MANAGEMENT PROGRAMME

Indira Gandhi National Open University (IGNOU)

A CASE STUDY OF POTENTIAL OF LIFE INSURANCE SECTOR IN UDAIPUR CITY at KOTAK LIFE INSURANCE, UDAIPUR (RAJASTHAN)

GUIDED BY MR. NAVNEET AGRAWAL ACDAMIC COUNCLER 2302 ASSISTANT PROFESSOR, CTAE COLLEGE, MPUAT UNIVERSITY, UDAIPUR (RAJ.)

SUBMITTTED BY KAILASH PALIWAL ENROLMENT NO 0 STUDY CENTER , STUDY CENTER CODE UDAIPUR (RAJ.)

Foreword
This project report gives a message that Risks and uncertainties are an unavoidable part of lifes design - death, accident and illnesses are built into the working of the universe, waiting to happen. Life insurance is mans answers to such vagaries of life. With life insurance, an event like death cannot render your family financially helpless. Nowadays life insurance not only financially secures a family in the event of untimely death of the life insured, but goes well beyond that.

Kailash has taken good initiative to study the Life Insurance Sector in a small city like Udaipur with developing awareness in people. Well attempted toward life insurance is an apt solution to provide you and your family a prosperous and financially secure life.ion and reuse of available resources.

This project has been very supportive to the organization as it has not only made the study of customers in Udaipur but helped the organization to understand the mindset of the customers of the small city towards life insurance Praveen has done a good project and the benefits are quite visible now.

Navin Gorwal Manager, Kotak Life Insurance, Udaipur

Preface
A case study of Potential of Life Insurance Sector in Udaipur City at Kotak Life Insurance, Udaipur (Rajasthan) is an interdisciplinary study of how Insurance companies , how we interact with customers, how we can live more sustainability and how way we can aware the customers in securing their life.

Life insurance is mans answers to such vagaries of life. With life insurance, an event like death cannot render your family financially helpless. Nowadays life insurance not only financially secures a family in the event of untimely death of the life insured, but goes well beyond that.

Through life insurance you can stand to earn attractive returns, plan your retirement, save up for a specific goal in the future, plan for your childrens education. You can even add riders to your life insurance plan, which provide insurance against disability and critical illnesses. Hence, life insurance is an apt solution to provide you and your family a prosperous and financially secure life.

My case study is based on historical, present and continuous data, observation, monitoring, analysis and presenting in graphical with taken of action by each customer and especially of management and Utility team. I have implemented my thoughts as a case study we get benefits and improve the potential of life insurance sector which one explain in this my case study by data.

It was rightly said by the greatest of great scientist, Albert Einstein, that:Imagination is more important than knowledge

Based on the statement I start my case study of Potential of Life Insurance Sector I welcome your help in improving the performance and the potential of Life Insurance Sector in a city like Udaipur. Let me know how you think this study can be improved. If you find any error or confusing explanation, please e-mail me about them at kailashpaliwal@gmail.com

Acknowledgement
In preparation of this report by me, I feel great pleasure because it gives me extensive practical knowledge in my career. I get idea about Indian Life Insurance Industry by this project.

I express my deep sense of gratitude to the Mr. Navin Gorwal, the Manager at Kotak Life Insurance, Udaipur for his valuable guidance during my project work. I also like to all staff of Kotak Life Insurance who guide me in project work.

I am thankful to Mr. Navneet Agarwal for valuable inspiration and guidance provided me through out the course of this project. They have patient and critically gone the subject matter.

Kailash Paliwal

Contents
Foreword Preface Acknowledgement Contents Chapter - 1 1.1 1.2 1.3 Chapter 2 13-22 2.1 2.2 2.3 2.4 Chapter 3 3.1 3.2 3.3 3.4 Chapter 4 4.1 4.2 4.3 4.4 4.5 4.6 4.7 4.8 Chapter 5 5.1 5.2 Introduction Important Milestones in the Life Insurance Business Insurance Sector Reforms IRDA SCOPE OF LIFE INSURANCE IN UDAIPUR About Udaipur History Geography and Climate Demographic Scope of Life Insurance in Udaipur CONTRIBUTION OF LIFE INSURANCE INDUSTRY Flow of Insurance Industry in India Structure of Life Insurance Industry Life Insurance Industry Aggregation of Long Term Savings Spread of Financial Services in Rural Areas Long term funds for infrastructure Development of Capital Markets/Economic Growth Employment Generation Special Features, Growth Potential, Phase of Transition KOTAK LIFE INSURANCE WORKING STRATEGIES Insurance Guide Products 31 33 33 35-42 35 37 13 17 19 20 23-26 23 24 24 25 27-34 27 27 29 30 31 INTRODUCTION Organization summary Rational study Objective LIFE INSURANCE INDUSTRY ii iii v vi 8-12 9 10 11

5.3 5.4 Chapter 6 6.1 6.2 6.3 Chapter 7 7.1 7.2 7.3 7.4

History and Milestones Office Hierarchy at Udaipur DATA ANALYSIS AND INTERPRETATION Data Classification Graphical Analysis and Interpretation Questionnaire FINDING AND SUGGESTIONS Findings Limitations Suggestions References

40 42 43-53 43 44 52 54-59 54 56 58 59

Chapter 1

INTRODUCTION
Traditionally, life insurance used to provide financial protection to your family and dependents in the event of any unforeseen event or your untimely death. But nowadays, life insurance has become synonymous with savings, wealth generation and protection. Life insurance companies-these days-provide plans through which you can not only secure the financial future of your dependents in the event of death but also build wealth for them and be financially secure from eventualities such as disease and disability.

Different Types of Life Insurance Plans

Traditional life insurance plans: Traditional life insurance plans, also known as non-unit linked insurance plans, ensure that the majority of the investments made by the policyholders are in to safe debt instruments. These plans are ideal for risk-averse investors as they provide assurance of returns to a large extent.

Unit Linked Insurance Plans (ULIPs): ULIPs, also known as market-linked life insurance plans, allow for investments made by the policyholders to get exposed to equities. ULIPs are suited for customers who aim for wealth creation over a long term.

1.1

Organization Summary

About Kotak Mahindra Old Mutual Life Insurance Ltd Kotak Mahindra Old Mutual Life Insurance Ltd is a 74:26 joint venture between Kotak Mahindra Bank Ltd., its affiliates and Old Mutual plc. The company started operations in 2001, and strives to offer its customers outstanding value through high customer empathy, consistent and benchmarked service and a suite of products that leverage the combined prowess of protection and long term savings. The company covers over 4 million lives and is one of the fastest growing insurance companies in India.

About Kotak Mahindra Group Established in 1985, the Kotak Mahindra Group is one of Indias leading financial services conglomerates. In February 2003, Kotak Mahindra Finance Ltd. (KMFL), the Groups flagship company, received a banking license from the Reserve Bank of India (RBI). With this, KMFL became the first non-banking finance company in India to become a bank - Kotak Mahindra Bank Limited.

The Kotak Mahindra Group has a consolidated net worth of Rs 12,901 crore (approx US$ 2.5 billion) as on March 31, 2012. The group offers a wide range of financial services that encompass every sphere of life. From commercial banking, to stock broking, mutual funds, life insurance and investment banking, the group caters to the diverse financial needs of individuals and the corporate sector. The group has a wide distribution network through branches and

franchisees across India, and international offices in London, New York, California, Dubai, Abu Dhabi, Bahrain, Mauritius and Singapore. For more information, please visit the companys website at http://www.kotak.com.

1.2 Rational study

The insurance business of non-life companies was not much in problems but the major problem was with life insurance. Life Insurance Corporation of India had monopoly for more than 45 years, but the picture then was completely different. Previously people felt that Insurance is only for classes not for masses but now the picture is vice-versa.

In current scenario the people of Udaipur have lack of awareness and less knowledge about the life insurance. The topic shows the scope for private insurance companies have great opportunities to cover the market and can insure the customer.

Why Life Insurance? Life insurance is required because of the following factors Life insurance takes care of those who are financially dependent on you even when you are not around to look after them. Retirement planning takes care of your retirement, as there is no guarantee of a consistent income post retirement.

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The expenses you may incur in future will keep increasing due to inflation, and thus even a fluctuation in your income may lead to a compromised lifestyle.

Savings plan enables individuals to secure their financial future by helping you to get attractive returns.

1.3

Objective

To check the Potential of Life Insurance Sector in comparison of small town to that of Metro cities. The Behavioral study is to be done with reference to customers. Taking this point as an objective of the project, we would have not only been helpful to understand the analysis of the Life Insurance Sector but also how the companies compete with other players in small town like Udaipur, securing the people and their families. Objectives considered were To know about brand awareness of Kotak Life Insurance and customers preference about Kotak Life Insurance. According the market survey to aware about how much potential of insurance market in our city. Proper understanding and analysis of life insurance industry. Conduct market survey on a sample selected from the entire population and derived opinion on that research. And based on analysis of the result thus to obtain and make a report on that research.

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Training aims at recruiting maximum number of Life Advisors and to Sell the maximum policies for the company and bring the business for the company which ever is going at the particular point of time.

To gain through knowledge about insurance products and in marketing products.

As the Kotak Life Insurance well reputed company in India its great chance to observe different products launch by other competitor companies like ICICI prudential, Bajaj alliance ,LIC, Max New York life etc. In all, it is to understand the overall working of the Life insurance sector.

The objective behind the project is as follows: o To find the right candidate. o To about their family background, occupation, social relation, Qualification. o Finalize candidates for the IRDA training

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Chapter 2

LIFE INSURANCE INDUSTRY

2.1 Introduction

Brief History of the Insurance Sector in India

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. The story of insurance is probably as old as the story of mankind. The same instinct that prompts modern businessmen today to secure themselves against loss and disaster existed in primitive men also. They too sought to avert the evil consequences of fire and flood and loss of life and were willing to make some sort of sacrifice in order to achieve security. Though the concept of insurance is largely a development of the recent past, particularly after the industrial era past few centuries yet its beginnings date back almost 6000 years.

Life Insurance in its modern form came to India from England in the year 1818. Oriental Life Insurance Company started by Europeans in Calcutta was the first life insurance company on Indian Soil. All the insurance companies established during that period were brought up with the purpose of looking after the needs of European community and these companies were not insuring Indian natives.

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However, later with the efforts of eminent people like Babu Muttylal Seal, the foreign life insurance companies started insuring Indian lives. But Indian lives were being treated as sub-standard lives and heavy extra premiums were being charged on them.

Bombay Mutual Life Assurance Society heralded the birth of first Indian life insurance company in the year 1870, and covered Indian lives at normal rates. Starting as Indian enterprise with highly patriotic motives, insurance companies came into existence to carry the message of insurance and social security through insurance to various sectors of society. Bharat Insurance Company (1896) was also one of such companies inspired by nationalism. The Swadeshi movement of 1905-1907 gave rise to more insurance companies. The United India in Madras, National Indian and National Insurance in Calcutta and the Cooperative Assurance at Lahore were established in 1906. In 1907, Hindustan Cooperative Insurance Company took its birth in one of the rooms of the Jorasanko, house of the great poet Rabindranath Tagore, in Calcutta.

The Indian Mercantile, General Assurance and Swadeshi Life (later Bombay Life) were some of the companies established during the same period. Prior to 1912 India had no legislation to regulate insurance business. In the year 1912, the Life Insurance Companies Act, and the Provident Fund Act were passed. The Life Insurance Companies Act 1912 made it necessary that the premium rate tables and periodical valuations of companies should be certified by an actuary. But the

14

Act discriminated between foreign and Indian companies on many accounts, putting the Indian companies at a disadvantage.

The first two decades of the twentieth century saw lot of growth in insurance business. From 44 companies with total business-in-force as Rs.22.44 crore, it rose to 176 companies with total business-in-force as Rs.298 crore in 1938. During the mushrooming of insurance companies many financially unsound concerns were also floated which failed miserably. The Insurance Act 1938 was the first legislation governing not only life insurance but also non-life insurance to provide strict state control over insurance business.

The demand for nationalization of life insurance industry was made repeatedly in the past but it gathered momentum in 1944 when a bill to amend the Life Insurance Act 1938 was introduced in the Legislative Assembly. However, it was much later on the 19th of January 1956 that life insurance in India was nationalized. About 154 Indian insurance companies, 16 non-Indian companies and 75 provident were operating in India at the time of nationalization. Nationalization was accomplished in two stages; initially the management of the companies was taken over by means of an Ordinance, and later, the ownership too by means of a comprehensive bill.

The Parliament of India passed the Life Insurance Corporation Act on the 19th of June 1956, and the Life Insurance Corporation of India was created on 1st

15

September, 1956, with the objective of spreading life insurance much more widely and in particular to the rural areas with a view to reach all insurable persons in the country, providing them adequate financial cover at a reasonable cost.

LIC had 5 zonal offices, 33 divisional offices and 212 branch offices, apart from its corporate office in the year 1956. Since life insurance contracts are long-term contracts and during the currency of the policy it requires a variety of services need was felt in the later years to expand the operations and place a branch office at each district headquarter. Re-organization of LIC took place and large numbers of new branch offices were opened. As a result of re-organization servicing functions were transferred to the branches, and branches were made accounting units. It worked wonders with the performance of the corporation. It may be seen that from about 200.00 Crores of New Business in 1957 the corporation crossed 1000.00 Crores only in the year 1969-70, and it took another 10 years for LIC to cross 2000.00 crore mark of new business. But with reorganization happening in the early eighties, by 1985-86 LIC had already crossed 7000.00 crore Sum Assured on new policies.

Today LIC functions with 2048 fully computerized branch offices, 100 divisional offices, 7 zonal offices and the corporate office. LICs Wide Area Network covers 100 divisional offices and connects all the branches through a Metro Area Network. LIC has tied up with some Banks and Service providers to offer on-line

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premium collection facility in selected cities. LICs ECS and ATM premium payment facility is an addition to customer convenience. Apart from on-line Kiosks and IVRS, Info Centers have been commissioned at Mumbai, Ahmedabad, Bangalore, Chennai, Hyderabad, Kolkata, New Delhi, Pune and many other cities. With a vision of providing easy access to its policyholders, LIC has launched its SATELLITE SAMPARK offices. The satellite offices are smaller, leaner and closer to the customer. The digitalized records of the satellite offices will facilitate anywhere servicing and many other conveniences in the future.

From then to now, LIC has crossed many milestones and has set unprecedented performance records in various aspects of life insurance business. The same motives which inspired our forefathers to bring insurance into existence in this country inspire us at LIC to take this message of protection to light the lamps of security in as many homes as possible and to help the people in providing security to their families.

2.2

Important Milestones in the Life Insurance Business

1850 Non life insurance debuts with triton insurance company. 1870 Bombay mutual life assurance society is the first Indian owned life insurer 1912 The Indian Life Assurance Companies Act enacted as the first statute to regulate the life insurance business.

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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. 5 Crore 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: 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

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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

Insurance Sector Reforms

In 1993, Malhotra Committee, headed by former Finance Secretary and RBI Governor R. N. Malhotra, was formed to evaluate the Indian insurance industry and recommend its future direction.

The Malhotra committee was set up with the objective of complementing the reforms initiated in the financial sector. The reforms were aimed at creating a more efficient and competitive financial system suitable for the requirements of the economy keeping in mind the structural changes currently underway and recognizing that insurance is an important part of the overall financial system where it was necessary to address the need for similar reforms In 1994, the committee submitted the report and some of the key recommendations included.

1997 2000

Insurance regulator IRDA set up IRDA starts giving licenses to private insurers: Kotak Life Insurance ICICI

19

prudential and HDFC Standard Life insurance first private insurers to sell a policy 2001 policy 2002 Royal Sundaram Alliance first non life insurer to sell a Banks allowed to sell insurance plans.

2.4

IRDA

The Insurance Regulatory and Development Authority (IRDA)

The Insurance Act, 1938 had provided for setting up of the Controller of Insurance to act as a strong and powerful supervisory and regulatory authority for insurance. Post nationalization, the role of Controller of Insurance diminished considerably in significance since the Government owned the insurance companies.

But the scenario changed with the private and foreign companies foraying in to the insurance sector. This necessitated the need for a strong, independent and autonomous Insurance Regulatory Authority was felt. As the enacting of legislation would have taken time, the then Government constituted through a Government resolution an Interim Insurance Regulatory Authority pending the enactment of a comprehensive legislation.

The Insurance Regulatory and Development Authority Act, 1999 is an act to provide for the establishment of an Authority to protect the interests of holders of insurance policies, to regulate, promote and ensure orderly growth of the

20

insurance industry and for matters connected therewith or incidental thereto and further to amend the Insurance Act, 1938, the Life Insurance Corporation Act, 1956 and the General insurance Business (Nationalization) Act, 1972 to end the monopoly of the Life Insurance Corporation of India (for life insurance business) and General Insurance Corporation and its subsidiaries (for general insurance business).

The act extends to the whole of India and will come into force on such date as the Central Government may, by notification in the Official Gazette specify. Different dates may be appointed for different provisions of this Act.

The Act has defined certain terms; some of the most important ones are as follows: Appointed day means the date on which the Authority is established under the act. Authority means the established under this Act.

Interim Insurance Regulatory Authority means the Insurance Regulatory Authority set up by the Central Government through Resolution No. 17(2)/ 94-lnsV dated the 23rd January, 1996.

Words and expressions used and not defined in this Act but defined in the Insurance Act, 1938 or the Life Insurance Corporation Act, 1956 or the General Insurance Business (Nationalization) Act, 1972 shall have the meanings respectively assigned to them in those Acts

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A new definition of "Indian Insurance Company" has been inserted. "Indian insurance company" means any insurer being a company (a) which is formed and registered under the Companies Act, 1956 (b) in which the aggregate holdings of equity shares by a foreign company, either by itself or through its subsidiary companies or its nominees, do not exceed twenty-six per cent. Paid up capital in such Indian insurance company (c) whose sole purpose is to carry on life insurance business, general insurance business or re-insurance business.

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Chapter 3

SCOPE OF LIFE INSURANCE IN UDAIPUR

3.1 About Udaipur History

Udaipur was founded in 1559 by Maharana Udai Singh II as the final capital of the erstwhile Mewar kingdom, located to the southwest of Nagda, on the Banas River, the first capital of the Mewar kingdom. Legend has it that Maharana Udai Singh II came upon a hermit while hunting in the foothills of the Aravalli Range. The hermit blessed the king and asked him to build a palace on the spot, assuring him it would be well protected. Udai Singh II consequently established a residence on the site. In 1568, the Mughal emperor Akbar captured the fort of Chittor, and Udai Singh moved the capital to the site of his residence, which became the city of Udaipur.

As the Mughal empire weakened, the Sisodia ranas, and later maharanas (also called the Guhilots or Suryavansh), who had always tried to oppose Mughal dominance, reasserted their independence and recaptured most of Mewar except for Chittor. Udaipur remained the capital of the state, which became a princely state of British India in 1818. Being a mountainous region and unsuitable for heavily armoured Mughal horses, Udaipur remained safe from Mughal influence in spite of much pressure. The rajvansh of Udaipur was one of the oldest dynasty of the world. Even the Nepal kingdom and Jammu kingdom are believed to have been originated from Mewar.

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3.2

Geography and Climate

Udaipur is located at WikiMiniAtlas 2435N 7341E / 24.58N 73.68E / 24.58; 73.68.[5] It has an average elevation of 598.00 m (1,962 ft). It is located in the southern region of Rajasthan and is close to Gujarat. It has five major lakes, which are under restoration with funds provided by the National Lake Conservation Plan (NLCP) of the Government of India.

3.3

Demographic

According to the 2011 India census, Udaipur city has a population of 571,178 making it the sixth largest city of Rajasthan. Males constitute 53 percent of the population and females 47 percent.

Udaipur has an average literacy rate of 62.74 percent, the national average is 79 percent: male literacy is 75.91 percent and female literacy is 49.10 percent. 389,317

As per 2011 census

Area profile of Udaipur (M CI) town of Udaipur district, Rajasthan state Number of households 78,557 Average household size (per household) 5.0

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Sex ratio 958 Population(0-6Years) 499,072; Sex ratio(0-6 Year) 920 SC population 36,879; Proportion of SC (%) 9.0 ; Sex ratio (SC) 921 ST population 18,553; Proportion of ST (%) 5.0 ; Sex ratio (ST) 798 Total workers 123,560 Work participation rate (%) 32.0 Main worker 114,980 ; % of main workers 30.0 Marginal worker 8,580 ; % of marginal worker 2.0 Non worker 265,878 ; % of non workers 68.0 CL (Main+marginal) 711 ; Proportion of CL (%) 1.0
Al (Main+marginal) 574 ; Proportion of AL (%) 0.0 HHI (Main+marginal) 6,975 ; Proportion of HHI (%) 6.0 OW (Main+marginal) 115,300 ; Proportion of OW (%) 93.0

3.4

Scope of Life Insurance in Udaipur

Even among uninsured households, there are people who have heard of life insurance and know their rights and duties.

Although many might have heard about life or health insurance, there is a lack of knowledge about the various aspects of insurance even among policy holders. A high percentage of households know that a nomination facility is available.

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However, more people know about their duties rather than their rights as policy holders.

The most important duty mentioned by households is the duty to pay the premium and the most important right is the right to pay the premium. An analysis based on socio-economic parameters enables an understanding of the categories of people which are insured and aware of insurance.

If not insured, the impact of financial loss can be disastrous for the economically poor people. Thus, the government needs to create appropriate awareness and take necessary steps to protect the poor households. Also, poor people cannot access improved health and educational facilities and this makes them more vulnerable.

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Chapter 4

CONTRIBUTION OF LIFE INSURANCE INDUSTRY

4.1 Flow of Insurance Industry in India

Structure of Insurance Industry: Snap Shot Contribution to Indian Economy Special Features

4.2

Structure of Life Insurance Industry

Historical Perspective (i) Prior to 1956 242 companies operating (ii) 1956 - 2001 Nationalization LIC monopoly player Government control (iii) 2001 -- Opened up sector (a) LIC Fully owned by Government (b) Postal Life Insurance (ii) Private players 1. Bajaj Allianz Life Insurance Co. Ltd. 2. Birla Sun Life Insurance Co. Ltd. (BSLI) 3. HDFC Standard Life Insurance Co. Ltd. (HDFC STD LIFE) 4. ICICI Prudential Life Insurance Co. Ltd. (ICICI PRU)

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5. ING Vysya Life Insurance Co. Ltd. (ING VYSYA) 6. Max New York Life Insurance Co. Ltd. (MNYL) 7. MetLife India Insurance Co. Pvt. Ltd. (METLIFE) 8. Kotak Mahindra Old Mutual Life Insurance Co. Ltd. 9. SBI Life Insurance Co. Ltd. (SBI LIFE) 10. TATA AIG Life Insurance Co. Ltd. (TATA AIG) 11. Reliance Life Insurance 12. Aviva Life Insurance Co. Pvt. Ltd. (AVIVA) 13. Sahara India Life Insurance Co. Ltd. (SAHARA LIFE) 14. Shriram Sunlam Other likely players PNB Life Insurance, Axa Bharti Enterprises Potential of the Insurance sector: Total population Total population of Insurable class Total population insured 1.1 billion 253 millions 88.5 millions Source: Financial Express-Delhi. Market share: 2001-02 LIC 98% Private Players 2% 94% 6% 87% 13% 78% 22% 72% 28% 2002-03 2003-04 2004-05 2005-06

Industry growth rate at 36% (2004-05) with premium income from new business. Source: Financial Express- Delhi

4.3

Life Insurance Industry 28

Company

Indian Promoter/ Partner Dabur Bajaj Auto Aditya Birla group HDFC ICICI Bank Vysya Bank Kotak Mahindra Bank Max India Jammu & Kashmir Bank Sahara India SBI Tata Group

Foreign Insurance

Market share based on premium 1.12 6.12 1.84 2.96 7.11 0.63 0.71

Aviva life Bajaj Allianz Birla sun life HDFC Standard ICICI Prudential ING Vysya Kotak Mahindra, Old Mutual Max New York MetLife Sahara Life Insurance SBI Life Tata AIG

Aviva, UK Allianz, Germany Sun Life, Canada Standard Life, UK Prudential, UK ING Insurance, Netherlands Old Mutual South Africa New York Life, US MetLife, US None Cardiff, France AIG, US

1.32 0.40 0.80 1.52 1.78

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Contribution to Indian Economy (i) Life Insurance is the only sector which garners long term savings (ii) Spread of financial services in rural areas and amongst socially less privileged (iii) Long term funds for infrastructure (iv) Strong positive correlation between development of capital markets and insurance/ pension sector (v) Employment generation

4.4

Aggregation of Long Term Savings

(i) Total Assets of Life Insurance Companies 2002-2003 2,80,450Cr 2003-2004 3,52,608Cr 2004-2005 4,23,000 Cr

(ii) Total Premium generated 2002-2003 57,708 Cr 2003-2004 66,278 Cr 2004-2005 79,000 Cr

(iii) Industry is growing @ 19 p.a. (iv) At this growth rate, the future premium income generated will be 2005-2006 94,000 Cr 2006-2007 1,12000 Cr 2007-2008 1,33,000 Cr

(v) Life Insurance funds account for 15% of household savings. (vi) The industry has the potential to increase the share to 20%.

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4.5

Spread of Financial Services in Rural Areas

IRDA Regulations provide certain minimum business to be done o In rural area o In the socially weaker sections

Life Insurance offices are spread over nearly 1400 centers. Presence of representative in every tensile deeper penetration in rural areas.

Insurance agents numbering over 6.24 lakhs in rural areas. Policies sold in rural areas (2004-05) - No. of policies - 55 lakhs Sum assured 46,000 cr

Social security - No. of lives covered 2003-04 17.4 lakhs 2004-05 42.1 lakhs

4.6

Long term funds for infrastructure Development of Capital Markets/Economic Growth

For GDP to grow at 8 to 10%, qualitative improvement in infrastructure is essential.

Estimates of funds required for development of infrastructure vary widely. An investment of 6, 19,600 crore is anticipated in the next 5 years (Source : SSKI India)

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Tenure of funding required for infrastructure normally ranges from 10 to 20 years.

Major portion of these funds are routed through debt/private equity participation

Development of Capital Markets/Economic Growth Industry also contributes in economic development through investments in capital market. Present level of investments is over Rs. 40,000 crore. (Mark to Market basis around 80,000 Crores). Annual Investment of around 9000 Crores in capital markets. Contribution to Five Year Plans9th Plan 2, 30,900 Crores Last Two Years 1, 70,900 Crores Helps inculcate a sense of security by protecting earning of people in case of untimely death. Benefits to Policy Holders 2002-2003 20,800 Cr 2003-2004 24,200 Cr 2004-2005 28,700 Cr

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4.7

Employment Generation

India is the fifth largest life insurance market in the emerging insurance economies globally, growing at 15-20 per cent annually.

Life insurance industry provides increased employment opportunities. Employees in insurance sector as on 31st March, 2005 is around 2 lakhs. Many agents depend on insurance for their LivelihoodNo. of agents on 31st March 2004 15.59 lakhs

Brokers,

corporate

agents,

training

establishments

provide

extra

employment opportunities. Many of these openings are in rural sectors.

4.8

Special Features, Growth Potential, Phase of Transition

Special Features Tax clubbing of various savings short term and long term into same bracket have a bias towards short term savings. Distinction between the short term savings and long term savings is critical from investors point of view. More prone to inflationary pressures Clearly, long term savings more than 10 years deserve special consideration under tax regime.

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Growth Potential

The level of insurance penetration (insurance as a percentage of GDP) in India at 4.6% is double the insurance penetration levels in China (2.3%). The report shows that adjusted for inflation, India's life insurance industry grew 10% to Rs 2,73,604 crore

Phase of Transition Life Insurance industry is under the phase of infancy after 50 years of monopoly Competition from within and other sectors of financial market Needs environmental support till it reaches a comfort zone

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Chapter 5

KOTAK LIFE INSURANCE WORKING STRATEGIES

5.1 Insurance Guide

Family Planning for your child's education Planning for your son's/daughter's wedding Caring for elderly parents Caring for dependents with special needs

Tax Planning

Tax Planning

Wealth Creation

Building wealth through regular investing Customising investments to manage your wealth Enhancing personal wealth and protection Creating a second source of income 36

 Receiving regular payouts at various stages of life

Protection

Providing for dependents in the event of death Insuring against accidents Insuring yourself against ill health Ensuring Complete Protection Against Death, Disability And Disease

Retirement

Planning for retirement Saving for an approaching retirement Managing your retirement

Other needs

Saving for a house Saving on taxes Investing a lump sum amount 37

e-Insurance

e-Insurance Why Buy Online Steps to buy insurance online

5.2

Products

Term Plans Kotak Term Assurance Plan Kotak Preferred Term Plan

Endowment Plans Kotak Endowment Plan Kotak Money Back Plan Kotak Child Advantage Plan Kotak Capital Multiplier Plan Kotak Retirement Income Plan Kotak Premium Return Plan

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Unit Linked Plans Kotak Retirement Income Plan (Unit-linked) Kotak Safe Investment Plan II Kotak Flexi Plan Kotak Easy Growth Plan Kotak Privilege Assurance Plan

Group Employee Benefits Kotak Term Grouplan Kotak Credit-Term Grouplan Kotak Complete Cover Grouplan

Rural Kotak Gramin Bima Yojana

Protection Plans

Kotak Saral Suraksha Kotak e-Term/e-Preferred Term Kotak Term Plan/Kotak Preferred Term Plan 39

 Kotak Eternal Life Plans Kotak Assured Protection Plan

Savings & Investment Plans

Kotak Assured Income Plan Kotak Platinum Kotak Single Invest Advantage Kotak Ace Investment Plan Kotak Wealth Insurance Kotak Endowment Plan Kotak Money Back Plan Kotak Premium Return Plan Kotak Surakshit Jeevan Kotak Invest Maxima Kotak Gramin Bima Yojana

Child Plans

Kotak Child Advantage Plan Kotak Headstart Child Assure 40

 Kotak Child Edu Plan Kotak Child Future Plan

41

5.3

History and Milestones

Year

Milestone

1986 Kotak Mahindra Finance Limited starts the activity of Bill Discounting Kotak Mahindra Finance Limited enters the Lease and Hire Purchase 1987 market 199 0 199 1 199 2 199 5 The Auto Finance division is started The Investment Banking Division is started. Takes over FICOM, one of India's largest financial retail marketing networks Enters the Funds Syndication sector Brokerage and Distribution businesses incorporated into a separate company - Kotak Securities. Investment Banking division incorporated into a separate company - Kotak Mahindra Capital Company The Auto Finance Business is hived off into a separate company -Kotak Mahindra Prime Limited (formerly known as Kotak Mahindra Primus Limited). Kotak Mahindra takes a significant stake in Ford Credit Kotak Mahindra Limited, for financing Ford vehicles. The launch of Matrix Information Services Limited marks the Group's entry into information 1996 distribution. Enters the mutual fund market with the launch of Kotak Mahindra Asset 1998 Management Company. 200 Kotak Mahindra ties up with Old Mutual plc. for the Life Insurance 0 200 0 business. Kotak Securities launches its on-line broking site (now

www.kotaksecurities.com). Commencement of private equity activity

42

through setting up of Kotak Mahindra Venture Capital Fund. 200 1 200 1 200 3 200 4 200 5 200 5 Matrix sold to Friday Corporation Launches Insurance Services Kotak Mahindra Finance Ltd. converts to a commercial bank - the first Indian company to do so. Launches India Growth Fund, a private equity fund. Kotak Group realigns joint venture in Ford Credit; Buys Kotak Mahindra Prime (formerly known as Kotak Mahindra Primus Limited) and sells Ford credit Mahindra. Launches a real estate fund Bought the 25% stake held by Goldman Sachs in Kotak Mahindra

2006 Capital Company and Securities Launched a Pension Fund under the New Pension System Kotak 2008 Mahindra Bank Ltd. Opened a representative office in Dubai 200 9 201 0 201 1 Entered Ahmedabad Commodity Exchange as anchor investor Ahmedabad Derivatives and Commodities Exchange, a Kotak anchored enterprise, became operational as a national commodity exchange. Kotak Mahindra Bank Ltd entered into a Business Cooperation arrangement with CIMB Group Sdn Bhd, Malaysia.

5.4

Office Hierarchy at Udaipur 43

Branch Manager

Assistant Branch Manager

Branch Operations Incharge

Sales Manager

Operation Executive

Assistant Sales Manager

Operations

Life Advisor

44

Chapter 6

DATA ANALYSIS AND INTERPRETATION

6.1

Data Classification

Data Classification done on the basis of following

Age Wise Gender wise Family and its Members Income wise Members Insured and Not Insured Different Policies owned by the customers People Under Insured versus Full Insured Market share on different Insurance Plans

45

6.2 Graphical Analysis and Interpretation

Demographic Information
Gender Male Female I No of Respondent 128 72 Percentage 64 36

36% Ma le F ale em 64%

Interpretation: Among the 200 respondents male are 64% and female are 36%

46

Age Information
Age in Years 18-25 26 - 30 31- 45 46 or above No of Respondent 30 74 59 37 Percentage 15 36 30 19

19%

15% 18-25 26-30 31-45 46 or a bove

30%

36%

Interpretation: Among the 200 respondents age group (years) are a) 18-25 b) 26 to 30 c) 31 to 45 are 15% are 36% are 30% are 19%

d) 46 or above

47

Occupation Information
Age in Years Service Business Govt. Employee Others No of Respondent 30 102 56 12 Percentage 15 51 28 6

6% 28%

15%

S ervice Business Govt. E ployee m Ohers

51%

Interpretation: Among the 200 respondents occupations are a) Service are 15%

b) Business are 51% c) Govt. Employee are 28% d) Others are 12%

48

Family Information
a) 2 to 4 b) 5 to 8 c) 8 or above

No of Family Members 24 58 8 or above

No of Respondent 44 89 67

Percentage 34 44 22

22% 34%

2 to 4 5 to 8 8 or a bove
44%

Interpretation: Among the 200 respondents occupations are a) 2 to 4 are 22% b) 5 to 8 are 44% c) 8 or above are 34%

49

Income Information
a) b) c) d) Less than 50000 Between 50000 to 1 Lakh Between 1 Lakh to 3 Lakhs Between 3 Lakhs or above No of Respondent 24 34 116 26 Percentage 12 17 58 13

Income Less than 50000 Between 50000 to 1 Lakh Between 1 Lakh to 3 Lakhs Between 3 Lakhs or above

13%

12% 17%

Les than 500 s 00 Between 50000 to 1 Lakh Between 1 L akh to 3 Lakhs

58%

Between 3 L akhsor above

Interpretation: Among the 200 respondents Income types are a) Less than 50000 are 12% b) Between 50000 to 1 Lakh are 17% c) Between 1 Lakh to 3 Lakhs are 58% d) Between 3 Lakhs or above are 13%

50

Insured and Non Insured Member Information

a) Insured Member b) Not insured Member Insured Status Insured Not Insured No of Respondent 39 61 Percentage 39 61

39%

Ins ured
61%

Not Ins ured

Interpretation: Among the 200 respondents Members are a) Insured are 39% b) Not Insured are 61%

51

Yearly Insurance investment for a Family Information

a) b) c) d) Less than 20000 Between 20000 to 50000 Between 50000 to 1 Lakh Above 1 lakh No of Respondent 56 84 46 Percentage 28 42 23

Income Less than 20000 Between 20000 to 50000 Between 50000 to 1 Lakh Above 1 lakh

14

7% 23%

28%

L s than 2 es 0000 B etween 200 to 5000 00 0 B etween 500 to 1 Lakh 00

42%

Above 1 lakh

Interpretation: Among the 200 respondents Yearly Investment on Family for Insurance are a) Less than 20000 are 28% b) Between 20000 to 50000 are 42% c) Between 50000 to 1 Lakh are 23% d) Above 1 lakh are 7%

52

Insurance Plan and its Udaipur Market Share Information

a) Endowment Plan b) Money back Plan c) Term Plan d) Unit link Plan e) Child Plan Type of Plan Endowment Plan Money back Plan Term Plan Unit link Plan Child Plan No of Respondent 36 51 78 22 13 Percentage 18 26 38 11 7

11%

7%

18%

Endowm Plan ent Money back Plan TermPlan

26%

38%

Unit link Plan C hild Plan

Interpretation: Among the 200 respondents Different Plans of Insurance Market Share in Udaipur are a) Endowment Plan are 18% b) Money back Plan are 26% c) Term Plan are 38% d) Unit link Plan are 11% e) Child Plan are 7 %

53

6.3 Questionnaire
Please fill the details Q1. Name _______________________________________ (Optional) Q2. In which age group you belong (in years?) a) 18-25 b) 26 to 30 c) 31 to 45 d) 46 or above

Q3. Gender a) Male b) Female

Q4. Occupation a) Service b) Business c) Govt. Employee d)Other

Q5. How many members are there in your Family? a) 2 to 4 b) 5 to 8 c) 8 or above

Q6. What is your annual income? a) b) c) d) Less than 50000 Between 50000 to 1 Lakh Between 1 Lakh to 3 Lakhs Between 3 Lakhs or above

Q7. Do you have a life insurance? Yes_______ No_______

If Yes (please choose the following from the table)

54

Companys name LIC ICICI Prudential Birla Sunlife SBI Life HDFC Standard Life Bajaj Alliance TATA AIG Kotak Mahindra ING Vysya Max Newyork Met Life Reliance Shri Ram Sahara

Term plan

Endowment

Whole Life

Money Back

Retire ment

Child Plan

Unit link Plan

Q8. How much do you pay yearly for Insurance includes you and your family?

a) Less than 20000

b) Between 20000 to 50000 c) Between 50000 to 1 Lakh d) Above 1 lakh Q9. Mode of Payment a) Online b) Cash Counter

55

Chapter 7

FINDINGS AND SUGGESTIONS

7.1 Findings
Majority customers are Males Major customers are in between the age group of 26 to 35 years, this age group are right to take the insurance as they are doing incomes. Government Jobs are quiet secured, so we find good numbers of customers from Government Jobs. Udaipur is a small town based on business so we find the customers majority from Business class. Major families are now doing family planning but its as behind one generation they lived in joint family. 5-8 members can be easily find in their family. Udaipur is a growing town, Major income is on the scale of between 1 lakh to 3 lakhs 61% which is a huge, as compared to other cities who are not insured as yet. Only above 40% invest in their family to insured which is between Rs. 20000 to 50000 yearly

56

They have to make aware in investing for Child Plans which will make secure their life.

57

7.2

Limitations

Lack of awareness among the people This is the biggest limitation

found in this sector. Most of the people are not aware about the importance and the necessity of the insurance in their life. They are not aware how useful life insurance can be for their family members if something happens to them.

Perception of the people towards Insurance sector People 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 like January, February and March making the other 9 months dry for this business.

Insurance does not give good returns Still 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 the Private sector players. They are still under the perception that if they take Insurance they will get only 5-6% returns which is not true nowadays. Nowadays most of the modern Unit Linked Insurance Plans gives returns

58

which are many times more than that of bank Fixed deposits, National saving certificate, Post office deposits and Public provident fund.

Lack of awareness about the earning opportunity in the Insurance

sector People still today are not aware about the earning opportunity that the Insurance sector gives. After the privatization of the insurance sector many private giants have entered the insurance sector. These private companies in order to beat the competition and to increase their Insurance Advisors to increase their reach to the customers are giving very high commission rates but people are not aware of that.

Increased competition Today the competition in the Insurance sector

has became very stiff. Currently there are 14 Life Insurance companies working in India including the LIC (life insurance Corporation of 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 became very difficult.

59

7.3 Suggestions

Increase in advertisement Make aware to the person that right is the right to pay the premium on time. People should be made aware among the people with proper information Change the perception of the people towards Insurance sector in a BIG positive manner

Most number of people wants Guaranteed Returns so company must focus on the same for customer investment.

Make insurance policy which can buy any one so we can insured them through this type of life insurance policy.

Create profit earning opportunities through life insurance policy. Encourage the customer Service Convey the offers regularly to customers and provoke them to talk to the advisors or other member of the office regularly.

60

7.4

References
www.en.wikipedia.org Economic Times, newspaper Times of India, newspaper "District Wise Data of Rajasthan" . censusindia. Directorate Of Census Operations Rajasthan. http://www.rajcensus.gov.in/Prov_data/Prov_district.pdf. Retrieved 23 March 2012.

Davidson, Max (2008-02-02). "Udaipur: An eternal melding of the ages". The Daily Telegraph (London).

http://www.telegraph.co.uk/travel/destinations/asia/india/738438/Udaipur-Aneternal-melding-of-the-ages.html. Retrieved 2010-05-26.

Tdil.mit.gov.in Udaipur Encyclopedia Britannica Eleventh Edition. Falling Rain Genomics, Inc - Udaipur http://www.worldlakes.org/uploads/Management_of_lakes_in_India_10Mar04.pdf Management of Lakes in India

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