coustomer perception towards idbi product i.docx

7/30/2019 coustomer perception towards idbi product i.docx

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A REPORT

ON

CUSTOMER BEHAVIOR WITH RESPECT OF IDBI FEDERAL

LIFE INSURANCE PRODUCT

By

Madhukar Rai

12BSP2184

IDBI federal Life Insurance co. ltd


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A REPORT

ON

CUSTOMER BEHAVIOR WITH RESPECT OF IDBI FEDERALLIFE INSURANCE PRODUCT

By

Madhukar Rai

12BSP2184

IDBI federal Life Insurance co. Ltd

A report submitted in partial fulfillment of

the requirements of

PGPMprogram of

IBS Pune

SUBMITTED TO

Prof. Gopinath Pillai Mrs Shanthi Yagyanath

FACULTY GUIDE COMPANY GUIDE

Date of submission:-


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AUTHORIZATION

I hereby declare that this project work titled CUSTOMER BEHAVIOR

WITH RESPECT OF IDBI FEDERAL LIFE INSURANCE PRODUCT

embodies the original work done by me at IDBI federal Life Insurance

co. Ltd during my Summer Internship Program in 2013. The project

report is being submitted as partial fulfilment of the requirement of

PGPM Program of IBS GURGAON. The findings and conclusions

expressed in this report are genuine and for academic purpose. This

work in part or full has not been submitted to any other University.

MADHUKAR RAIEnrollment No.12BSP2184(IBS GURGAON)


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ACKNOWLEDGEMENTS

The successful realization of this project is an outgrowth of consolidated

efforts of people from disparate fronts. I express my sincere thanks to

the management members of IBS GURGAON, for giving me an

opportunity to learn, grow, and widen the horizon of my knowledge and

inculcate the spirit of dedication to the purpose.

I would like to extend my heartiest thanks to Mrs Shanthi Yagyanath

(Additional Branch Head),who gave an opportunity to work under her in

IDBI Federal

I would also wish to express my gratitude to Prof. Gopinath Pillai

(FACULTY GUIDE) Faculty In-Charge, for not only being a guide, but

also a mentor and her tireless support and guidance in the course of my

project and its completion.

MADHUKAR RAIEnrollment No.12BSP2184(IBS GURGAON)


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TABLE OF CONTENTS

Abstract

1. Industry Profile1.1 Origin of the Insurance Sector

1.2 Impact of Liberalization1.3 The Working of Insurance Company1.4 Current Scenario of the Industry1.5 Global Players in Insurance1.6 Overview of Indian Insurance Sector1.7 Future Outlook of Indian Insurance Sector

2. Company Profile

2.1 Company History

2.2 Present Company Profile2.3 About Sponsors of the Company2.4 Product Portfolio2.5 Competition Analysis

4. SWOT Analysis of the Company

5. Objective

6. Methodology

7. Scope of the Study

8. Limitations of the Study

9. Data Analysis and Interpretation

10. Findings

11. Recommendations

12. Conclusion

14. References

15. Annexure


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CHAPTER 1

INDUSTRY PROFILE


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1.1INDUSTRY PROFILEWith 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 abusiness growing at the rate of 15-20 per cent annually. Together with banking

services, it adds about 7% to the countrys 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 aspectsof 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 behindthis 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.

The Indian Life Insurance company act 1912 was the first statutory body that

started to regulate the life insurance business in India. By 1956 about 154 Indian, 16

foreign and 75 provident firms were been established in India. Then the central

government took over these companies and as a result the LIC was formed. Since

then LIC has worked towards spreading life insurance and building a wide network

across the length and the breath of the country. After the liberalization the entrance

of foreign players has added to the competition in the market.

Insurance Sector Reforms

In 1993, Malhotra Committee, headed by former Finance Secretary and RBI

Governor was formed to evaluate the Indian insurance industry and give its

recommendations. The committee came up with the following major provisions


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Private Companies with a minimum paid up capital of Rs.1bn should be

allowed to enter the industry.

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

the domestic companies.

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

It was after this committee came into effect the regulatory body for insurance

sector was formed with the name ofIRDA.

Insurance Regulatory and Development Authority (IRDA): The IRDA since its

incorporation as a statutory body has been framing regulations and registering the

private sector insurance companies. IRDA being an independent statutory body has

put a framework of globally compatible regulations.

1.2 Impact of Liberalization

The introduction of private players in the industry has added to the colours in

the dull 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 thedeclining phase in its career. The market share was distributed among the private

players. Though LIC 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 63.95 %( 2010-11)

and now it is further decreasing.

1.3 THE WORKING OF INSURANCE COMPANY

Profit = Earned Premium + Investment Income Incurred Loss Underwriting

expenses


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Insurers make money in two ways:

1. Through Underwriting, the processes by which insurers select the risks to

insure and decide how much in premiums to charge for accepting those risks,

and2. By investing the premiums they collect from insured.

Revenue = Premium

Expenses = (Sum of Claims + Commission payable on procurement of

business + Operating expenses)

Operating Surplus = (Revenue Expenses)

Net investment income includes income from trading in and holding stock

market securities including government securities, special deposits with the central

government, loans to several public utilities and service providers in state

government. Insurance premium collected is converted in a pool of fund then divided

in to four expenses:

To pay the expenses of the management

To pay agency commission

To pay for the claims Surplus money will be invested in govt. securities

1.4 Current Scenario of the 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.Innovative products and aggressive distribution have become the say of the

day. 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. Life insurance industry is waiting for a big growth as many

Indian and foreign companies are waiting in the line for the green signal to start their

operations. The Indian consumer should be ready now because the market is going

to give them an array of products, different in price, features and benefits. How the

customer is going to make his choice will determine the future of the industry.The

private insurance players have significantly improving their market share whencompared to 50 years Old Corporation (i.e. LIC).


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1.5 Global Players in Insurance

American International Group(AIG)Country: United States

Market Value: $172.24 billion

American International Group, Inc. (AIG), a global leader in insurance and financial

services,is the leading international insurance organization with operations in over

130 countries and jurisdictions. AIG companies serve commercial, institutional and

individual customers throughout the world largest property and casualty and lifeinsurance networks of any insurer. In addition, AIG companies are leading providers

of retirement services, financial services and asset management around the world.

AIG's common stock is traded on the New York Stock Exchange and the stock

exchanges in Paris and Tokyo.

AXA Group

Country: France


In 1980, AXA did not exist. Over the next 20 years, the group would become a great

international success with his running player.AXA external growth strategy: a

consolidation of the ongoing operations of AXA, buying 50% stake in AXA Oyak, 2nd

turkish Insurer, for $ 525 million and the prevalence of high growth potential through

the acquisition of 100% of 3rd Mexican insurer ING Seguros (which amounts to 1.5

billion dollars). Today AXA takes place in geographically diverse markets, with

operations concentrated in Europe, North America and Asia.

Allianz Worldwide

Country: Germany

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The Allianz Group is a leading provider of integrated services across the financial

world. With about 155,000 employees worldwide, the Allianz Group serves

approximately 75 million customers in about 70 countries. Insurance on the side,

Allianz is the market leader in the German market and has a strong international

presence

Manulife Financial

Country: Canada


Manulife Financial is a leading Canadian financial services group serving millions ofcustomers in 22 countries and territories around the world. We provide financial

protection and wealth management products and services, to individual and group

customers in Canada, the United States and Asia. These products and services

include individual life insurance, group life and health insurance, long term care

services, pension products, annuities, mutual funds and banking products. We offer

reinsurance services specializing in retrocession life and property and the victim of

reinsurance, and to provide management services of the Company and segregated

fund assets and mutual funds and institutional clients.

Generali Group

Country: Italy


The Generali Group is one of the most important participants in the global insuranceand financial products on the market. Group is leader in Italy and Assicurazioni

Generali, founded in Trieste in 1831, is the parent company and main operating

company. In recent years, the Group achieved a significant return to central-eastern

European markets and has established offices in key markets of the Far East,

including China and India

Prudential Financial
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Country: United States


Prudential Financial, Inc. (NYSE: PRU), a leading financial services firm with

approximately $ 580 billion in assets under management at June 30, 2009, has

operations in the United States, Asia, Europe and Latin America. In its heritage of lifeinsurance and asset management, Prudential is focused on helping approximately

50 million individual and institutional customers grow and protect their wealth.

MetLife

Country: United States


MetLife, Inc. is a leading insurance and other financial services to millions ofindividual and institutional customers in the United States. Outside the U.S., the

MetLife companies have direct insurance operations in Asia, Latin America and

Europe.

Aviva

Country: United Kingdom

Market value: $33.10 billion

Aviva is a leading provider of life and pension products in Europe and are growing

long-term savings businesses in Asia and the United States. Their main activities are

long-term savings, fund management and general insurance

Munich Re Group

Country: Germany


Munich Re Group is one of the vectors of global risk. These activities cover the entire

value chain of insurance and reinsurance.
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AEGON

Country: Netherlands


AEGON is an international company, providing life insurance, pensions and other

long-term savings and investment products to millions of customers worldwide. Thecompany has significant operations in the United States, the Netherlands and the

United Kingdom and other companies in Asia, America and other parts of Europe.

AEGON is listed on stock exchanges in Amsterdam, London, New York and Tokyo.

1.6 Overview of Indian Insurance Sector

Indian insurance sector has remained on rails even in the toughest of the times,thanks to the Insurance Regulatory and Development Authority (IRDA)'s tough and

conservative apparatus. A sound insurance segment ensures better economic

development as indicated by a study which states that 1 per cent increase in

insurance penetration leads to 13 per cent reduction in uninsured losses and 22 per

cent reduction in taxpayers' contribution to recovery following a natural catastrophe.

Keeping pace with international happenings, Indian insurance industry has remained

in a good health and maintained absolute transparency and highest standards of

corporate governance. Assets under management (AUM) of the Indian insurers are

slated to touch Rs 20 trillion (US$ 376.51 billion) while the general insurance sectoris anticipated to grow 18 per cent in 2012-13, said J Hari Narayan, Chairman, IRDA.

He further reported that the insurance sector has grown substantially over the last

few years, with its AUM from Rs 8 trillion (US$ 150.57 billion) in 2008 to Rs 18 trillion

(US$ 338.82 billion) in 2011-12.

Key Statistics

Life insurance companies have registered a growth of 4 per cent in the first three

quarters of financial year 2012-13. The total premium collection from the individual

segment by 24 life insurers stood at Rs 40,688 crore (US$ 7.66 billion) in April-December 2012 as against Rs 39,131 crore (US$ 7.36 billion) in the corresponding

period last year.Public sector insurer Life Insurance Corporation of India (LIC) recorded 11.3 per cent

growth in the retail segment, with collection of Rs 28,017 crore (US$ 5.27 billion)

during April-December 2012 while private sector insurers' collection from individual

segment stood at Rs 12,671 crore (US$ 2.38 billion).

IRDA reported that insurance density came out be US$ 49 while insurance

penetration stood at 4.1 per cent in 2011.The measure of insurance penetration and density reflects the level of development


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of insurance sector in a country. While insurance penetration is measured as the

percentage of insurance premium to the gross domestic product (GDP), insurance

density is calculated as the ratio of premium to population (per capita premium)


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CHAPTER 2

COMPANY PROFILE


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2.1 COMPANY HISTORY

IDBI FEDERAL Life insurance co. ltd. is one of the major players in

the insurance market. it is a joint-venture of IDBI Bank which is Indias premier

development and commercial bank, Federal Bankwhich is one of Indias leading

private sector banks and Ageas which is a multinational insurance giant based out

of Europe. In this venture, IDBI Bank owns 48% equity while Federal Bank and

Ageas own 26% equity each. At IDBI Federal, we endeavour to deliver products that

provide value and convenience to the customer. Through a continuous process of

innovation in product and service delivery we intend to deliver world-class wealth

management, protection and retirement solutions to Indian customers. Having started

in March 2008, in just five months of inception IDBI FEDERAL Life insurance co.

ltd became one of the fastest growing new insurance companies to garner Rs. 100

Cr in premiums. The company offers its services through a vast nationwide network

across the branches of IDBI Bank and Federal Bank in addition to a sizeable networkof advisors and partners. As on April 30th 2011, the company has issued over 2.94

lakh policies with over Rs. 16, 499 Cr in sum assured

INTODUCTION TO IDBI BANK

The Industrial Development Bank of India Limited, now more popularly known as

IDBI Bank, was established as a wholly-owned subsidiary of Reserve Bank of India.The foundation of the bank was laid down under an Act of Parliament, in July1964.

The main aim behind the setting up of IDBI was to provide credit and other facilities

for the Indian industry, which was still in the initial stages of growth and

development. After the transfer of its ownership, IDBI became the main institution,

through which the institutes engaged in financing, promoting and developing industry

were to be coordinated. In January 1992, IDBI accessed domestic retail debt market

for the first time, with innovative Deep Discount Bonds, and registered path-breaking

success. The following year, it set up the IDBI Capital Market Services Ltd., as its

wholly-owned subsidiary, to offer a broad range of financial services, including Bond

Trading, Equity Broking, Client Asset Management and Depository Services .InSeptember 1994, in response to RBI's policy of opening up domestic banking sector

to private participation, IDBI set up IDBI Bank Ltd., in association with SIDBI. In July

1995, public issue of the bank was taken out, after which the Government's

shareholding came down (though it still retains majority of the shareholding in the

bank). In September 2003, IDBI took over Tata Home Finance Ltd, renamed IDBI

Home finance Limited, thus diversifying its business domain and entering the arena

of retail finance sector the year 2005 witnessed the merger of IDBI Bank with the

Industrial Development Bank of India Ltd. The new entity continued to its

development finance role, while providing an array of wholesale and retail bankingproducts (and does so till date). The following year, IDBI Bank acquired United


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Western Bank (which, at that time, had 230 branches spread over 47 districts, in 9

states). In the financial year of 2008, IDBI Bank had a net income of Rs 9415.9

crores and total assets of Rs120, 601 crores.

The Present

Today, IDBI Bank is counted amongst the leading public sector banks of India, apart

from claiming the distinction of being the 4th largest bank, in overall ratings. It Is

presently regarded as the tenth largest development bank in the world, mainly in

terms of reach. This is because of its wide network of 509 branches, 900 ATMs

and319 centers. Apart from being involved in banking services, IDBI has set up

institutions like The National Stock Exchange of India (NSE), The National Securities

Depository Services Ltd. (NSDL) and the Stock Holding Corporation of India

(SHCIL).

Objectives

The main objectives of IDBI are to serve as the apex institution for term finance for

industry in India. Its objectives include

(1) Co-ordination, regulation and supervision of the working of other financial

institutions such as IFCI , ICICI, UTI, LIC, Commercial Banks and SFCs.

(2) Supplementing the resources of other financial institutions and thereby widening

the scope of their assistance.

(3) Planning, promotion and development of key industries and diversifications of

industrial growth.

(4) Devising and enforcing a system of industrial growth that conforms to national

priorities.

Functions

The IDBI has been established to perform the following functions:-

(1) To grant loans and advances to IFCI, SFCs or any other financial institution by way of

refinancing of loans granted by such institutions which are repayable within 25 year.

(2) To grant loans and advances to scheduled banks or state co-operative banks by way of

refinancing of loans granted by such institutions which are repayable in 15 years.


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(3) To grant loans and advances to IFCI, SFCs, other institutions, scheduled banks, state co-

operative banks by way of refinancing of loans granted by such institution to industrial concerns

for exports.

(4) To discount or rediscount bills of industrial concerns.

(5) To underwrite or to subscribe to shares or debentures of industrial concerns.

(6) To subscribe to or purchase stock, shares, bonds and debentures of other financial

institutions.

(7) To grant line of credit or loans and advances to other financial institutions such as IFCI, SFCs,

etc.

(8) To grant loans to any industrial concern.

(9) To guarantee deferred payment due from any industrial concern.

(10) To guarantee loans raised by industrial concerns in the market or from institutions.

(11) To provide consultancy and merchant banking services in or outside India.

(12) To provide technical, legal, marketing and administrative assistance to any industrial concern

or person for promotion, management or expansion of any industry.

(13) Planning, promoting and developing industries to fill up gaps in the industrial structure in India.

(14) To act as trustee for the holders of debentures or other securities.

Subsidiaries

The following are the subsidiaries of IDBI

(1) Small Industries Development Bank of India (SIDBI)

(2) IDBI Bank Ltd..

(3) IDBI Capital Market Services Ltd.

(4) IDBI Investment Management Company


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Capital Structure and Operations

As on September 30, 1996, the authorized Capital of IDBI was Rs.2000crores.

Issued, subscribed and paid up share capital was Rs.828.76crores.Reserves were

Rs.6309 crores. Loan funds were Rs.35450 crores. The total outstanding loans,

investments and guarantee of IDBI stood at Rs.39, 221 crore as on 31st March

1996.

INTRODUCTION TO FEDERAL BANK

Federal Bank Limited is a major Indian commercial bank in the private sector,

headquartered at Aluva, Kochi, Kerala. As of 18 August 2012, Federal Bank has

1000 branches spread across 24 states in India and 1058 ATMs around the

country(across 108 metro centres, 224 urban centres, 384 semi-urban locations and

87 rural areas). Federal Bank opened its 1000th branch at Muthoor, Thiruvalla in

Kerala on 17 August 2012,and is planning to hire 2000 professionals by September

2012.The Bank would be the first Bank from Kerala to cross the milestone of 1000

branch network.

History

In the year 1931, Travancore Federal Bank was inaugurated at Vengal Varuttisseril

at Nedumpuram, near Tiruvalla, Kerala. The 14 founders included Sri Vengal

Varuttisseril Oommen Varghese, his brothers Oommen Chacko, Oommen Kurian,

Oommen George and also another person from Tiiruvalla, Kavumbhagam

Mundapallil Lukose, and others. Oommen Varghese was the Chairman and

Oommen Chacko the Manager. After it had functioned for nearly 10 years, the bank's

day to day transaction had to be stopped due to the ill-health of the Manager.

Understanding this situation, a lawyer from Perumbavoor named Sri K.P.Hormis and

his acquaintances joined together, bought the bank and took over the management.

In 1945, they moved the bank's registered office to Aluva and Hormis became the

Managing Director. In 1947,the bank's name was shortened from Travancore

Federal Bank to Federal Bank.

In 1970, the bank became a Scheduled Commercial Bank. Recently, it opened a

representative office in Dubai.


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Acquisitions and Mergers

In 1964, the bank embarked on a series of acquisitions that would

substantially increase its size. It acquired the Chalakudy Public Bank

in Chalakudy, the Cochin Union Bank inThrissur, and the Alleppey Bank

in Alappuzha.

In 1965, it acquired the St.George Union Bank in Puthenpally.

In 1968, it acquired the Marthandom Commercial Bank

in Thiruvananthapuram.

In 2006, Federal Bank acquired Ganesh Bank of Kurundwad after

the Reserve Bank of India suspended the bank. Established in 1920, Ganesh

Bank had its headquarters at Kurundwad, Maharashtra. The bank had a

network of 32 branches and its operations were concentrated

in Sangli and Kolhapur in Maharashatra and Belgaum in Karnataka. Prior to

the merger, Federal Bank had 20 branches in Maharashtra.

In March 2008, Federal Bank entered into a joint venture with IDBI Bank and

Fortis Insurance International to form IDBI Fortis Life Insurance, of which

Federal Bank owns 26 percent. The company ended the year with over 300

Cr in premiums as on 31 March 2009.

On 24 August 2010, IDBI Fortis, rejuvenated as IDBI Federal Life

Insurance with Aegas of Belgium.

INTRODUCTION TO AGEAS

Ageas N.V./S.A. is a Belgium-Dutch multinational insurance company co-

headquartered in Brussels, Belgium and Utrecht, Netherlands. Ageas is Belgium's

largest insurer and operates in 14 countries worldwide. The company was renamed

from Fortis Holding in April 2010 and consists of those insurance activities

remaining after the breakup and sale of the financial services group Fortis during

the financial crisis of 2007-2010. It is listed on the Euro next Brussels, Euro next

Amsterdam, and Luxembourg stock exchanges and forms part of the blue-chip BEL20 stock market index.

The company's roots reach back to the 1824 foundation of the Belgian life

insurer Assurances Gnrales (now AG Insurance).[2] In 1990 AG merged with

the Netherlands-based banc assurer AMEV/VSB to form Fortis. AMEV/VSB had

itself been formed earlier that year by the combination of savings bank VSB

(Verenigde Spaarbank) and insurer AMEV, which took advantage of the recent

relaxation of Dutch legislation preventing mergers between banks and insurers.

AMEV had originally been founded in Utrecht in 1920 as Algemeene Maatschappij

tot Exploitatie van Verzekeringsmaatschappijen (English: General Society for

Operation of Insurance).


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After its creation in 1990, Fortis expanded its offerings to

include private and investment banking and asset management, establishing

subsidiaries around the world, and by 2007 it had become the 20th largest business

in the world by revenue. That year Fortis agreed to jointly purchase ABN

AMRO with Banco Santander and Royal Bank of Scotland Group, but the onset ofthe crisis exacerbated problems with financing its part of the large acquisition and

prompted fears of impending insolvency. Considered "too big to fail", Fortis received

an 11.2 billion bailout from the Benelux governments and saw its retail

banking operations in Belgium sold to BNP Paribas and its insurance and banking

subsidiaries in the Netherlands nationalised.

The remaining assets of the company, consisting principally of insurance operations

but also including some distressed assets, were rebranded Fortis Holding. In April

2010 its shareholders agreed a formal change of name to Ageas N.V./S.A., with

ownership of the Fortis brand passing to BNP Paribas.

Objectives:

1) To know about the reason for investment in life insurance.

2) To develop and standardize a measure to evaluate investment pattern in life

insurance services

3) To evaluate the factors underlying consumer perception towards investment

in life insurance policies

4) To compare the differences in consumer perception of male and female

consumers

5) To open new vistas for further researches.

History

2006: IDBI Bank, Federal Bank and Belgian-Dutch insurance major Fortis

Insurance International NV signed a MoU to start a life insurance company

2008: IDBI Fortis Life Insurance Co. Ltd., which started its operations in March

2008

2008: IDBI Fortis opens its second branch in Andhra Pradesh in Vijayawada

2008: IDBI Fortis Life positive on assured return products


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2008: IDBI Fortis launches the Bondsurance Plan

2009: IDBI Fortis announces Rs 250cr capital infusion

2009: Nimbus ropes in IDBI Fortis as title sponsor of IndiaSri Lanka series

2009: 'IDBI Fortis' Boss-Ka-Boss receives PRCI Award

2009: IDBI Fortis launches Retiresurance Pension Plan

2009: IDBI Fortis scores with Goalsurance

2009: IDBI Fortis reaches the banks of Hoogly

2009: IDBI Fortis launches Incomesurance Immediate Annuity

2009: IDBI Fortis Life Insurance uses an interactive application to help users

easily calculate their taxes

2009: IDBI Fortis reaches the City of Eastern Light

2009: IDBI Fortis receives bronze Dragon at 'PMAA 2009'

2009: IDBI Fortis Life Insurance introduces financial inclusion plan in rural Orissa

2009: IDBI Fortis launches Termsurance Protection Plan

2009: IDBI Fortis redefines endowment & money back with Incomesurance

2009: IDBI Fortis to open 65 more branches; raise headcount by 1,000

2010: IDBI Fortis now renamed as IDBI Federal Life Insurance Company

Management:

GV Nageswara Rao is the MD & CEOof IDBI Federal Life Insurance.

Aneesh Srivastava is the CIOof IDBI Federal Life Insurance.

Michael J Wood is the appoin ted actuaryof IDBI Federal Life Insurance.


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2.2 PRESENT COMPANY PROFILE

Idbi federal life insurance co ltd is a joint-venture of idbi bank, Indias premier

development and commercial bank, federal bank, one ofIndias leading private

sector banks and ageas, a multinational insurance giant based out of Europe. In this

venture, idbi bank owns 48% equity while federal bank and ageas own 26% equity

each. . Having started in March 2008, in just five months of inception, idbi federal

became one of the fastest growing new insurance companies to garner rs 100 cr in

premiums. Through a continuous process of innovation in product and service

delivery idbi federal aims to deliver world-class wealth management, protection and

retirement solutions that provide value and convenience to the Indian customer. The

company offers its services through a vast nationwide network of 2137 partner bank

branches of idbi bank and federal bank in addition to a sizeable network of advisors

and partners. As on 28th February 2013, the company has issued over 8.65 lakh

policies with a sum assured of over rs. 26,591 cr.Idbi federal today is recognized as a customer-centric brand, with an array of awards

to their credit. They have been awarded the pmaa awards (2009) for best

dealer/sales force activity, Effie award (2011) for effective advertising, and conferred

with the status of master brand 2012-13 by the cmo council USA and cmo Asia.

2.3 About the sponsors of IDBI Federal Life Insurance Co

Ltd

+ + =

48% + 2 6 % + 26% = 100%

IDBI Bank Ltd. continues to be, since its inception, Indias premier industrial

development bank. It came into being as on July 01, 1964 (under the Companies Act,

1956) to support Indias industrial backbone. Today, it is amongst Indias foremost

commercial banks, with a wide range of innovative products and services, serving

retail and corporate customers in all corners of the country from 1077 branches and

1702 ATMs. The Bank offers its customers an extensive range of diversified services

including project financing, term lending, working capital facilities, lease finance,

venture capital, loan syndication, corporate advisory services and legal and technical

advisory services to its corporate clients as well as mortgages and personal loans to

its retail clients. As part of its development activities, IDBI Bank has beeninstrumental in sponsoring the development of key institutions involved in Indias


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financial sectorNational Stock Exchange of India Limited (NSE) and National

Securities Depository Ltd, SHCIL (Stock Holding Corporation of India Ltd), CARE

(Credit Analysis and Research Ltd).

Federal Bank is one of Indias leading private sector banks, with a dominant

presence in the state of Kerala. It has a strong network of over 1060 branches and1158 ATMs spread across India. The bank provides over four million retail customers

with a wide variety of financial products. Federal Bank is one of the first large Indian

banks to have an entirely automated and interconnected branch network. In addition

to interconnected branches and ATMs, the Bank has a wide range of services like

Internet Banking, Mobile Banking, Tele Banking, Any Where Banking, debit cards,

online bill payment and call centre facilities to offer round the clock banking

convenience to its customers. The Bank has been a pioneer in providing innovative

technological solutions to its customers and the Bank has won several awards and

recommendations.

Ageas is an international insurance group with a heritage spanning more than 180

years. Ranked among the top 20 insurance companies in Europe, Ageas has chosen

to concentrate its business activities in Europe and Asia, which together make up the

largest share of the global insurance market. These are grouped around four

segments: Belgium, United Kingdom, Continental Europe and Asia and served

through a combination of wholly owned subsidiaries and partnerships with strong

financial institutions and key distributors around the world. Ageas operates

successful partnerships in Belgium, UK, Luxembourg, Italy, Portugal, Turkey, China,Malaysia, India and Thailand and has subsidiaries in France, Hong Kong and UK.

Ageas is the market leader in Belgium for individual life and employee benefits, as

well as a leading non-life player through AG Insurance. In the UK, Ageas has a

strong presence as the fourth largest player in private car insurance and the over

50s market. Ageas employs more than 13,000 people and has annual inflows of

more than EUR 21 billion.

2.4 PRODUCT PORTFOLIO

Being a new entrant, IDBI is slowly increasing its portfolio which includes:

Retirement Plan: With rising inflation, its absolutely necessary to makeprovisions for the future which makes retirement plan an important financial decision.Better known as Pension plan, this plan takes care of financial needs after retirementby investing a part of your savings for limited period. Pension plan provides steadyincome after retirement and takes care of daily needs. The pension plan offered by

IDBI Federal is Retiresurance.


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Term Plan:A risk plan which provides comprehensive cover for your family in theunfortunate event of untimely demise. A term life insurance plan provides good coverat relatively nominal cost and has no survival benefits. IDBI Federal Life term plan is

Termsurance.

Investment Plan: Popularly known as ULIP, an investment plan invests part ofyour savings in equity or debt market as per your preference. The objective ofinvestment plan is to give you returns which easily beat the rising costs since theusual returns in a bank are extremely low. ULIPs offered by IDBI Federal Life areWealthsurance, Bondsurance and Incomesurance.

Health Plan: Slightly different from health insurance, health plan provides coverfor surgery costs, critical illness. A lump sum is paid irrespective of actual hospital

bill. Healthsurance is IDBI Federal Lifes health plan.

IDBI Federal Life Insurance Product Table:

Retirement/Pension Plan Retiresurance

Term Plan Termsurance

Savings & Investment Plan Wealthsurance

Savings & Investment Plan Bondsurance

Savings & Investment Plan Incomesurance

Health Plan Healthsurance

Financial Information:

The total premium earned for the half year ended September 30, 2010 was Rs.3427million. The profit after tax for the same period is Rs.513 million. There have been132 death claims reported during the period out of which 43 claims were settled and19 claims were rejected.


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VISION AND VALUES

Maintaining integrity through our values

IDBI FEDERAL LIFE INSURANCE Co. Ltd. s Vision

To be the leading provider of wealth management, protection and

re t irement so lu t ions that meets the needs o f our customers and adds va lue to

their lives.

IDBI FEDERAL LIFE INSURANCE Co. Ltd. s Mission

To continually strive to enhance customer experience through

innovative product offerings, dedicated relationship management and superior

service delivery while striving to interact with our customers in the most

convenient and cost effective manner.

To be transparent in the way we deal with our customers and to act withintegrity.

To invest in and build quality human capital in order to achieve our

mission.

IDBI FEDERAL LIFE INSURANCE Co. Ltd. sValues

Transparency: Crystal Clear communication to our partners and stakeholders

Value to Customers: A product and service offering in which customers

perceive value

Rock Solid and Delivery on Promise: This translates into being financially

strong, operationally robust and having clarity in claims

Customer-friendly: Advice and support in working with customers and

partners

Profit to Stakeholders: Balance the interests of customers, partners,

employees, shareholders and the community at large


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Marketing Campaigns:

IDBI Federal Life recently launched television commercials focusing on

its frontline productsWealthsurance and Incomesurance. The campaign

taglines are Jisne bhi suna khareed liya and Guaranteed Income

Ki Bhavishavani Whereas the first advertisement reflects that the

product is so great that whoever hears about it, buys it instantly, the

second advertisement promises to be clear and transparent on the issue

of returns in the investment product. IDBI Federal has also introduced

two animation characters by the name ofHappy and Lucky to promotethe brand.

2.5COMPETITION ANALYSIS

IDBI FEDERAL LIFE INSURANCE Co. Ltd. is in a highly competitive segment i.e.,

insurance sector they are having large number of rival companies fighting along with

them in taking control of the industry.

Threat of intense segment rivalry- The major plus point for IDBIFEDERAL LIFE INSURANCE Co. Ltd. is the brand value of its partners. The

competition in this market is a very difficult or tough you could say we can refer this

intense competition as Cut throat competition or Red ocean competition market.

The market condition is oligopoly where a few number of big competitors are

providing identical product and services differing only in quality of them. Each

competitor has their own trademark attribute, they are finding that attribute and

charging for that particular attribute. As we know LICs attribute is their hold in rural

market. But when we say about population growth, economic growth, or government

policies insurance segment is very attractive because only 25% insurable person areinsured secondly 80% population are under age of 45. The competitors of IDBI

FEDERAL LIFE INSURANCE Co. Ltd. are

oLife Insurance corporation of India

oBajaj Allianz life insurance company

oHDFC standard life insurance Co. Ltd.

oBirla Sun Life

o ICICI Prudential life insurance Co. Ltd.

o

ING vysya life insurance Co. Ltd.oMax New York life insurance Co. Ltd.


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oMet life India insurance Co.

oKotak Mahindra old mutual life insurance Ltd.

oSBI Life insurance Co. Ltd.

oTATA AIG Life insurance company Limited

o

Reliance life insurance company limitedoAviva life insurance Co. Pvt. Ltd

oSahara India life insurance Co. Ltd

oSriram Life insurance Co. Ltd

oBharati AXA life Insurance Co. Ltd.

oFuture general life insurance company Ltd.

o IDBI Fortis life insurance company Ltd.

oCanara HSBC Oriental Bank of Commerce life insurance Co. Ltd.

oAEGON Religare Life insurance Co. Ltd.

oDlf Pramaerica Life insurance Co. Ltd.

oStar Union Dai-ichi life insurance Co. Ltd.oAndhra BOB Legal General life insurance Co. Ltd.

LIC has many resources and it has above 50-year experience in insurance field but

has only 3 year experience in market. However, due to AGEASs experience,

FEDERAL BANKS and IDBIs brand value, IDBI FEDERAL LIFE INSURANCE Co.

Ltd. had made a good position in the market with this comparatively short period of

time. Likewise many companies alike IDBI FEDERAL LIFE INSURANCE Co. Ltd.

are facing threat from LIC if India to this reason price war, advertisement, and new

product innovation will be expensive in future.

Threat of new entrance- Due to aggressive competition and high entryexit barrier, this is not attractive segment for new player. For entering in insurance

field, mandatory capital is 100 crores. Secondly, foreign stake limited with 26%, third

Indian company have no experience in insurance business. Exit barrier are also very

high because, no company can leave market after entering due to loss because

firstly, 100 crores will be lost secondly, their compensation (customer or other

company) will be very high or more than deposited money. So in long run, companywill try to less their business but they will not leave market. So this is good factor for

IDBI FEDERAL LIFE INSURANCE Co. Ltd. Because, where entry or exit barrier are

high, profit potential are also high.

Threat of substitute product- This is not attractive market in view ofsubstitute goods because there is many substitute in market but only service style is

different. Different insurance company provide at least same product but

presentation is different. In case of lower substitute (means investment purpose)


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many product in India for example, share, mutual fund, fixed deposit. Substitute

place a limit on price and on profit.

Threat of buyers growing power- In India buyers growing power areincreasing because they have more concentrated or organized towards market.

Government has established insurance regulator (IRDA) in India for growing buyers

barging power. Due to lowest switching, buyers are very price sensitive and buyers

have many sources for knowing about different company product. Due to education

buyer can analysis that, which product is good for him. So due to growing buyers

power this segment is not good for new player.

Threat of suppliers growing power- Due to oligopoly marketcondition insurance company cannot raise price but they can increase their profit

from selling more policies in market. In India, supply-growing power (agent, broker,

bank assurance) are growing due to lot of company availability in India and this is not

good for IDBI FEDERAL LIFE INSURANCE Co. Ltd.


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CHAPTER 5

OBJECTIVE OF STUDY


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OBJECTIVE OF STUDY

The objective of this study is to understand better about the insurance sector, which

is the fast growing business in India.

Proper understanding & analysis of life insurance industry.

To conduct market surveys on a sample selected from the entire population

and study the consumers behaviour.

As large insurance market is still untapped so based on the survey the

potential of the Indian market can be evaluated.

New distribution channel and marketing strategies can be evaluated based onthe awareness among the masses regarding IDBI FEDERAL LIFE

INSURANCE Co. Ltd.


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CHAPTER 8

LIMITATIONS OF STUDY


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8LIMITATIONS OF STUDY

Some of the difficulties and limitations faced during my training are as follows:

Lack of awareness among the people

This is the biggest limitation found in this sector. Most of the people are not awareabout the importance and the necessity of the insurance in their life.

Perception of the people towards Insurance sectorPeople still consider insurance just as a Tax saving device. So today also there is

always a rush to buy an Insurance Policy only at the end of the financial year.

Insurance does not give good returnsStill today people think that Insurance does not give good returns. They are not

aware of the modern Unit Linked Insurance Plans which are offered by most of thePrivate sector players. They are still under the perception that if they take

Insurance they will get only 5-6% returns. Nowadays most of the modern Unit

Linked Insurance Plans gives returns which are many times more than that of bank

Fixed deposits, National saving certificate, and PPF.

Lack of awareness about the earning opportunity in the Insurance

sectorPeople still today are not aware about the earning opportunity that the Insurance

sector gives. Companies in order to beat the competition and to increase theirInsurance Advisors and increase their reach to the customers are giving very high

commission but people are not aware of that.

Increased competitionToday the competition in the Insurance sector has become very stiff. Currently

there are more than 20 Life Insurance companies working in India. Today each and

every company is trying to increase their Insurance Advisors so that they can

increase their reach in the market. This situation has created a scenario in which to

recruit Life insurance Advisors and to sell life Insurance Policy has become verydifficult.


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QUESTIONNARE

Dear Sir/Madam,

I am MADHUKAR RAI doing this survey as a part of my Summer Internship Project. I will be

extremely grateful if you could spare a valuable minute of yours. All the information given will

be used only for academic purpose and it will be confidential:-

1. NAME -

_____________________________________________________

______________

2. Date Of Birth - ________________ Sex :- Male

Female

3. Which is the best investment option?

a. Shares and debentures.

b. Bank Deposits.

c. Mutual Funds.

d. Financial Products.

e. Post Office Savings.

f. Others.

4. Do you own an insurance policy?

a. Yes b. No

If yes, please mention which company policy you own

________________________________________________

_____________________


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5. Following are the features you consider before taking an insurance

policy?

Insurance Coverage

High Returns

Low premium amount

Flexible Withdrawals

Risk Involved

a. Strongly Agree

b. Agree

c. Neither Agree nor Disagree

d. Disagree

e. Strongly Disagree

6. Are you aware of IDBI Federal Life Insurance Co Ltd products?

a. Yes b. No

7. Do you have a life insurance? A) Yes B) No

8. If yes which insurance company? ______________________________ and

which plan?

A) Term plan B) Endowment C) Whole life D)Money

back E) Unit linked F)Child plan

G)Retirement H) Others

9. What would be your preferable mode of premium payment?

a. Annual mode of premium payment.

b. Half Yearly mode of premium payment.

10. What is your motive behind investing in insurance? (Rank from 1 to 4)

A) Tax benefit B) Savings C) Risk cover D)

Returns


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11. Does the company in which you work provide you

insurance?

a. Yes b. No

12. Are you satisfied with the different plans of IDBI Federal Life

Insurance?

Yes No

13. How will you rate the overall plans of IDBI Federal Life Insurance?

Excellent Very Good

Good Bad

14.Do you think that IDBI Federal Life Insurance is preferred because of

its returns?

Yes No

15.Your Valuable

Feedback__________________________________________________

_________________________________________________________

_________________________________________________________

______________________________________________________

DATE:

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