SUMMER TRAINING REPORT

On
Death claims Analysis and Trends
(Bihar and Jharkhand)
Submitted To

AMITY SCHOOL OF INSURANCE AND ACTURIAL

SCIENCE, NOIDA
AMITY UNIVERSITY – UTTAR PRADESH

In Partial Fulfillment Of
Degree of MBA
In
INSURANCE (2008-10)

Under Guidance of

Mr. Nehal Ahmed

Operations Head
Bihar and Jharkhand
SBI LIFE Insurance co. Ltd.

Submitted By:

PRITI K. KANTH
MBA INSURANCE (2008-2010)
Roll No. : M08032

ACKNOWLEDGEMENT
If words are considered to be signs of gratitude then let these words convey the very
same.

My sincere gratitude to SBI Life Insurance Co. Ltd. for providing me with an opportunity
to work with SBI Life and giving necessary direction on doing this project to the best of
my abilities.

I am highly indebted to Mr. Nehal Ahmad, Head Ops (Bihar and Jharkhand) and
company project guide, who has provided me with the necessary information and also for
the support extended out to me in the completion of this report and his valuable
suggestion and comments in bringing out this report in the very best way possible.

I would also like to thank Mr. Ashish Mishra, Mr. Kundan Kumar and the entire
team of SBI Life Ops Patna PC, for the constant support and help in the successful
completion of this project.

I also thank Mr. J.L. Kapoor, Faculty, Amity University, Noida, who has sincerely
supported me with the valuable insights into the completion of this project.

Signature
(Student)

Sr. No. Subject Cover Pages

2
1. Project Proposed 4-5
1.1 Objective of the Project
1.2 Methodology
1.3 Limitations

2. Introduction 6-10
2.1 Definition of Insurance
2.2 Function of Insurance
2.3 Definition of Life Insurance
2.4 Role of Life Insurance
2.5 Importance of Life Insurance

3. Indian Insurance Industry 11-18

3.1 History
3.2 IRDA
3.3 Possibilities

4. Global Insurance Industry 19-20

5. Functioning of Insurance Industry 21-23

6. Insurance and Economy 24-25

7. SBI Life Insurance Company Ltd. 26-33

7.1 Introduction
7.2 Products of SBI Life
7.3 Operation Work of SBI Life

8. Competitors of SBI Life 34-41

9. Policy Claims 43-82

9.1 Introduction
9.2 Claims Management
9.3 Process of Claims settlement
9.3a) Process of Claims Settlement at SBI Life
9.3b) Process of claims settlement at other
companies.
9.4 Analysis of the claims data of SBI LIFE for Bihar
and Jharkhand.
10. Inferences 83
11. Suggestions 84
12. Reference 85

3
 1.Project Proposed

• To analyse the Death claims of SBI Life for the states Bihar and Jharkhand.

• To understand the general trends of the Death Claims arising in these two states.

• To study the factors which influence the claims.

• To study all the parameter on which the Death claims depends.

1.1 Objective of the Project

• The main objective of the study is appraisal of the underwriting practices.

• The conclusion of this project report may help in better risk management.

4
1.2 Methodology

Analysis is totally based on the data given by the organization.

The data are classified into two types:

1. Primary Data
2. Secondary Data

Primary Data are those, which are collected afresh and for the first time, and thus happen
to be original in character.

Secondary Data are those which have already been collected by someone else and which
are already been passed through the statistical process.

Research is totally based on secondary data, as the data is given by the organization.

1.3 Limitations

• Many of the details have not been disclosed due to privacy policy.

• Analysis is done only for the Death Claims of Bihar and Jharkhand.

• There are possibilities of error in data collection.

5
 2. Introduction

The story of insurance is probably as old as the story of mankind tendency of a human
being to secure them self against loss and disaster has been from the starting of world.
They 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
as per records.

Although insurance in its present form has been brought to India, Asia and Africa by
British and other colonial powers, the concept of collective cooperation to share a
particular risk was as old as dawn of human civilization. India was a major trading power
in ancient times and some mention of devices of sharing of risk can be founded in ancient
literature.

In the Moghul Army a life annuity was granted to the family on the demise of the sepoy.

The joint family system in India was embodiment of basic concept of life insurance.

6
2.1 Definition of Insurance:

From the viewpoint of the Individual:

From the individual point of view, insurance is an economic device whereby the
individual can substitute a small relatively definite cost (the premium) for a large
uncertain financial (the contingency insured against) that would have to be borne if
insurance was not available.

From the viewpoint of the Society:

Insurance from the point of view of the society is a mechanism which relieves the
individual citizens and the industry from the burden of carrying on themselves the
various risks they are likely to face from day to day.

Insurance business is divided into four classes:

• Life Insurance
• Fire Insurance
• Marine Insurance
• Miscellaneous Insurance

Insurance Provides:

• Protection to insured.
• Accumulation of savings.
• Channeling these savings into sectors needing huge long term investment.

7
2.2Functions of Insurance

• Provide protection.
• Collective bearing of risk.
• Assessment of risk.
• Provide certainity.
• Small capital to cover large risk.
• Contributes towards the development of industries.
• Means of saving and investment.
• Source of earning foreign exchange
• Risk free trade.

2.3 Definition of Life Insurance:

Life insurance is a co-operative risk-sharing plan, based on the incentives of individual

thrift and initiative. Through Life insurance, people are able to set aside portion of their
income during their earning years, to make provisions for the time when their incomes
cease, because of early death, retirement, etc. Thus, Life Insurance make it comparatively
easy for people to provide against these uncertainties to Life- a task generally imposible
for an individual to accomplish alone.

8
2.4 Role of Life Insurance:

• Life insurance as an investment: - Insurance products yield more than any other
investment instruments and it also provides added incentives or bonus offered by
insurance companies.

• Life Insurance as risk cover: - Insurance is all about risk cover and protection of
life. Insurance provides a unique sense of security that no other form of invest can
provide.

• Life Insurance as tax planning: - Insurance serves as an excellent tax saving

mechanism too.

2.5 Importance of Life Insurance:

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

dependents of the life insured and the family of the assured in case of his untimely
death. The dependents or family members get a fixed sum of money in case of
death of the assured.

• Saving for old age: - After retirement the earning capacity of a person reduces.
Life insurance enables a person to enjoy peace of mind and a sense of security in
his/her old age.

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

compulsorily. When life policy is taken, the assured is to pay premiums regularly
to keep the policy in force and he cannot get back the premiums, only surrender
value can be returned to him. In case of surrender of policy, the policyholder gets
the surrendered value only after the expiry of duration of the policy.

9
• Initiates investments: - Life Insurance Corporation encourages and mobilizes the
public savings and canalizes the same in various investments the economic
development of the country. Life insurance is an important tool for the
mobilization and investment of small savings.

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

loans. It improves the credit worthiness of business.

• Social Security: - Life insurance is important for the society as a whole also. Life
insurance enables a person to provide for education and marriage of children and
for construction of house. It helps a person to make financial base for future.

• Tax Benefit: - Under the Income Tax Act, premium paid is allowed as a
deduction from the total income under section 80C for maximum of Rs.1,00,000/-
for premium paid to Life insurance company. Again bonus received, Maturity
proceeds or death benefits are exempt under section 10(10D).

10
 3. Indian Insurance Industry

3.1 History:

In the Moghul army a life annuity was granted to the family on the demise of the sepoy,
against some regular contribution in the life time of the sepoy. The ‘joint family’ system
in India was embodiment of basic concept of life insurance.

Life insurance in its modern form came to India from England in 1818 with formation of
Oriental Life Insurance Company in Calcutta (now Kolkata) mainly by Europeans to help
widows of their kin.

Pioneering efforts of reformers and social workers like Raja Ram Mohan Roy,
Dwarakanath Tagore, Ramatam Lahiri, Rustomji Cowasji and others led to entry of
Indians in Insurance Business. First Indian insurance company under the name “Bombay
Life Assurance Society” started its operations in 1870, and started covering Indian lives
at standard rates. Later “Oriental Govt. Security Life Assurance Co.” was established in
1874, with Sir Phirozshah Mehta as one of its founder directors and later emerged as a
leading Indian insurance company.

With the patriotic fervour of non-Cooperation Movement (1919) and Civil Disobedience
Movement (1929), number of Indians companies entered the insurance arena. In 1914
there were only 44 companies, by 1940 this number grew to 195.

In spite of mushrooming of many insurance companies, per capita insurance in India was
merely Rs.8.00/- in 1944. With the main aim of spreading of life insurance to rural areas
and to channelise huge funds accumulated by life insurance companies to nation-
building activities, Government of India nationalized the life insurance industry in

11
January 1956 by merging about 250 life insurance companies and forming Life Insurance
Corporation of India, which started functioning from 1.9.1956.

In spite of phenomenal progress of Life Insurance Corporation of India, especially in the

80’s the Govt. and public at large were not quite satisfied with it. By signing GATT
accord, the Government of India committee to opening of insurance sector to private
sector – to local and global operators. A committee under the Chairmanship of late R.N.
Malhotra (ex-Governor of Reserve Bank of India) was appointed by the Government to
look into all the aspects of insurance industry in India. The committee recommended a
number of measures to revamp LIC of India GIC of India and its four subsidiaries. It also
recommended allowing outside Insurance companies to operate in Indian partner.

3.2 IRDA

In 1999, the Insurance Regulatory and Development Authority (IRDA) was constituted as
an autonomous body to regulate and develop the insurance industry. The IRDA was
incorporated as a statutory body in April, 2000. The key objectives of the IRDA include
promotion of competition so as to enhance customer satisfaction through increased
consumer choice and lower premiums, while ensuring the financial security of the
insurance market. The IRDA opened up the market in August 2000 with the invitation for
application for registrations. Foreign companies were allowed ownership of up to 26%.
The Authority has the power to frame regulations under Section 114A of the Insurance
Act, 1938 and has from 2000 onwards framed various regulations ranging from
registration of companies for carrying in insurance business to protection of
policyholders’ interests.

12
Role of IRDA:

• Protecting the interest of policyholders.

• Establishing guidelines for the operations of insurers, and broker.
• Specifying the code of conduct, qualifications, and training for insurance
intermediaries and agents.
• Promoting efficiency in the conduct of insurance business.
• Regulating the investment of funds by insurance companies.
• Specifying the percentage of business to be written by insurers in rural sectors.
• Handling disputes between insurers and insurance intermediaries.

13
3.3 Possibilities:

India is a very under-insured country and life insurance is turning out to be a very
lucrative business. Insurance penetration levels are abysmally low at 2% of the
population. With a huge population of 1.1 billion there is a vast market out there ready to
be tapped.

When economic reforms were thought of India way back in 1991 one of the priority
sectors for privatization and reforms considered by the government of India was the
insurance sectors. Almost 5 years after the formation of Insurance Regulatory and
Development Authority (IRDA), the first license to start insurance business was issued.
Today there are 21 life insurance companies operating in India.

Life Insurance Companies:

Sr. Insurer Foreign Partner Regn Date of Year of

No. No. Registration Operation
1. HDFC Standard Life Standard Life 101 23.10.2000 2000-01
Insurance Co. Ltd. Assurance, Uk
2. Max New York Life New York Life USA 104 15.11.2000 2000-01
Insurance Co. Ltd
3. ICICI-Prudential Life Prudential, UK 105 24.11.2000 2000-01
Insurance Co. Ltd
4. Om Kotak Life Old Mutual, South 107 10.01.2001 2001-02
Insurance Co. Ltd. Africa
5. Birla Sun Life Sun Life, Canada 109 31.01.2001 2000-01
Insurance Co. Ltd.
6. Tata-AIG Life American 110 12.02.2001 2000-01
Insurance Co. Ltd. International
Assurance Co., USA
7. SBI Life Insurance BNP Paribas 111 29.03.2001 2001-02
Co. Ltd. Assurance SA,

14
 France
8. ING Vysya Life ING Insurance 114 02.08.2001 2001-02
Insurance Co. Ltd International B.V.,
Netherlands
9. Allianz Bajaj Life Allianz Germany 116 03.08.2001 2001-02
Insurance Co. Ltd.
10. Metlife Indian Metlife International 117 06.08.2001 2001-02
Insurance Co. Ltd Holdings Ltd., USA
11. Reliance Life --- 121 03.01.2002 2001-02
Insurance Co. Ltd.
(Earlier AMP
Sanmar Life
Insurance Company
from 3.1.02 to
29.9.05)
12. AVIVA Aviva International 122 14.05.2002 2002-03
Holdings Ltd., UK
13. Sahara Life --- 127 06.02.2004 2004-05
Insurance Co. Ltd.
14. Shriram Life Sanlam, South Africa 128 17.11.2005 2005-06
Insurance Co. Ltd.
15. Bharti AXA Life AXA Holdings, 130 14.07.2006 2006-07
Insurance Co. Ltd. France
16. Future Generali India Pantaloon Retail Ltd.; 133 04.09.2007 2007-08
Life Insuranc Sain Marketing
Company Ltd. Network Pvt. Ltd.
(SMNPL), Generali,
Italy
17. IDBI Fortis Life Fortis, Netherlands 135 19.12.2007 2007-08
Insurance
18. Canara HSBC OBC HSBC, UK 136 08.05.2008 2008-09
Life Insurance
Company Ltd.
19. Aegon Religare Life Religare, Netherlands 138 27.06.2008 2008-09
Insurance Co. Ltd.

15
20. DLF Pramerica Life Prudential of 140 27.06.2008 2008-09
Insurance Co. Ltd. America, USA
21 Life Insurance 512
Corporation of India

Source: www.irdaindia.org

SOLVENCY RATIO OF LIFE INSURERS IN INDIA

SOLVENCY RATIO OF LIFE INSURERS IN INDIA

(As on 31st March)
S.No Name of the Insurer 2008 2007 2006
PRIVATE
1 AVIVA 4.29 6.31 2.80
2 BAJAJ ALLIANZ 2.34 2.45 2.80

16
 3 BHARTI AXA 2.73 1.96 NA
4 BIRLA SUN 2.37 1.80 2.00
5 FUTURE GENERALI 2.94 NA NA
6 HDFC STANDARD 2.38 2.05 2.90
7 ICICI PRUDENTIAL 1.74 1.53 1.60
8 IDBI FORTIS 3.45 NA NA
9 ING VYSYA 2.36 2.87 2.30
10 MAX NEW YORK 2.25 2.08 2.00
11 MET LIFE INDIA 1.70 1.73 1.70
12 OM KOTAK MAHINDRA 2.41 1.64 1.80
13 RELIANCE 1.65 1.62 2.00
14 SAHARA INDIA 4.32 2.68 2.70
15 SBI LIFE 3.30 1.78 2.90
16 SHRIRAM 2.85 2.74 2.20
17 TATA AIG 2.50 2.59 2.70
PUBLIC
18 LIC OF INDIA 1.52 1.50 1.30

Current scenario:

• Insurance penetration has increased.

• Selling insurance is no longer a part-time job. For most consult it is a full-time

job.

17
 • Although insurance is supposed to be solicited, competition is so severe, it is now
being aggressively sold.

• Several innovative marketing avenues have opened up, like banking channels,
departmental stores, telemarketing, mailers etc. for marketing insurance.

• Presence of IRDA- industry watch dog.

• Premiums can be paid online.

Another business model that is fast catching up and becoming popular, is the combining
of insurance and banking into a single entity known as bancassurance. Bancassurance has
contributed substantially to the premium accretions of the financial players in the
business. Bancassurance also raises possibilities of collaboration of multiple players for
providing better insurance options. It works this way, one insurance company might tie-
up with a bank having a presence in urban areas and another bank having a better reach in
rural areas. Most importantly, it will generate new business opportunities for agents and
would simultaneously provide reliable insurance cover to the population.

4. Global Insurance Industry

Globally, insurers increasingly are pressured by the demands of their clients. The
development global insurance industry over the past few years was influenced by
booming stock markets which enables considerable capital gains to be made in non life
business. Increase in insurers equity capital increased underwriting capacity, while
demand did not develop at the same pace, resulting in decrease in insurance policies

18
prices. The stock market boom in the past led to demand for unit linked insurance
products.

The global insurance industry is growing at rapid pace. Most of the markets are
undergoing globalization. Lot of merger and acquisition are taking place in the insurance
world. The rapidity in the industry, technological improvement has resulted in pressures
on a few economic parameters. The world insurance industry is at peak of its
globalization process.

Insurance companies today find themselves juggling a variety of challenges as they work
to improve profitability, grow, and compete. Life insurance companies must find ways to
contend with the demographic changes that are altering their customer base – learning to
serve more effectively the soon-to-be-retiring Baby Boomers, as well as the more
technically sophisticated younger individuals now beginning wealth accumulation. For
their part, property and casualty companies face complex and increased exposure to
significant risks due to factors such as terrorism and natural disasters.

Across the industry insurance companies face a range of common challenges. There is a
need of innovative bundles of products and services for top-line growth. Today insurers
are increasingly competing across borders as they look to penetrate new markets.
Throughout the various plans and initiatives being launched by companies, however, one
factor will be critical to success- the ability to execute well. To succeed in the coming
years, companies will need to shorten the time it takes to turn strategy into action, and
implement their programs with high levels of precision and efficiency. They also need to
be astute to the potential to leverage the effort and resources used to solve one problem to
also benefit others they face.

The challenges facing the industry are clearly significant, but the changes they require are
also bringing new opportunities. In the coming year, following areas can be key
opportunities for insurance companies to drive significant benefits.

19
 • The growth imperative. Driving growth has become a key objective for most
insurance companies.

• Leveraging analytical tools: Deeper insight, better operations. Insurance

companies have used predictive analytics to support underwriting efforts for
several years, but today, advances in technology and methods are opening the
door to the use of analytics in a broad range of business processes.
• Managing the complexities of compliance. Growing regulatory requirements are
bringing increased scrutiny to governance, information security, monitoring, and
reporting processes in insurance companies.

5. Functioning of Insurance industry:

Insurer’s Business model:

Profit = earned premium +investment income – incurred loss – underwriting expenses

Insurers make money in two ways:

20
 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 and
2) By investing the premiums they collect from insured.

The most difficult aspect of the insurance business is the underwriting of policies. Using
a wide assortment of data insurer predict the likelihood that a claim will be made against
their policies and price products accordingly. To this end, insurers use actuarial science to
quantify the risks they are willing to assume and the premium they will charge to assume
them. Data is analyzed to fairly accurately project the rate of future claims based on a
given risk. Actuarial science uses statistics and probability to analyze the risks associated
with the range of perils covered, and these scientific principles are used to determine an
insurer’s overall exposure. Upon termination of a given policy, the amount of premium
collected and the investment gains thereon minus the amount paid out in claims is the
insurer’s underwriting profit on that policy.

An insurer’s underwriting performance is measured in its combined ratio. The loss ratio
(incurred losses and loss-adjustment expenses divided by net earned premium) is added
to the expense ratio (underwriting expenses divided by net premium written) to determine
the company’s combined ratio. The combined ratio is reflection of the company’s overall
underwriting profitability, while anything over 100 indicates an underwriting loss.

Insurance companies also earn investment profits on “float”. “Float” or available reserve
is the amount of money, at hand at any given moment that an insurer has collected in
insurance premiums but has not been paid out in claims. Insurance start investing
insurance premiums as soon as they are collected and continue to earn interest on them
until claims are paid out.

Naturally, the “float” method is difficult to carry out in an economically depressed

period. Bear markets do cause insurers to shift away from investments and to toughen up

21
their underwriting standards. So a poor economy generally means high insurance
premiums. This tendency to swing between profitable and unprofitable periods over time
is commonly known as the “underwriting” or insurance cycle.

Finally, claims and loss handling is the materialized utility of insurance. In managing the
claims-handling function, insurers seek to balance the elements of customer satisfaction,
administrative handling expenses, and claims over payment leakages.

Investment Management:
Investment operations are often considered incidental to the business of insurance, and
have traditionally viewed as secondary to underwriting. In the past risk management was
the most important part of business, where as today the focus has shifted to fund
management. Investment income is a large component of insurance revenues, skilful and
careful management of funds. Insurance is a business of large numbers and generates
huge amount of funds overtime. These funds arise out of policyholder funds in the case of
life insurance, and technical and free reserves in the non life segments. Time lag between
the procurement of premium and the payment of claim provides an internal during which
the funds can be deployed to generate income. Insurance companies are among the
largest institutional investors in the world. Assets managed by insurance companies are
estimated to account for over 40% of the world’s top ten asset managers.

Returns on investments influence the premium rates and bonuses and hence investment
income will continue to be an important component of insurance company profits. In life
insurance, benefits from insurance profits accrue directly to policy holders when it is
passed on to him in the form of a bonus. In non life insurance the benefits are indirect and
mostly by the creation of an investment portfolio. Investment income has to compensate
for underwriting results which are increasingly under pressure.

In the case of insurance, the difference between revenue and the expense is known as
operating surplus.

22
Revenue = premium

Expense = 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.

6. Insurance and Economy

Indian economy is growing in reference to global market. Business of insurance with its
unique features has a special place in Indian economy.

23
It is a highly specialized technical business and customer is the most concern people in
this business, therefore this business is able to spur the growth of infrastructure and act as
a catalyst in the overall development of Indian economy.

The high volume in the insurance business help spread risk wider allowing a lowering of
the rates of the premium to be charged and in turn, raising profits. When there is a bigger
base, the possibilities become more predictable, and with system wide risk balanced out,
profits improve. This explains the current scenario of mergers, acquisition and
globalization of insurance.

Insurance is type of savings. Insurance is not only important for tax benefits, but also for
saving and for providing security it can serving as an essential service which are welfare
state must make available to its people.

Insurance play a crucial role in the commercial lives of nations and act as the lubricants
of economic activities. Insurance firms help to spread the potentially financial
consequences of risk among the large number of entities to mobilize and distribute
savings for productive use, facilitate investment, support and encourage external trade,
and protect economic entities against external risk.

Insurance and economic growth mutually influences each other. As the economy grows,
the living standards of people increase. As a consequence, the demand for life insurance
increases. As the assets of people and of business enterprises increases in the growth
process, the demand for general insurance also increases. In fact, as the economy widens
the demand for the new types of insurance products emerges.

Insurance is no longer confined to product markets, they also cover service industries. It
is equally true that growth itself facilitated by insurance. A well developed insurance
sector promotes economic growth by encouraging risk taking. Risk is inherent in all
economic activities. Without some kind of cover against risk, some of these activities will

24
not be carried out at all. Also insurance and more particularly life insurance is a mobiliser
of long term savings and life insurance companies are thus able to support infrastructure
projects which require long term funds.

There is thus a mutually beneficial interaction between insurance and economic growth.
The low income levels of the vast majority of population have been one of the factors
inhibiting a faster growth of insurance in India. To some extent this is also compounded
by certain attitudes to life. The economy has moved on to a higher growth path. The
strong growth will bring about significant changes in the insurance industry.

At this point, it is important to note that not all activities can be insured. If that were
possible, it would completely negate entrepreneurship

The real management challenges are uninsurable risks, risk is avoided at a cost.

7. SBI LIFE INSURANCE COMPANY LTD.

25
7.1 Introduction:

SBI Life Insurance is a joint venture between the State Bank of India and BNP Paribas
Assurance. SBI Life Insurance is registered with an authorized capital of Rs.2000 crores.
SBI owns 74% of the total capital and BNP Paribas Assurance the remaining 26%.

State Bank of India enjoys the largest banking franchise in India. Along with its 7
Associate Banks, SBI Group has the unrivalled strength of over 14,500 branches across
the country, arguably the largest in the world. BNP Paribas Assurance is the insurance
arm of BNP Paribas – Euro Zone’s leading Bank. BNP Paribas, part of the world’s top 10
group of banks by market value and part of Europe top 3 banking companies, is one of
the oldest foreign banks with a presence in India dating back to 1860. BNP Paribas
Assurance operates in 41 countries mainly through the bancassurance and partnership
model.

SBI Life Insurance’s mission is to emerge as the leading company offering a

comprehensive range of Life Insurance and pension products at competitive prices,
ensuring high standards of customer service and world class operating efficiency.

SBI Life has a unique multi-distribution model encompassing Bancassurance, Agency

and Group Corporate.

SBI Life extensively leverages the SBI Group as a platform for cross-selling insurance
products along with its numerous banking product packages such as housing loans and
personal loans. SBI’s access to over 100 million accounts across the country provides a
vibrant base for insurance penetration across every region and economic strata in the
country ensuring true financial inclusion.

26
 Agency Channel, comprising of the most productive force of more than 40,000 Insurance
Advisors, offers door to door insurance solution to customers.

RANK Apr-09 Apr-09 Apr-08 Apr-08

Apr-09 Apr-08 Company Amt Private Amt Private Total Growth
Rs In Crs Market Rs In Crs Market Share
Share Share Apr-09
1 3 SBI Life 4 60.26 30.92 1 71.91 11.22% 12.78% 167.74%
%
2 2 Bajaj Allianze 1 63.19 10.96 187.77 12.25% 4.53% -13.09%
%
3 6 Max New 1 45.18 9.75% 119.17 7.78% 4.03% 21.83%
York
4 1 ICICI 1 35.83 9.13% 3 44.78 22.50% 3.77% -60.60%
Prudential
5 4 Reliance 1 10.77 7.44% 1 57.92 10.31% 3.08% -29.86%
Life
6 5 HDFC 9 8.95 6.65% 1 20.39 7.86% 2.75% -17.81%
Standard
7 8 Birla 8 2.92 5.57% 9 1.95 6.00% 2.30% -9.82%
Sunlife
8 7 Tata AIG 4 9.24 3.31% 9 8.34 6.42% 1.37% -49.93%
9 0 Canara 4 5.90 3.08% - 0.00% 1.27% 0.00%
HSBC OBC
10 12 ING Vysya 3 7.76 2.54% 3 0.19 1.97% 1.05% 25.06%
Others 1 58.47 10.65 2 09.81 13.69% 4.40% -24.47%
%

In IRDA Industry Ranking for the month of April 09 SBI Life has been ranked No.1 Life

27
BALANCESHEET : SBI LIFE (AS ON 31ST MARCH)(RS. LAKH)
SBI LIFE
2008 2007 2006 2005 2004 2003 2002

SOURCES OF FUNDS
SHAREHOLDERS’ FUNDS:
Share Capital 100000 50000 42500 35000 17500 12500 12500
Advance Against Share Capital
Share Application Money Pending Allotment
Employees Stock Option Outstanding
Reserves And Surplus 473
Credit/[Debit] Fair Value Change Account 205 (936) 704 160 75 (11)
Sub-Total 100677 49064 43204 35160 17575 12489 12500

Borrowings
POLICYHOLDERS’ FUNDS:
Credit/[Debit] Fair Value Change Account 547 (2079) 3146 299 239 0
Revaluation Reserve-Investment Property
Policy Liabilities 371157 241359 139128 72673 26079 8466 1436
Insurance Reserves
Provision For Linked Liabilities 528530 174954 24398 210
Sub-Total 900233 414234 166671 73181 26318 8466 1436
Deferred Tax Liability
Funds For Future Appropriations 77
TOTAL 1000988 463298 209875 108341 43893 20955 13936
APPLICATION OF FUNDS
Investments
Shareholders’ 100586 59152 44075 33837 14806 10851 10934
Policyholders’ 385751 231806 136133 70219 23116 7230 462
Assets Held To Cover Linked Liabilities 528530 174954 24398 210
Loans
Fixed Assets 4488 3789 2885 1580 690 412 141
Incidental Expenses Pending Capitalisation
Deferred Tax Asset
A. CURRENT ASSETS
Cash And Bank Balances 11690 15042 9768 5588 5072 844 652

28
Advances And Other Assets 16743 14836 11950 5304 2580 2067 2301
Sub-Total (A) 28433 29878 21718 10892 7653 2911 2953
B. CURRENT LIABILITIES 44286 39097 22587 11934 4766 1205 564
Provisions 2514 150 95 13 6 5 1
Sub-Total (B) 46801 39247 22683 11947 4772 1209 565
NET CURRENT ASSETS (C) = (A – B) (18368) (9369) (965) (1055) 2881 1701 2388
MISCELLANEOUS EXPENDITURE (To The Extent Not
Written Off Or Adjusted)
Debit Balance In Profit & Loss Account (Shareholders’ 2966 3349 3550 2400 760 11
Account)
Debit Balance In Policyholders’ A/C
TOTAL 1000988 463297 209875 108341 43893 20955 13936

7.2 Products of SBI Life:

INDIVIDUAL PRODUCTS:

1. SBI Life Smart ULIP

2. SBI Life Plus Child
3. SBI Life Unit Plus II Pension
4. SBI Life Horizon II Pension
5. SBI Life Unit Plus Elite
6. SBI Life Horizon Plus Elite
7. SBI Life Unit Plus Elite
8. SBI Life Maha Anand

GROUP PRODUCTS:
9. Dhanaraksha Plus LPPL (Limited Premium Payment)

TRADITIONAL PRODUCTS:
10. SBI Life Sudarshan
11. SBI Life Money Back
12. SBI Life Scholar II
13. SBI Life Long Pensions
13. SBI Life SHield

29
7.3 Operation work of SBI Life Insurance Company

In SBI Life Insurance Company, development of insurance products, distribution,

planning services products and claims are taken care by head office. Back office
providers are those persons who take care of the operational part of the organization and
front office providers are the people who brings sell to the organization.

Back office has its own hierarchy which is connected to head office, and every policy has
to be processed to head office. Unit for the operations is known as processing centre, and
processing centre within the city is known as mini processing centre.

Proposal forms come through front office and the verification of the proposal is done by
manually which is known as scrutiny. After scrutiny the operational staff enters it in SBI
Life website, which is done online. The entry of proposal is done in a sequential order
starting with scrutiny, inwards, proposal wise inwards, cashier entry, cashier entry
approval, data entry and finally outwards. After finishing all these operations policy
issues from the head office of the state.

30
 NB WORK FLOW – FROM PROPOSAL TO POLICY

Scrutinize and Lodge the

Cashier the Inward the Proposal MPC to Send it to
Procure Business Acknowledge the instruments in
instrument with Instrument PC
(1) proposal Bank
(3) (6) (12)
(2) (4)

If found , write
Get Customer -id customer -id on Fulfill Inward at PC
Identify
through SUC proposal . Else , requirements, (13)
Requirements
calculator write as ‘Fresh wherever possible
(10)
(7) Customer’ (11)
(8)

Raise full
Any Print new rating Scan the proposal
Requirements Yes
Requirements ? sheet and check (5)
(17)
(16)

No
Data entry and Approval Calculate SUC .
Receive and – Add for new, update for Check if proposal
update existing proposals – By is marked as
No
Requirements Vendors ‘Fresh Customer’
(18) Update Underwrite (15) (14)
requirements and through BBU
proposal (19)

Send Proposal
papers to CPC
Inward at CPC
through outward
(21)
Ok for given Scan the module
Yes (20)
Proposal ? documents

Print proposal
To be copy from
No
underwritten? scanned image
(22)

Yes
Policy Issuance
Process Yes
(25) Check whether
Yes
Dispatch the trf to Indigo
Policy Document
to Customer
Attach copy of through Outward No
proposal (29)
(26) Underwrite Transfer the data
manually at CPC to Indigo
(24) (23)
Send proposals
Policy Printing for storage
Process
(27)
Yes Proposal
Accepted ?
Policy Checking Declined /
Generate MIS
Process Postpone Process
(30) No
(28) (31)
No
Further
Requirements ?

Scrutiny Process - Check List

1. Check whether all documents are available
2. Check whether all documents are properly filled
3. Check whether premium calculation and instrument
amount matches
4. Do SUC calculation process and find out the
requirements

31
(Numbers in brackets indicate the activity in the flow chart)
• Business Procurement Process (1)
• Scrutiny Process and acknowledgement of proposal (2)
• Cashiering Process (3)
• Banking Process (4)
• Scanning Process (5)
• Inward (6, 13, 21)
• SUC Calculator (7, 8, 14)
• Requirement Process (10,11,17, 18)
• Outward (12, 20, 29)
• Proposal Data Entry Process (15)
• Rating Sheet (16)
• Express Underwriting Process (19)
• Photo Copying (22,26)
• Data Transfer to Indigo(23)
• Manual Underwriting at CPC(24)
• Policy Issuance Process(25)
• Policy Printing Process(27)
• Policy Checking Process(28)
• MIS(30)
• Declined / Postpone Process(31)

32
 8. Competitors of SBI Life Insurance Co. Ltd

ICICI prudential:

ICICI prudential is a joint venture of ICICI bank and prudential plc a leading financial
service group in the UK. ICICI Bank holds stake of 74% and Prudential plc hold 26%.
ICICI begin their operations in December 2000 after receiving approval from IRDA.
ICICI prudential is having over 1000 offices, over 270000 advisors and 21 bancassurance
partners. ICICI Prudential was the first life insurer in India to receive a National Insurer
Financial Strength rating of AAA from Fitch ratings. ICICI prudential is working on the
base of five core values:

• Integrity
• Customer first
• Boundary less
• Ownership
• Passion

Key Features:
• Understanding the needs of customers and offering them superior products and
service.
• Leveraging technology to service customers quickly, efficiently and conveniently.
• Developing and implementing superior risk management and investment
strategies to offer sustainable and stable returns to policyholders.

33
 • Providing an enabling environment to faster growth and learning for employee

HDFC Standard Life Insurance Co.:

HDFC Standard Life insurance Company Ltd. is one of India’s leading private insurance
companies. It is a joint venture of Housing Development Finance Corporation Limited,
India’s leading housing finance institution and a Group Company of the Standard Life in
UK. HDFC is having 1000 advisor in 11 towns.

Key Features:
• Creating corporate agents through HDFC bank in India.
• Creating agents to provide total financial consultancy.
• Introducing low cost group schemes for companies and NGOs

34
BALANCESHEET : LIFE INSURERS (AS ON 31ST MARCH)(RS. LAKH)
HDFC STD
2008 2007 2006 2005 2004 2003 2002 2001

SOURCES OF FUNDS
SHAREHOLDERS’ FUNDS:
Share Capital 127064 80071 61927 31909 25441 21673 16618 16618
Advance Against Share Capital 2874
Share Application Money Pending Allotment

Employees Stock Option Outstanding

Reserves And Surplus 5529 659 659 25
Credit/[Debit] Fair Value Change Account 39 731 36 29 (78)
Sub-Total 132631 83604 63317 31945 25469 21594 16643 16618

Borrowings
POLICYHOLDERS’ FUNDS:
Credit/[Debit] Fair Value Change Account 1937 912 2096 1750 344
Revaluation Reserve-Investment Property
Policy Liabilities 243667 173915 114880 63774 33364 14375
Insurance Reserves 2789 99
Provision For Linked Liabilities 594516 285168 119361 19183 1655
Sub-Total 840121 459995 236337 84707 35363 14375 2789 99
Deferred Tax Liability
Funds For Future Appropriations 2470 595 255 26 321 48
TOTAL 975222 544195 299909 116651 60833 35995 19753 16765
APPLICATION OF FUNDS
Investments
Shareholders’ 42131 15297 13809 9843 6395 8800 9731 11980
Policyholders’ 232990 177829 116950 60879 33995 13104 3016 141
Assets Held To Cover Linked Liabilities 594516 285168 119361 19183 1655
Loans 186 126 294 120 58 65 67
Fixed Assets 13318 7361 6013 7318 5028 4234 3368 279
Incidental Expenses Pending Capitalisation
Deferred Tax Asset
A. CURRENT ASSETS
Cash And Bank Balances 44932 33636 28796 7335 5826 3726 1452 4460
Advances And Other Assets 40825 19620 9901 4095 2344 1639 993 711
Sub-Total (A) 85757 53255 38697 11430 8170 5365 2445 5171
B. CURRENT LIABILITIES 61291 38747 26586 10696 4094 2946 1495 941
Provisions 1220 308 287 207 183 92 23
Sub-Total (B) 62512 39055 26873 10904 4277 3038 1518 941
NET CURRENT ASSETS (C) = (A – B) 23246 14200 11824 527 3893 2327 927 4230
MISCELLANEOUS EXPENDITURE (To The Extent Not
Written Off Or Adjusted)
Debit Balance In Profit & Loss Account (Shareholders’ 68835 44214 31658 18782 9808 7465 2644 135
Account)
Debit Balance In Policyholders’ A/C
TOTAL 975222 544195 299909 116651 60833 35995 19753 16765

35
Aviva Life Insurance India:

Aviva Life Insurance India is a private insurance company formed from a collaboration
between the Aviva insurance group of UK and the Dabur group, one of India’s oldest and
top producer of traditional health care products. Aviva’s products are meant to provide
customers flexibility, transparency and value for money.

Aviva insurance group in UK with a history dating back to 1696, today stands as one of
the leading provider of life and pension products to Europe and other parts of the world.
The history of Aviva Life Insurance India starts at 1834 during nationalization when
Aviva was the largest foreign insurance group in terms of the compensation paid by the
Indian Government. In 1995 Aviva was the first foreign insurance company to start its
representative office in India. At present in Aviva Life Insurance India, the Aviva
group is a 26% share holder and the Dabur group holds 74% shares in the joint venture.
\

• Aviva Life Insurance India has 40 Branches in India, including rural branches
supporting its distribution network. With over 27,000 Financial Planning
Advisers (FPAs) and the Financial Health Check (FHC) programme it has been
successful in setting up its position in the Indian market. The FHC is a free
service administered by the FPAs which analyses the customer's long-term
savings and insurance needs and depending on the life stage and earnings of the
customer it selects the proper insurance product for them.
• Aviva Life Insurance India initiated the concept of Bancassurance in India and
at present it has Bancassurance tie-ups with ABN Amro Bank, American
Express Bank, Canara Bank, Centurion Bank of Punjab, The Lakshmi Vilas Bank
Ltd. and Punjab & Sind Bank, 11 Co-operative Banks in Gujarat, Rajasthan,
Jammu & Kashmir, Bihar, West Bengal, Andhra Pradesh and Maharashtra and

36
 one regional Bank in Sikkim. This has helped to distribute Aviva products in
nearly 378 towns and cities across India.
• Aviva Life Insurance India offers more modern Unit Linked and Unitized
With Profit money products to the customers. Following the IRDA guidelines,
with effect from 1 July 2006, these unit - linked products have been modified.

37
BALANCESHEET : LIFE INSURERS (AS ON 31ST MARCH)(RS. LAKH)
AVIVA
2008 2007 2006 2005 2004 2003

SOURCES OF FUNDS
SHAREHOLDERS’ FUNDS:
Share Capital 100450 75820 45870 31980 24280 15480
Advance Against Share Capital
Share Application Money Pending Allotment

Employees Stock Option Outstanding

Reserves And Surplus
Credit/[Debit] Fair Value Change Account 5 2
Sub-Total 100450 75820 45870 31980 24285 15482

Borrowings
POLICYHOLDERS’ FUNDS:
Credit/[Debit] Fair Value Change Account 122 57 1
Revaluation Reserve-Investment Property
Policy Liabilities 4343 3701 1537 813 187 5
Insurance Reserves
Provision For Linked Liabilities 246493 131861 65406 21026 5009 830
Sub-Total 250837 135562 66943 21961 5254 836
Deferred Tax Liability
Funds For Future Appropriations 4837 2290 1707
TOTAL 356124 213672 114520 53941 29539 16317
APPLICATION OF FUNDS
Investments
Shareholders’ 25348 26249 18458 10614 12656 10984
Policyholders’ 9621 5460 1542 813 187 21
Assets Held To Cover Linked Liabilities 247963 132557 67111 21070 5066 1438
Loans
Fixed Assets 5441 2383 1232 1177 1042 637
Incidental Expenses Pending Capitalisation
Deferred Tax Asset
A. CURRENT ASSETS
Cash And Bank Balances 17567 15183 7762 5202 2128 531
Advances And Other Assets 14573 5405 1418 1591 870 577
Sub-Total (A) 32140 20588 9180 6792 2998 1108
B. CURRENT LIABILITIES 29762 19058 15871 5308 2197 1257
Provisions 1376 1007 458 156 55 36
Sub-Total (B) 31138 20065 16329 5465 2252 1293
NET CURRENT ASSETS (C) = (A – B) 1002 523 (7149) 1328 746 (185)
MISCELLANEOUS EXPENDITURE (To The Extent Not
Written Off Or Adjusted)
Debit Balance In Profit & Loss Account (Shareholders’ 66749 46501 33325 18939 9842 3422
Account)
Debit Balance In Policyholders’ A/C
TOTAL 356124 213672 114520 53941 29539 16317

38
Bajaj Allianz Life Insurance Co. Ltd.

Bajaj Allianz Life Insurance Co. Ltd. is a joint venture between Allianz SE, one of the
world's largest insurance companies, and Bajaj Finserv. Allianz SE is a leading insurance
corporation globally and one of the largest asset managers in the world, that manage
assets worth over a Trillion. With over 115 years of financial experience, Allianz SE is
present in over 70 countries around the world. Bajaj Allianz is into both life insurance
and general insurance. Today, Bajaj Allianz is one of India's leading and fastest growing
insurance companies. Currently, it has presence in more than 550 locations with over
60,000 Insurance Consultants.

In June 2008, Bajaj Allianz entered into partnership with Thomas Cook India to provide
travel finance. Bajaj Allianz Life Insurance ensures excellent insurance and investment
solutions by offering customized products, supported by the best technology.

39
40
BALANCESHEET : LIFE INSURERS (AS ON 31ST MARCH)(RS. LAKH)
BAJAJ ALLIANZ
2008 2007 2006 2005 2004 2003 2002

SOURCES OF FUNDS
SHAREHOLDERS’ FUNDS:
Share Capital 15071 15037 15023 14976 14943 14908 14872
Advance Against Share Capital
Share Application Money Pending Allotment 9867 4933

Employees Stock Option Outstanding

Reserves And Surplus 105996 55016 34953 11766
Credit/[Debit] Fair Value Change Account 1 1 7 (1)
Sub-Total 121067 70054 49984 26742 24809 19841 14872

Borrowings
POLICYHOLDERS’ FUNDS:
Credit/[Debit] Fair Value Change Account 995 154 130 70
Revaluation Reserve-Investment Property
Policy Liabilities 106290 67129 40430 21308 7687 3090 341
Insurance Reserves
Provision For Linked Liabilities 1095417 518684 256932 55350 2856
Sub-Total 1202702 585968 297492 76727 10543 3090 341
Deferred Tax Liability
Funds For Future Appropriations 39098 20297 6823 641 904 411 16
TOTAL 1362868 676319 354299 104110 36256 23342 15229
APPLICATION OF FUNDS
Investments
Shareholders’ 114589 65365 27809 16370 14076 12879 10985
Policyholders’ 146870 90508 47661 22018 8591 3501 357
Assets Held To Cover Linked Liabilities 1095417 518684 256932 55350 2856
Loans 309 186 34 10 5 1
Fixed Assets 10907 5357 3646 3071 3112 2448 1939
Incidental Expenses Pending Capitalisation
Deferred Tax Asset
A. CURRENT ASSETS
Cash And Bank Balances 37853 41980 29585 8473 4400 1473 737
Advances And Other Assets 13101 8545 7629 4008 2329 1551 1295
Sub-Total (A) 50953 50525 37214 12481 6729 3024 2032
B. CURRENT LIABILITIES 102982 80930 38905 15611 5895 2729 1647
Provisions 2185 977 524 155 119 0 1
Sub-Total (B) 105167 81908 39429 15766 6014 2729 1648
NET CURRENT ASSETS (C) = (A – B) (54214) (31383) (2215) (3285) 715 295 384
MISCELLANEOUS EXPENDITURE (To The Extent Not
Written Off Or Adjusted)

Debit Balance In Profit & Loss Account (Shareholders’ 48990 27601 20431 10577 6901 4220 1564
Account)

Debit Balance In Policyholders’ A/C

TOTAL 1362868 676319 354299 104110 36256 23342 15229
Note: Figure in bracket represents negative value

41
 9. POLICY CLAIMS

9.1 Introduction:

“The real service of insurance is at the time of payment of the claim.”

The operative clause of a life insurance policy states that the insurer will pay to the policy
holder or nominee or such other person as may have a right to it, certain sums of money
on the happening of specified events. When such events happen, the insurer has to fulfill
the promise of making the payments.

A demand on the insurer to fulfill its promise, as per the terms and
conditions of the policy, is called a ‘Claim’.

Claims may arise because of:

• Survival up to the end of policy term, which is the date of maturity, this is known
as Maturity Claims

• Survival up to a specified period during the term, known as Survival Benefits.

• Death of the life assured during the term, known as DEATH CLAIMS.

42
Maturity Claims:
A maturity claim is payable as per the terms of the contract, at the end of the term of
policy, if the life assured lives up to that date. It includes the Sum Assured and any other
guaranteed addition s plus vested bonuses. Any debt or charge under the policy, like
loans, outstanding premia (due but not paid), etc. will be deducted. If the policy remains
paid up (automatically or on request), the paid up value, which will include the vested
bonus as on that date, will be the claim amount.

Survival Benefits:
The Money Back type plans promise payment of part of the Sum Assured at intervals,
during the term of the policy. As in the case of maturity claims, the specified amounts are
paid on the due dates, after deduction of the outstanding loan interest, outstanding
premium, X charge, etc. on receipt of the discharge voucher duly stamped, signed and
witnessed.

Death Claims:
Death claims are classified into two categories:
• Early claims
• Non early claims

Claims arising within three years of the date of commencement or revival reinstatement,
are termed as ‘Early death Claims’ or ‘Premature death claims’. Claims arising more than
two years after the date of risk/revival/reinstatement are non-early claim.

Early claims are looked upon with some suspicious and processed
differently.

In case of non early claims, the normal requirements would be:

43
 • The policy document, together with any deeds of assignment

• Claimant’s statement giving the details of the cause of death, nature of last illness,
treatment, burial or cremation, etc.

• Certified extract from death register maintained by the Municipality, the local
board or any other competent authority

• Proof of title of claimant.

If the duration of the policy at the time of death is more than 3 years and the title of
claimant is clear, the discharge voucher may be sent along with the call for requirements.

This is done to expedite settlement, although strictly, the discharge voucher cannot be
prepared without satisfaction that the reported death is indeed the death of the life
assured.

Early Claims:

It is assumed that a person, who is accepted by the underwriter as good for life insurance,
is not likely to die within 2 years.

Enquiries are made to confirm, that there was no suppression of information at the time
of proposal. This is done both to ensure genuineness of the claim and to safeguard the
interest of the community of the policyholders.

44
Additional Requirements in case of early claims:

• Statement from the last medical attendant giving details of last illness, previous
history and treatment.
• Statement from the hospital, in case the deceased life assured had received
hospital treatment.
• If death was due to accident or unnatural causes, certified copies of post-mortem
report, police inquest report, panchnama report and magistrate’s/coroner’s
verdict.
• Details of cremation or burial, place, time, witness, etc.
• Statement from the employer about the leave, if any, taken by the life assured on
ground of sickness.

Presumption of Death:

Sometimes a person is reported missing without any information about his whereabouts.
The Indian Evidence Act provides, for presumption of death in case a person has not
been heard of, for 7 years.

If a nominee or assignee or legal heir contends that the life assured must be presumed to
be dead, it would be prudent to ask for a decree from the competent court that the assured
should be presumed dead. It is necessary that premiums are paid till date of the decree
presuming death of the life assured.

45
9.2 Claims management

Claims philosophy

The claims philosophy should be clearly documented and communicated within the
syndicate, and reflected in the management and organisation.

Resources, skills and management controls

Managing agents should have appropriate claims resources, skills and management
controls in each line of business they propose to write.

Claims processes

Claims should be adjusted and processed in an efficient and timely manner.

Documentation

The handling of a claim should be appropriately documented and information relevant to

the management of the claim retained for a reasonable period.

Claim reserving

Claim reserving should be undertaken with the goal of a consistent, timely and accurate
result.

Management of external service providers

Disciplined procurement and pro-active management procedures should be employed in

the selection and use of third parties.

46
Performance measurement

Measurement of claims management performance and capabilities should be appropriate

and regular.

Claims agreement for subscription business

For subscription business there should be an effective claims agreement process to

protect the interests of followers, supported by the full co-operation of lead underwriters.

Important information regarding the application of these

standards

Important information relevant to the claims management standards

47
9.3 Process of Claims Settlement:

9.3(a) Process of claim settlement at SBI Life:

Process Flow- Chart at Processing centre

SBI Life’s Claims Policy:

• All genuine claims are paid accurately and within the stipulated time

• Using technological innovations to improve upon the claims management

processes.

• Establishment of effective Grievance Redressal Mechanism.

• Employees take up ownership of processes and internalize the quality

management system

• Fraudulent claims are detected in real time to minimize damage caused by such
claims.

48
Walk in customer Claim Intimation Mails by Poast

Initial Scrutiny
Receive documents and put

Provide Feedback
On scrutinizing the documents, aid customer in filling the forms.

MIS Updating
Update excel sheet as well as claims register with AWB No.

SEN REQUIREMENT LETTER

Forward To CPC
Issue a letter for basic requirement
Send the entire set to CPC by EOD for
along with Claim Form.
processing

Claims Requirement
Check for the requirement raised by CPC on the claim from Zonal MIS updated in
Myspace

Follow-Up Pending Cases

All pending cases can checked in the MIS uploaded in Myspace and followed-up
accordingly

Branch Intimation Register

End of each month a Branch Intimation Register sent to CPC containing all claims
intimidated at PC/MPC.

UPDATION OF MIS
If MIS at My Space shows Paid or Repudiated, then the status is updated in the Claim
Register with PC.

49
 9.3(b) Process of Claims Settlement at other Companies:

ICICI Prudentials:

Claim intimation/ notification form:

The claimant can get a claim intimation/ notification form from the nearest local branch
office of the insurance company or their insurance advisors /agents. Some insurance
companies also provide the facility of downloading the form from their websites.The
claimant must submit the written intimation as soon as possible to enable the insurance
company to initiate claim processing. The claim intimation should consist of basic
information such as policy number, name of the insured, date of death, cause of death,
place of death and name of the claimant.

Documents required for claim processing:

The claimant will be required to provide a claimant's statement, original policy

document, death certificate, police FIR and post-mortem examination report (for
accidental death), certificate and records from the treating doctor/ hospital (for death due
to illness) and advance discharge form for claim processing. Based on the sum at risk,
cause of death and policy duration, insurance companies may also request some
additional documents.

Submission of required documents for claim processing:

For faster claim processing, it is essential that the claimant submits complete
documentation as early as possible since a life insurance company will not be able to take
a decision until all the requirements are complete. Once all relevant documents, records
and forms have been submitted, the life insurer can take a decision about the claim.

50
Settlement of claim:

As per guidelines of the Insurance Regulatory and Development Authority (Irda), the
insurance company is required to settle a claim within 30 days of receipt of all
documents. However, the insurance company can set a practice of settling the claim even
earlier. Further, as per the IRDA, if the claim requires further verification, the insurance
company has to complete its procedures within six months of the date of receiving the
written intimation of claim.

Usually, the claimant is the nominee as appointed by the insured at the time of taking
policy or subsequently, but before, the occurrence of death claim. At times, the proposer
of the policy is different than the life assured. In such cases, the proposer receives the
claim settlement proceeds.

In case there is no nomination or the nominee is not alive, it becomes an 'Open Title'
situation. The life insurance company would then require the proof of title/ succession
certificate issued by a competent court. The claim would be paid to the person specified
in the proof. It is very important that the policyholder should provide nomination. It saves
the heirs, the inconvenience of time consuming court procedures at a claim stage. It is
important that premium payments are made regularly so that the insurance policy does
not lapse and the cover remains in force, thereby securing the family against any
eventuality.

51
Birla Sun Life Insurance Company:

In case of unfortunate event of death of the Life Insured the following standard
requirements need to be submitted:

• Death certificate issued by Municipal Authority in specified format.

• Original policy document

• Claimant's Statement

• In case the death has taken place outside India, the Claimant is also required to
submit 'Death Abroad Questionnaire'

• Discharge form

• Legal evidence of title where there is no nomination, assignment or the policy has
not been issued under Married Women's Property Act.

The Company may in certain conditions call for additional requirements as warranted.

Birla Sun Life Insurance may also have an investigation made into the bonafides of any
claim where it is considered necessary.

52
II. Unnatural Death Claim

If a death of the LA is for any reason other than natural or due to illness, it is termed as
unnatural death claim. In such cases, the following additional documents need to be
submitted.

• First Information Report

• Post - Mortem Report
• Police Inquest Report
• Panchnama Report

In case of death due to accident, the above documents would be a necessity. News papers
cuttings (if any) may be submitted.

*NOTE: Attestation of all the above documents by Branch Head/ Relationship Manager.

53
RELIANCE Life Insurance Company:

Documents required for Death Claims:

• Claims form A: This form is filled by the nominee or claimant.

• Claims form B: certificate of last illness to be filled, signed stamped by the doctor
in attendance during the last illness of the deceased life assured.
• Original Policy Documents.
• Original Death Certificate by Death and Birth Registrar.
• Death Certificate by the doctor confirming cause of death.
• Nominee photo identification card copy attested by Insurance Company Official.
• All Hospital reports, if hospitalized during the last sickness.
• Post Mortem Report and Viscera Report, if performed.

In case of Accident or Suicide:

• Claim form C: Certificate of Identity, along with Claim forms A and B.

• First Information Report and final Police Investigation Report.
• News Paper cutting on the accident, if available.

54
Bajaj Allianz Life Insurance Co.

When the death claim intimation is received from the claimant, the claims department has
to satisfy about certain requirements like

1. Whether the policy number pertains to its office i.e. whether their office issued
the policy.

2. If the policy is in full force as on the date of death or in a lapsed condition. If the
policy is in lapsed condition then the company does not have the liability to pay
any claim.

3. Who has intimidated the death, whether it’s the nominee, a near relative, also the
place, time and cause have to be clearly known to the company.

4. Whether claim time is barred. There is a two year limitation on the policy claim
from the time it is due. Incase the claim becomes time barred, there is no liability
attached to the company.

5. Investigation where it is found necessary by the company may take place to avoid
fraud.

6. The cause of death should be clearly ascertained. If it is due to natural cause and
the death occurred within two years of the date of the first premium receipt, early
claim investigation is necessary in order to ascertain whether there was
suppression or non-disclosure of material facts. In such a case, the liability stands
repudiated on account of non-disclosure/suppression of material facts.

55
 7. If the death is unnatural, copies of FIR, police reports and court documents may
be necessary depending on the case. If it is an accidental case also, there has to be
a careful examination of the case. If the death has been caused by intoxicating
liquors, drugs etc. chemical analyzer’s report will have to be insisted upon. If all
the requirements are satisfied and nothing is found be fraudulent, the company
can proceed further with the settlement.

8. Murder of the policy holder has to be dealt carefully. Whether it was long
standing enmity which resulted in murder. It cannot be treated as unnatural death
but viewed as an accident. In self provoked murder there is no double accident
benefit. Hence extra care is to be taken.

9. If a person is missing then a decree of court is to be obtained on or before the date

of maturity. Status of the policy will be as on the date of the court order drawing
the presumption of death. Claimant should approach the insurance company with
the courts decree. Hence where the policy holders’ body is found on the road,
railway track etc. payment of double accidental benefit cannot be considered
unless accidental death can be proved.

The claim is settled in this order:

Request made by the branch to HO  Head office verifies the

documents  approval given to branch  sanctioned  cheque
handed over to the concerned claimant.

The above is a computerized methodology and time to time events are updated by the
concerned authority.

56
It takes normally one month for the claim to be settled from the time of intimation. The
claim amount is sanctioned by the head office (Pune) and the cheque is sent to the
respective branch, where the customer service executive calls the customer by phone

HDFC Standard Life Insurance Co. Ltd.

• The claimant can intimate the company at any branch about the death claim
through an intimation letter. Alternatively, he could fill in the death claim
statement or critical illness disability claim information form. The intimation
should ideally contain policy no./ name of the life assured, cause and place of
death./ diagnosis/ disability. For a death claim the intimation should be done
along with the death certificate issued by the Municipal Corporation and original
policy document. For critical illness and disability claim the intimation should be
done along with the copies of available medical records.

• The company on receiving the intimation leter shall send a letter to the claimant.
This letter will give the information that what all documents are required to
process the claim and the relevant claim forms will be enclosed with this claim
form.

• Ideally the requirements should be submitted to the branch within 30 days from
the receipt of letter.

• All forms should be duly completed and signed by respective claimants and
officials.

DOCUMENTATION

This has been divided into three categories.

For death claims under Pension plan/ savings assurance plan.

1. Death claim form

2. Original policy document
3. A copy of death certificate issued by Municipal Corporation.

For death claims for products apart from which were mentioned above:

Natural Death claims

1. Death claim form

2. Original policy document
3. A copy of death certificate issued by Municipal Corporation

57
 4. A copy of medical certificate cause of death.
5. A copy of post mortem report if carried out.
6. A copy of cremation or burial certificate.
7. Legal evidence of title in case there is no nominee.
8. A copy of FIR, Inquest report and final investigation report attested by police
authorities.
9. A coy of post mortems report and chemical analysis (attested by hospital
authorities)
10. A copy of valid driving license of the deceased.

The list of documents may vary from case to case

A copy of identification proof, residence proof of the beneficiary and the death certificate
needs to be verified in original receipt of claim documents and copies of these have to be
sent for processing.

The discharge voucher is revised to contain additional details of identification and bank
details

After the death claim cheque has to be handed personally to the beneficiary without delay
after proper identification

Once the decision to accept the claim is taken, the company will send the discharge
voucher to the claimant. The claimant should it return it within seven days t the branch
duly filled and signed

The company on receiving the discharge voucher issues the claims cheque. The
claimant can collect the same from the branch office. He must carry a photo identity
proof for verification purpose.

58
9.4 Analysis of the data given by SBI Life

As the data provided by the organization is only for the Bihar and Jharkhand, the analysis
report is strictly for these two states.

The data has been provided for both individual claims and group claims.

The analysis has been done separately for individual claims and group claims.

First the Number of Policy issued in a year has been compared with the claims arisen in
that particular year.
This has been done for both Individual as well as Group Products.

Further the claims have been analysed on different basis, like age, duration of the policy,
sum assured and channels.

59
New Business Vs Claims:

Individual Claims:

2007-08 2008-09

NOP: 38238 NOP: 50563

No. of Claims: 137 No. of Claims: 24

% Of Claims: 0.36% % Of Claims: 0.047

Here the table shows the percentage of claims to the NOP, i. e. Number of Policy issued
in the particular year.

60000

50000

40000

30000 2007-08

20000 2008-09

10000 2008-09
0
2007-08
NOP
No.of claims

60
From the chart above it can be clearly interpreted that the percentage of claims are very
less when compared to the Number of Policies issued.

100%
90%
80%
70%
60% 2008-09
50% 2007-08
40%
30%
20%
10%
0%
NOP No.of claims

Further the percentage of claims are compared for two years, and observed that
percentage of claims is higher in 2007-08.

The percentage death claim in year 2007-08 is 0.36% for individual business, which
means out of 10,000 insured lives 36 are dieing prematurely.

Where as in the year 2008-09 the same has gone down to 0.047%, meaning 4.7 lives are
dieing prematurely out of the 10,000 insured lives.

61
Group Claims:
2007-08 2008-09

NOP: 58892 NOP: 90926

No. Of Claims: 08 No. Of Claims: 06

% Of Claims: 0.0136% % Of Claims: 0.0066%

Here the table shows the percentage of claims to the NOP, i. e. Number of Policy issued
in the particular year.

100000
90000
80000
70000
60000
50000 2007-08
40000
30000 2008-09
20000
10000 2008-09
0 2007-08
NOP
No.of
claims

From the chart above it can be clearly interpreted that the percentage of claims are very
less when compared to the Number of Policy issued.

62
 100%
90%
80%
70%
60%
2008-09
50%
2007-08
40%
30%
20%
10%
0%
NOP No.of claims

Further the percentage of claims are compared for two years, and observed that
percentage of claims is higher in 2007-08.

As in individual business in group business too the incidence of premature death claims
have improved from 1.36 lives out of 10,000 to just 0.66 lives out of 10,000 insured lives.
The data shows consistency for both groups and individual claims. This states that either
the quality of lives insured has been more standard in the year 2008-09 as compared to
2007-08, or the underwriting standards have improved over the last one year.

It may be pointed out that the underwriting of only FMR cases has been delegated to PCs
from CPC from Jan 2008 onwards.

63
For individual claims:

Age wise categorization

0-17 18-30 31-40 41-50 51-60 60above

30 69 95 144 198 53

5% 0-17
9% 12%
18-30
31-40
34% 16% 41-50
51-60
24%
60above

• Here we can see that most of the claims falls in the age group of 51-60, followed
by the age group 41-50.

64
 • Total number of claims is 589, out of which 198 are from the age group 51-60.
• 33% claims are from age group 51-60.
• 24% claims are from age group 41-50.
• So more than 50% claims are from the age 40 above but below 60.

Reasons for these findings can be:

• Non medical cases.
• Quality lives are not being insured.
• The health conditions pertaining to these age group may not be good.
• The no. of claims are less in the age group 60 above, this is due to the several
safeguards while accepting a proposal.
• The other reason for so large number of claims may be due to the number of
proposal are high in the said age group.

0-17 81-30 31-40 41-50 51-60 60 above

Early Claims 28 64 87 122 172 51
Non Early
Claims 2 5 8 21 23 2

65
200
180 172

160
140 122
120
Early Claims
100 87
Non Early Claims
80 64
60 51

40 28 23
21
20 2 5 8 2
0
0-17 81-30 31-40 41-50 51-60 60
above

• Here the claims have been further categorized in early and non early claims.
• The bar- graph clearly shows that numbers of early claims are more than non
early claims in all the age groups.
• Non early claims are very minimal.

66
 100% 2 5 8 2
21 23
90%
80%
70%
60%
50% 51 Non Early Claims
28 64 87 172
122 Early Claims
40%
30%
20%
10%
0%
0-17 81-30 31-40 41-50 51-60 60 above

The above chart shows the percentage of early and non early claims in each age groups.
• In the age group 0-17 only 6.67 %of the claims are non early.
• 93.33% of the claims under age group 0-17 are early claims.
• In age group 18-30, 7.24% are non early and 92.75% of claims are early claims.
• In the age group 31-40, 8.42% claims are non early and 91.58% claims are early
claims.
• In age group 41-50 14.68% claims are non early, where as 85.31% claims are
early claims.
• In the age group 51-60, 11.79% of claims are non early, and 88.20% of claims are
early claims.
• In the age group 60 above only 3.77% of claims are non early claims and 96.22%
claims are early claims

67
Reasons for these findings can be:
• Non medical cases.
• Quality lives are not being insured.
• The health conditions pertaining to these age group may not be good.
• The no. of claims are less in the age group 60 above, this is due to the several
safeguards while accepting a proposal.
• The other reason for so large number of claims may be due to the number of
proposal are high in the said age group.
• Even in case of age group 60 above early claims are more which means no proper
safeguard has been taken during the issue of policy

68
Channel wise categorization:

Channel
Agency Bancassurance Corporate agent
409 180 15

2%
30%
Agency
Bancassurance
Corporate agent
68%

Here the pie chart depicts that most of the business is from the agency channel,which is
followed by the bancassurance and very few are business come from corporate agents.

69
 Agency % Bancassurance % Corporate Agent
Early Claims 362 89.16 161 90.44 15 100
Non Early 10.84 9.55
Claims 44 17 0 0

400
362
350

300

250
Early Claims
200
161 Non Early Claims
150

100
44
50 17 15
0
0
Agency Bancassurance Corporate Agent

Further the claims are categorised into early and non early claims.
From the graph above it is clear that that in all the channels early claims are much more
than non early claims.

70
 0
100% 44 17
90%
80%
70%
60%
15 Non Early Claims
50% 362 161
Early Claims
40%
30%
20%
10%
0%
Agency Bancassurance Corporate Agent

in the above diagram the percentage of early and non early claims are shown.

• In case of agency channel 89.16% of the claims are early claims, and only 10.84%
are non early claims.
• In bancassurance 90.44% of claims are early claims and 9.55% are non early
claims.
• In corporate agent channel all the claims are early claims.

Reasons for these findings can be:

• The main reason for 100% early claims in case of corporate agent is, the channel
has been newly started so if there’s any claim that will fall in the category of early
claims.
• The agency channel brings more business hence the number of claims will also be
large , but when we see the percentage of early claims of both agency and
bancassurance both are almost same, it shows that selection of life is adverse by
both the channels.

71
Sum Assured wise categorization:

Sum Assured
100001- 300001- 500001- 700000
Up To 1 lakh 300000 500000 700000 above
267 263 35 9 15

6% 2%3%
Up To 1 lakh
44% 100001-300000
300001-500000
500001-700000
45%
700000 above

The pie chart shows that the most of the claims arises for the smaller sum assured.

Most of the claims are for up to Rs.300000/-, it shows that SBI Life is selling small ticket
policy in Bihar and Jharkhand.

The other reason for lesser number of high sum assured claims are, that there are several
safeguards for higher sum assured.

72
 100001- 300001- 500001- 700000
Up To 1 lakh 300000 500000 700000 above
Early Claims 232 234 34 9 15
Non Early
Claims 34 25 1 0 0

250 232 234

200

150
Early Claims
Non Early Claims
100

50 34 34
25
9 15
1 0 0
0
Up To 1 100001- 300001- 500001- 700000
lakh 300000 500000 700000 above

Percentage Table

100001- 300001- 500001- 700000

Up To 1 lakh 300000 500000 700000 above
Early Claims 87.21 90.34 97.14 100 100
Non Early
Claims 12.78 9.65 2.85 0 0

73
 1 0 0
100% 25
34
90%
80%
70%
60%
50% 34 9 15
232 234 Non Early Claims
40% Early Claims
30%
20%
10%
0%
Up To 1 100001- 300001- 500001- 700000
lakh 300000 500000 700000 above

Here we can see that in all the group of sum assured percentage of early claims are very
high.

• In the case of sum assured up to Rs.1000000/- 87.21% claims are early claims,
and only 12.78% of claims are non early claims.
• In case of sum assured of Rs.100001-300000/- 90.34% of claims are early claims,
and 9.65% of the claims are non early.
• In the third group of sum assured, i.e., Rs.300001-500000/- 97.14% of claims are
early claims and 2.85% of claims are non early claims.
• In the group fourth and fifth i.e. above Rs.500000 all the claims are early claims.

74
For all the above factors as a whole we can see that numbers of early claims are more in
each group. The main reason behind this can be that the company has grown in a sizable
manner only after the year 2004, so whatever claims are arising they are mostly falling
under early claims.

But we cannot assume that the above said reason is the main cause of the large number of
early claims. The reason could be that the selection of lives is more unfavourable to the
company as the incidents of early claims are more for each groups categorized.

75
 Group Claims:
Age wise categorization:

Age
group 18-30 31-40 41-50 51-60 60 above
No. of
claims 34 53 193 188 4

1% 7%
11%
18-30
40% 31-40
41-50
51-60
60 above
41%

Here we can see in the pie chart in groups products most of the claims arises in the age
group 41-50, which is followed by age group 51-60.

18-30 31-40 41-50 51-60 60 above

Early Claims 29 38 140 149 4
Non Early
Claims 5 15 53 40 0

76
 160 149
140
140

120

100
Early Claims
80
Non Early Claims
60 53
38 40
40 29
15
20 5 4 0
0
18-30 31-40 41-50 51-60 60 above

• Further the claims has been categorised in early and non early claims.

• Here we can see that the numbers of early claims are more in every age group.

• The main reason for this is that SBI Life has grown in sizable manner only after
the year 2004, so if the claims arises they mostly fall in the category of early
claims.

77
 100% 0
5
90% 40
15 53
80%
70%
60%
4 Non Early Claims
50%
29 Early Claims
40% 149
38 140
30%
20%
10%
0%
18-30 31-40 41-50 51-60 60 above

In the above graph we can see that percentage of early claims are higher in each age
group.

Channe INSTITUTIONAL
l Bancassurance GroupCorporate ALLIANCE
No. of
Claims 455 2 29

78
 0% 6%
Bancassurance

GroupCorporate

INSTITUTIONAL
ALLIANCE
94%

It is clear from the pie chart that large number of business is done through the
bancassurance channel.
Few are done with the Institutional Alliance and just the nominal are done through Group
Corporate.

The main reason for this is that the channel has been newly introduced.

Group Institutional
Bancassurance Corporate Alliance
Early Claims 343 2 3
Non Early
Claims 112 2 0

79
400
343
350
300
250
Early Claims
200
Non Early Claims
150 112
100
50
2 2 3 0
0
Bancassurance Group Corporate Institutional
Allaince

• In the above graph only bancassurance channel is visible.

• In the other channels, i.e., Group Corporate and Institutional Alliance claims are
very less, this is due to the reason that the number of business is very less in these
two channels.

• The less numbers of policy leads to less number of claims, and this is due to the
reason that the channel has been newly introduced.

80
500
450
112
400
350
300
Non Early Claims
250
Early Claims
200 343
150
100
50
2 0
3
0
Bancassurance Group Corporate Institutional Allaince

• In the above graph the percentage of early and non early claims are are shown.

• It can be clearly observed that the percentages of early claims are higher in
bancassurance and Institutional Alliance, but in case of Group Corporate it is
equal.

81
 10. INFERENCES

While analyzing the data for the death claims of Bihar and Jharkhand, it was found that
most of the claims are EARLY CLAIMS.

The main reason for large number of early claims in all categories is that even though
SBI Life got registered in 2001, the company has grown in a sizable manner only after
the year 2004.

The high number of business comes through agency channel.

If we analyse the data sum assured wise, it is found that SBI Life, specially in Bihar and
Jharkhand mostly sells small ticket policies.

It has also been found out that quality life is not being insured in the region of Bihar and
Jharkhand by SBI Life.

82
 11. SUGGESTIONS:

Medical test should be compulsory from the age of 40.

As observed during the analysis most of the claims falls under the age group 41-50 and
51-60.
Above 60 cases are less, this is because the medical is compulsory.
Special scrutiny should be done if insuring lives of rural areas, and female lives.
INSURABLE INTEREST to be considered as major factor while issuing a policy.

83
 References:

• www.google.co.in
• www.irda.co.in
• www.onlinesbilife.com
• Insurance Plus Magazine
• e-bandhan celebrate life, a bimonthly in-house magazines of SBI Life Insurance
Co. Ltd.

84
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