entity reimbursement or financial

protection against possible future losses or damages.

The meaning of insurance is important to understand for anybody that is considering

buying an insurance policy or simply understanding the basics of finance. Insurance is a

hedging instrument used as a precautionary measure against future contingent losses.

This instrument is used for managing the possible risks of the future. A simple example will make the meaning of insurance easy to understand. A biker is

always subjected to the risk of head injury. But it is not certain that the accident causing

him the head injury would definitely occur. Still, people riding bikes cover their heads

with helmets. This helmet in such cases acts as insurance by protecting him/her from

any possible danger. The price paid was the possible inconvenience or act of wearing

the helmet; this ie equivalent to the insurance premiums paid.

Insurance may be described as a social device to reduce or eliminate risk of Loss to lif

and property. Insurance is a collective bearing of risk. Insurance is a financial device to

spread the risks and losses of few people among a large number of people, as people

prefer small fixed liability instead of big uncertain and changing liability. Insurance can

be defined as a “legal contract between two parties whereby one party called insurer

undertakes to pay a fixed amount of money on the happening of a particular event,

which may be certain or uncertain.” The other party called insured pays in exchange a

fixed sum known as premium.Insurance is desired to safeguard oneself and one’s family against possible losses on

account of risks and perils. It provides financial compensation for the losses suffered

due to the happening of any unforeseen events.

Insurance constitutes one of the major segments of the financial market.



HISTORY OF INSURANCE

The concept of insurance is believed to have emerged almost 4500 years ago in the

ancient land of Babylonia where traders used to bear risk of the craven by giving loans,

which were later repaid with interest when the goods arrived safely.

The concept of insurance as we know today took shape in 1688 at a place called

Lloyd’s Coffee House in London where risk bearers used to meet to transact business.

This coffee house became so popular that Lloyd’s became the one of the first modern

insurance companies by the end of the eighteenth century.

Marine insurance companies came into existence by the end of the eighteenth century.

These companies were empowered to write fire and life insurance as well as marine.

The Great Fire of London in 1966 caused huge loss of property and life. With a view to

providing fire insurance facilities, Dr. Nicholas Barbon set up in 1967 the first fire

insurance company known as the Fire office.

The early history of insurance in India can be traced back to the Vedas. The Sanskrit

term ‘Yogakshema’ (meaning well being), the name of Life Insurance Corporation of

India’s corporate headquarters, is found in the Rig Veda. The Aryans practiced some

form of ‘community insurance’ around 1000 BC.

Life insurance in its modern form came to India from England in 1818. The Oriental

Life Insurance Company was the first insurance company to be set up in India to help

the widows of European community. The insurance companies, which came into

existence between 1818 and 1869, treated Indian lives as subnormal and charged an

extra premium of 15 to 20 per cent. The first Indian insurance company, the Bombay

Mutual Life

Assurance Society came into existence in 1870 to cover Indian lives at normal rates.

The Insurance Act, 1938, the first comprehensive legislation governing both life and

non-life branches of insurance were enacted to provide strict state control over



and management of these companies.

By the mid- 1950s there were 154 Indian insurers, 16 foreign insurers, and 75 provident

societies carrying on life insurance business in India. Insurance business flourished and

so did scams, irregularities and dubious investment practices by scores of companies.

As a result the government decided to nationalize the life assurance business in India.

The Life Insurance Corporation of India (LIC) was set up in 1956. The nationalization

of life insurance was followed by general insurance in 1972.

MODERN INSURANCE

Illegal almost everywhere else in Europe, life insurance in England was

vigorously promoted in the three decades following the Glorious Revolution of 1688. The type of insurance we see today owes its roots to 17th century

England. Lloyd's of London, or as they were known then, Lloyd's Coffee

House, was the location where merchants, ship owners and underwriters met to

discuss and transact business deals.

While serving as a means of risk-avoidance, life insurance also appealedstrongly to the gambling instincts of England's burgeoning middle class.

Gambling was so rampant, in fact, that when newspapers published names of

prominent people who were seriously ill, bets were placed at Lloyd’s on their

anticipated dates of death. Reacting against such practices, 79 merchant

underwriters broke away in 1769 and two years later formed a “New Lloyd’s.

Coffee House” that became known as the “real Lloyd’s.” Making wagers on

people’s deaths ceased in 1774 when parliament forbade the practice.



INSURANCE MOVES TO AMERICA-

The U.S. insurance industry was built on the British model. The year 1735 saw the birth

of the first insurance company in the American colonies in Charleston, SC. The

Presbyterian Synod of Philadelphia in 1759 sponsored the first life insurance

corporation in America for the benefit of ministers and their dependents. And the first

life insurance policy for the general public in the United States was issued, in

Philadelphia, on May 22, 1761. But it wasn't until 80 years later (after 1840), that life

insurance really took off in a big way. The key to its success was reducing the

opposition from religious groups.

In 1835, the infamous New York fire drew people's attention to the need to provide for

sudden and large losses. Two years later, Massachusetts became the first state to require

companies by law to maintain such reserves. The great Chicago fire of 1871 further

emphasized how fires can cause huge losses in densely populated modern cities. The

practice of reinsurance, wherein the risks are spread among several companies, was

devised specifically for such situations.

With the creation of the automobile, public liability insurance, which first made its

appearance in the 1880s, gained importance and acceptance?

More advancement was made to insurance during the process of industrialization. In

1897, the British government passed the Workmen's Compensation Act, which made it

mandatory for a company to insure its employees against industrial accidents.

During the 19th century, many societies were founded to insure the life and health of their members, while fraternal orders provided low-cost, members only insurance. Even

today, such fraternal orders continue to provide insurance coverage to members, as do

most labor organizations. Many employers sponsor group insurance policies for their

employees, providing not just life insurance, but sickness and accident benefits and old-

age pensions. Employees contribute a certain percentage of the premium for these

policies.



FINAL THOUGHTS-

Even though the American insurance industry was greatly influenced by Britain, the US

market developed somewhat differently from that of the United Kingdom. Contributing

to that was America's size; land diversity and the overwhelming desire to be

independent. As America moved from a colonial outpost to an independent force, from

a farming country to an industrial nation, the insurance business developed from a small

number of companies to a large industry. Insurance became more sophisticated,

offering new types of coverage and diversified services for an increasingly complex

country.

WHY INSURANCE IN INDIA-

1) Only 22% of the insurance population has been extended cover.

2) Market penetration is low and the potential to exploit is high.

3) Insurance premium per capita is very low.

4) Lack of comprehensive social system benefit and welfare means that demand

5) For pension products is high.

6) Huge middle class of approximately 300 Million.

7) Existing insurance company score low on customer service front.

The insurance market registered growth in the Asian region even though India’s

share in global insurance is less than 0.5% (1988) as compared to USA (24.2%)

and Japan (21%). Studies have reveled that in an emerging market, as

disposable income rises, Insurance premiums as a ratio of GDP shoots up. The

confederation of Indian Industry projected a growth of Life Insurance premiums



from Rs 350 Billion at present to Rs.140 Billion. The growth of non-life insurance

premium is expected to increase from 75billion to 375 billion. Out of which, only

10% is tapped by the existing insurer.

Insurance even more than banking is a volume game. A very exclusive approach in

view is unlikely to provide meaningful numbers. Currently, insurance is bought for the

purpose of tax-benefits. A higher percentage of business is in the rural market. The

share of rural new business insurance total new business is 55% in terms of policies and

47% in terms of sum assured. However, this needs to be viewed in the light of some

recent issues that have been raised regarding as to what constitutes the rural market.

Therefore, private insurers will be best served by middle market approach, targeting the

customer segments that are presently unexploited.

How many Indians are aware that LIC has more than 60Products and GIC has more

than 180Products? Not only there is a reduction in the premiums of Life Insurance

products have long overdue since Indian morality rate has decreased three folds in the

last 50years. There is also scope to increase the yield on life insurance policies

(presently 6%) with proper risk management in place.

It is been debated that insurance business does not produce profit in the first five years

cross subsidization is a feature of Indian market. Even the first portfolio vote that is

considered profitable, cross subsidizes other departments.

Tariffs reduction is likely to reduce profits; further insurers have to institute proper

claims management progress in order to extract efficiencies. At present life insurance

business in the country is taxed at 12.5% of the profit in financial year.

The government is soon to present a new model of taxing life insurance companies at

international rates. New entrants should be well advised to look ahead to the stage

where brand strength will be a competitive advantage and sketch their alliances

accordingly. In fact, we believe that alliance related to distribution rather than to

produce or technology will prove most valuable in the long run. Banks and financial

companies will emerge, as attractive distribution channel for this insurance trend will be

led by two factors, which already apply in other world market. First Banking food

insurance, fund management and other financial services companies are being to

increase their profitability and provide maximum value to their customers.

Therefore, they are themselves looking for a range of products to distribute.

In other market notably Europe; this has resulted in bank assurance.

Bank entering into the insurance business in India to bank hope to maximize



expensive existing network by selling a range of products more of a loss alliance

between insurance and bank than a formal ownership. Some Indian entrants like

ICICI, HDFC and Reliance hope to ride their existing network and customer

bases.

IMPORTANCE OF INSURANCE:

Insurance services play predominant role in the process of financial intermediary.

Today insurance industry is one of the most growing sectors in India. There is lot of

potential in the Indian Insurance Industry. There are many issues, which require study.

The scope of the study of insurance industry of India would be very great as there are

ongoing developments in the industry after the opening of the sector.

The major issue right now is the hike in FDI (Foreign Direct Investment) limit from

26% to 49% in the insurance sector. Government may in near future allow 49% FDI in

Insurance. This would lead to more capital inflow by foreign partners.

Another major issue is the effects on LIC after the entry of private players in the

market. Though market share of LIC has been affected, it has improved in terms of

efficiency.

There are number of other hot topics like penetration of Health Insurance, Rural

marketing of insurance, new distribution channels, new product ranges, insurance

brokers’ regulation, incentive scheme of development to officers of LIC etc. So it offers

lot of scope for studying the insurance industry.

Right now the insurance industry has great opportunities in a country like

India or China which huge population. Also the penetration of insurance in India is very

low in both life and non-life segment so there is lot potential to be tapped. Before

starting the discussion on insurance industry and related issues, we have to start with

Achin Report 1

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