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COMPARATIVE STUDY OF

BAJAJ-ALLIANZ
WITH LIC & ICICI PRUDENTIAL
PROJECT REPORT
2011

SUBMITTED BY

PUNEET GUPTA
In the partial fulfillment of the requirement of
Master of Business Administration (2010-2012)

T.JOHN BUSINESS SCHOOL


BANGALORE

ACKNOWLEDGEMENT
At the outset, I would like to express my deep sense of gratitude and sincere
thanks to Prof. S.K Nayak, Principal, T.JOHN Business School Bangalore,
for providing an opportunity to discover the corporate world, froma close
perspective.
Once again Prof. S.K Nayak, My Principal and internal guide for this project to
whom I am deeply grateful for his constant support and guidance without which
it would not have been possible for me to complete this project in time.
I take this opportunity to extend my sincere gratitude to Mr. Vishwamitra
Verma (Sales Manager), for giving me an opportunity to undertake internship
training and the project on the topic Organization Study.
I extend my sincere gratitude to Mr. Shyam Lal Pandey for his directions,
suggestions and information provided which were of utmost importance for the
successful completion of the project.
I convey my gratitude to all the staff members of Bajaj Allianz Life Insurance
Co. Ltd, for their kind co-operation and guidance through out my project.

INDEX
1

INTRODUCTION
History of Insurance

2
3

4
5
6
7
8
9
10

5
7

Types of Insurance

12

Overview of Life Insurance Sector in India

18

Indian Insurance Industry

21

IRDA

29

COMPANY PROFILES
Bajaj Allianz

35

Life Insurance Corporation of India

44

ICICI Prudential

50

COMPARATIVE STUDY

59

Market Share Analysis

60

Comparison on the Basis of Attributes

61

RESEARCH METHODOLOGY

71

ANALYSIS

75

FINDINGS

82

CONCLUSION

84

RECOMMENDATIONS

85

BIBLIOGRAPHY

87

INTRODUCTION

Insurance is a social device where uncertain risks of individuals may be


combined in a group and thus made more certain - small periodic
contributions by the individuals provide a found out of which those who

suffer losses may be reimbursed. In addition to being a means to protect


oneself, the insurance Industry is an efficient conduit for the saving of
people to be channeled towards economic growth. In India, the Insurance
Industry7 is more than 150 years old. Today, it is monopolized by two
PSU's in their respective fields of life and General Insurance. However,
with the successful passage IRDA Bill through both houses of parliament
in December 1999 the sector has been opened up to private players. This
will provided much. Needed impetus to the Industry and will improve the
quality of service and products and will also increase employment
opportunities. There are still some issues their need to be sorted out,
particularly with regard to the status of intermediaries as envisaged by
the Insurance Regulatory Authority.
Insurance is not necessarily an investment from which one expects to get
one's money back. Nor is it gambling. A gambler takes risks, while
insurance offers protection against risks that already exist. Insurance is a
way to share risk with others. Since ancient times, communities have
pooled some of their resources to help individuals who suffer loss.
"Insurance is a contract between two parties whereby one party called
insurer undertakes in exchange for a fixed sum called premiums, to pay

the other party called insured a fixed amount of money on the happening
of a certain event."
Insurance is a protection against financial loss arising on the happening
of an unexpected event. Insurance companies collect premiums to
provide for this protection. A loss is paid out of the premiums collected
from the insuring public and the Insurance Companies act as trustees to
the amount collected.
For example, in a Life Policy, by paying a premium to the Insurer, the
family of the insured person receives a fixed compensation on the death
of the insured. It is a system by which the losses suffered by a few are
spread over many, exposed to similar risks. Insurance is desired to
safeguard oneself and one's family against possible losses on account of
risks and perils. It provides financial compensation for the losses suffered
due to the happening of any unforeseen events. By taking life insurance a
person can have peace of mind and need not worry about the financial
consequences in case of any untimely death..

HISTORY OF INSURANCE

Insurance has been around since ancient times. The Babylonians and
Phoenicians had ocean marine insurance to protect a merchant against
losses incurred when a ship did not reach its intended destination with its
load of goods or did not return with payment. This form of insurance,
called respondent, evolved because the goods on board often were used
as collateral for a loan. The lender charged the borrower interest on the
loan and levied an additional sum, the premium, to cover the cost of the
respondent contract. If the ship reached its destination and returned, the
merchant received payment for the goods and in turn paid the
moneylender. If the ship failed to return, the debt was cancelled. This
system was profitable to lenders because many respondent contracts were
sold, and debts were paid more often than cancelled.
In ancient Rome, associations had a form of insurance for their members.
Each member made regular payments to the association in return for
coverage of funeral expenses or for assistance to family members who
were injured or ill.
Insurance also existed in 17th-century England, which was then one of
the world's principal maritime powers. Those seeking marine insurance
would post a list of their cargo and voyages in a London coffee house

owned by Edward Lloyd. Private investors would examine the list and
sign their name by the entries they were willing to guarantee for a fee.
These private investors were the first insurance underwriters, and the
coffee house became the world center of marine insurance. Today the
organization is known as Lloyds of London, and it brings together
individuals, most often working in syndicates, who write all types of
insurance.
Insurance in the modern form originated in the Mediterranean during 14th
century. The earliest references to insurance have been found in Babylonia,
the Greeks and the Romans. The use of insurance appeared in the account
of North Italian merchant banks who then dominated the international
trade in Europe at that time. Marine insurance is the oldest form of
insurance followed by life insurance and fire insurance. The patterns that
have been used in England followed in other countries also in these kinds
of insurance
The oldest and the earliest records of marine policy relates to a
Mediterranean voyage in 1347. In the year 1400, a book written by a
merchant of Florence, indicates premium rates charged for the shipments
by sea from London to Pisa.

The early developments of life insurance were closely linked with that of
marine insurance. The first insurers of life were the marine insurance
underwriters who started issuing life insurance policies on the life of
master and crew of the ship, and the merchants. The early insurance
contracts took the nature of policies for a short period only. The
underwriters issued annuities and pension for a fixed period or for life to
provide relief to widows on the death of their husbands. The first life
insurance policy was issued on June 18, 1583, on the life of William
Gibbons for a period of 12 months.
The history of life insurance in India dates back to 1818 when it was
conceived as a means to provide for English Widows. Interestingly in
those days a higher premium was charged for Indian lives than the nonIndian lives as Indian lives were considered more risky for coverage. The
Bombay Mutual Life Insurance Society started its business in 1870. It
was the first company to charge same premium for both Indian and nonIndian lives. The Oriental Assurance Company was established in 1880.
The first general insurance company- Tital Insurance Company Limited
was established in 1850. Till the end of nineteenth century insurance
business was almost entirely in the hands of overseas companies.

Insurance regulation formally began in India with the passing of the Life
Insurance Companies Act of 1912 and the Provident Fund Act of 1912.
Several frauds during 20's and 30's sullied insurance business in India.
By 1938 there were 176 insurance companies. The first comprehensive
legislation was introduced with the Insurance Act of 1938 that provided
strict State Control over insurance business. The insurance business grew
at a faster pace after independence. Indian companies strengthened their
hold on this business but despite the growth that was witnessed,
insurance remained an urban phenomenon.
The Government of India in 1956, brought together over 240 private life
insurers and provident societies under one nationalized monopoly
corporation and LIC was born. Nationalization was justified on the
grounds that it would create much needed funds for rapid
industrialization. This was in conformity with the Government's chosen
path of State- led planning and development.
The (non-life) insurance business, however, continued to thrive with the
private sector till 1972. Their operations were restricted to organized
trade and industry in large cities. The general insurance industry was
nationalized in 1972. With this, nearly 107 insurers were amalgamated

10

and grouped into four companies- National Insurance Company Ltd., The
New India Assurance Company Ltd., The Oriental Insurance Company
Ltd. and United India Insurance Company Ltd. These were subsidiaries
of the General Insurance Corporation of India (GIC).

TYPES OF INSURANCE
GENERAL INSURANCE:
The basis for general insurance is "transfer of risk".
This means that the insurer agrees to compensate you if you suffer a loss.
Without the insurance you would have to pay for that loss yourself.

11

Obviously this contract is made on the basis that the insurance company
calculates the risk that you, or the total number of people buying
insurance, will cost more in payouts than what is received in premiums.
This is determined by the use of statistics and the information you
disclose

on

your

application

for

insurance.

This includes:
HOME CONTENTS: It can either be "defined event" i.e. the policy
covers loss or damage from a list of "defined" events, e.g. storm or fire;
or "accidental loss or damage" i.e. all accidental loss with some
exclusions.
MOTOR VEHICLE: It can either be "comprehensive" i.e. it covers any
damage to your car as well as damage to the other car or another person's
property; "third party property" i.e. it covers damage caused by your car
to another person's property. This type of insurance will not cover you for
the cost of repairs to your own car; "third party fire and theft i.e. it covers
damage partly for damage caused by your car to another person's
property, and restricted cover for damage to your car cause by theft or
fire.

12

INCOME PROTECTION: With this type of insurance the insurer


agrees to pay you a specified amount of money, usually in monthly
payments, in the event that you become disabled and unable to work.
Along the same lines you can purchase "trauma insurance" to cover a
medical trauma such as a heart attack.
Also in the modern day world a number of utility specific insurance
policies are being launched by the various players in the insurance
market in an effort to stay one step ahead of their competitors. Hence to
make the Definition of General Insurance inclusive we can say that all
the policies which do not fall under Life Insurance category fall under the
General Insurance category.

LIFE INSURANCE:
Life insurance is insurance that will protect your family and/or specified
dependents in the event of the policy holders death. In general, it is an
essential component in planning for the future.
There are many options with coverage, depending on your situation. And
there are three main categories of life insurance: term life, universal life,
and whole life insurance.
Term life is the simplest and least expensive type of policy. It's pure

13

insurance with no cash value account. A term life policy has only one
function: to pay a specific lump sum to whomever you've designated,
upon a specific event, your death.
Whole life insurance provides permanent protection for your dependents
while building a cash value account. With this type of insurance, the
insurance company manages the policies various accounts.
Universal life insurance provides permanent protection for your
dependents and is more flexible than whole or variable life.

KINDS OF LIFE INSURANCE PRODUCTS


TERM LIFE INSURANCE:
Term life insurance is the easiest form of life insurance. It simply
provides insurance protection for a period of time and only pays a benefit
14

during that period. Since term life insurance has no cash value, the
amount of protection in this policy is equal to its death benefit. There are
three basic forms of term life insurance: level term, decreasing term, and
increasing term.
LEVEL TERM LIFE INSURANCE:
Level term life insurance provides an equal amount of protection for a
period of time. For example, an Rs 150,000 ten-year level term life
insurance policy pays out Rs 150,000 of coverage until the ten years are
over. At the end of the ten years this level term life insurance policy
would expire, and would pay out no benefits.
DECREASING TERM LIFE INSURANCE:
Decreasing term life insurance is a policy where the benefit amount
decreases gradually over the term of the protection. A 30 year Rs 200,000
decreasing term policy, for example, wound pays an Rs 200,000 benefit
at the beginning of the policy. This amount would gradually decline over
the 30-year term and would pay out Rs 0 at the end of the term.
INCREASING TERM LIFE INSURANCE:

15

Increasing term life insurance policies provide a payout benefit that


gradually increases at periodic intervals. These increase amounts are
usually a percentage of the original amount.. When changing the policy,
your premium term life insurance rates are based on either your current
age, or the age when you originally took out the policy. Depending on
how your policy is set up, you could be paying much lower interest rates
that you would have normally qualified for.

WHOLE LIFE INSURANCE:

Whole life insurance is a popular life insurance plan because it provides


permanent protection, provided premiums are paid. The advantages of
whole life insurance plans are cash values, maturity at age 100, and living
benefits. Also the policy's premiums and benefits remain constant
throughout the policy's life. Unlike term life insurance, which provides
only death protection, whole life insurance combines insurance
protection with savings benefit. The cash value of this type of insurance
builds over the life of the policy. This is because whole life insurance
plans are given a certain guaranteed interest rate. Another benefit of
whole life insurance policies is that they are designed to mature at the age

16

of 100. The premium rate for a whole life insurance is based on the
assumption that the insured would be paying premiums until the age of
100. This means that at age 100, the cash value of the policy has come to
the point when it equals the face amount of the policy. At this point the
policy has completely matured, no more premiums are owned, and the
policy is completely paid out to the policy owner.

UNIVERSAL LIFE INSURANCE:


Universal life insurance is a variation of whole and term life insurance,
with added flexibility and transparency. This added flexibility allows the
policy owner to determine the amount and frequency of premium
payments and to adjust the benefit payout amount up or down to reflect
changes in needs... Universal life insurance policies remain in force as
long as there enough cash value to pay the monthly mortality expenses,
regardless of whether or not the policy owner pays the premium.

OVERVIEW OF THE LIFE INSURANCE SECTOR IN


INDIA

17

With largest number of life insurance policies in force in the world,


Insurance happens to be a mega opportunity in India. Its a business
growing at the rate of 15-20 per cent annually and presently is of the
order of Rs 450 billion. Together with banking services, it adds about 7
per cent to the countrys GDP. Gross premium collection is nearly 2 per
cent of GDP and funds available with LIC for investments are 8 per cent
of GDP.Yet, nearly 80 per cent of Indian population is without life
insurance cover, health insurance and non-life insurance continue to be
below international standards. And this part of the population is also
subject to weak social security and pension systems with hardly any old
age income security. This is an indicator that growth potential for the
insurance sector is immense. A well-developed and evolved insurance
sector is needed for economic development as it provides long term funds
for infrastructure development and at the same time strengthens the risk
taking ability. It is estimated that over the next ten years India would
require investments of the order of one trillion US dollars. The Insurance
sector, to some extent, can enable investments in infrastructure
development to sustain economic growth of the country. With a large
capital outlay and long gestation periods, infrastructure projects are
fraught with a multitude of risks throughout the development,

18

construction and operation stages. These include risks associated with


project implementation, including geological risks, maintenance,
commercial and political risks. Without covering these risks the financial
institutions are not willing to commit funds to the sector, especially
because the financing of most private projects is on a limited or nonrecourse basis. Insurance companies not only provide risk cover to
infrastructure projects, they also contribute long-term funds. In fact,
insurance companies are an ideal source of long term debt and equity for
infrastructure projects. With long term liability, they get a good assetliability match by investing their funds in such projects. IRDA
regulations require insurance companies to invest not less than 15 percent
of their funds in infrastructure and social sectors. International Insurance
companies also invest their funds in such projects. Insurance is a federal
subject in India. There are two legislations that govern the sector- The
Insurance Act- 1938 and the IRDA Act- 1999. The Government of India
liberalized the insurance sector in March 2000with the passage of the
Insurance Regulatory and Development Authority (IRDA) Bill, lifting all
entry restrictions for private players and allowing foreign players to enter
the market with some limits on direct foreign ownership. Under the
current guidelines, there is a 26 percent equity cap for foreign partners in

19

an insurance company. There is a proposal to increase this limit to 49


percent. Premium rates of most general Committee. The opening up of
the sector is likely to lead to greater spread and deepening of insurance in
India and this may also include restructuring and revitalizing of the
public sector companies. A host of private insurance companies operating
in both life and non-life segments have started selling their insurance
policies since 2001.

INDIAN INSURANCE INDUSTRY

Insurance industry, as on 1.4.2000, comprised mainly two players:

Life Insurers:

20

Life Insurance Corporation of India (LIC)


General Insurers:
General Insurance Corporation of India (GIC) (with effect from
Dec'2000, a National Reinsurer)
GIC had four subsidiary companies, namely (with effect from Dec'2000,
these subsidiaries have been de-linked from the parent company and
made as independent insurance companies.
1. The Oriental Insurance Company Limited
2. The New India Assurance Company Limited,
3. National Insurance Company Limited
4. United India Insurance Company Limited.
Yr: 2000-2001: (From 2nd April '2000 to 31st December'2001)
Insurance Industry in the year 2000-2001 had 16 new entrants, namely:

Life Insurers:

21

S.No. Reg.

Date of

Name of the Company

Number Reg.
1

101

23.10.2000

HDFC Standard Life Insurance


Company Ltd.

104

15.11.2000

Max New York Life Insurance Co.


Ltd.

105

24.11.2000

ICICI Prudential Life Insurance


Company Ltd.

107

10.01.2001

Kotak Mahindra Old Mutual Life


Insurance Limited

109

31.01.2001

Birla Sun Life Insurance Company


Ltd.

110

12.02.2001

Tata AIG Life Insurance Company


Ltd.

111

30.03.2001

SBI Life Insurance Company


Limited.

114

02.08.2001

ING Vysya Life Insurance


Company Private Limited

116

03.08.2001

Bajaj Allianz Life Insurance


Company Limited

10

117

06.08.2001

Metlife India Insurance Company

22

Pvt. Ltd.

General Insurers :

S.No Registratio

Date of

Name of the

Registratio

Company

n Number

n
1

102

23.10.2000

Royal Sundaram
Alliance Insurance
Company Limited

103

23.10.2000

Reliance General

23

Insurance Company
Limited.

106

04.12.2000

IFFCO Tokio
General Insurance
Co. Ltd

108

22.01.2001

TATA AIG General


Insurance Company
Ltd.

113

02.05.2001

Bajaj Allianz
General Insurance
Company Limited

115

03.08.2001

ICICI Lombard
General Insurance
Company Limited.

Yr: 2001-2002: (From 1st Jan 2001 to Dec. 2002)

Insurance Industry in this year, so far has 5new entrants; namely

24

Life Insurers:

S.N Reg.

Date of

o.

Number

Reg.

121

03.01.200

AMP Sanmar Life Insurance

Company Limited.

14.05.200

Aviva Life Insurance Co. India

Pvt. Ltd.

122

Name of the Company

General Insurers :

S.No Registratio

Date of

Name of the

Registratio

Company

n Number

n
1

123

15.07.2002

Cholamandalam
General Insurance
Company Ltd.

2.

124

27.08.2002

Export Credit
Guarantee
Corporation Ltd.

3.

125

27.08.2002

HDFC-Chubb

25

General Insurance
Co. Ltd.

Yr: 2003-2004: (From 1st Jan 2003 till Date)


Insurance Industry in this year, so far has 1new entrants; namely
Life Insurers:

S.No.

Registration Name of the Company


Number

127

Sahara India Insurance


Company Ltd.

Yr: 2004-2005:
Insurance Industry in this year, so far has 1new entrants; namely

Life Insurers:

26

S.No. Registration Date of Reg. Name of the Company


Number
1

128

17.11.2005

Shriram Life Insurance


Company Ltd.

INSURANCE BUSINEES:
Insurance business is divided into four classes:
1) Life Insurance
2) Fire Insurance
3) Marine Insurance and
4) Miscellaneous Insurance.
Life Insurers transact life insurance business; General Insurers transact
the rest.
No composites are permitted as per law.

27

THE INSURANCE REGULATORY AND


DEVELOPMENT AUTHORITY (IRDA)

A faster development and wider impact of the insurance industry were to


be achieved through a process of insurance reforms resulting in the
liberalization of the market and in the passage of the Insurance
Regulatory and Development Authority (IRDA) Act, 1999. The reforms
procedures recognized simultaneously the need for development of the
sector in addition to the traditional concept of regulation and thus
conferred on the Authority the obligation to develop the sector as well.

OBJECTIVES

To protect the interest of and secure fair treatment to


policyholders:

28

To bring about speedy and orderly growth of the insurance


industry, for the benefit of the common man, and to provide long
terms funds for accelerating growth of the economy;
To set, promote, monitor and enforce high standards of integrity,
financial soundness, fair dealing and competence of those it
regulates:
To ensure that insurance customers receive precise, clear and
correct information about products and services and make them
aware of their responsibilities and duties in this regard;
To ensure speedy settlement of genuine claims, to prevent
insurance frauds and other malpractices and put in place effective
grievances redressed machinery;
To promote fairness, transparency and orderly conduct in financial
markets dealing with insurance and build a reliable management
information system to enforce high standards of financial
soundness amongst market players.

IRDA POWERES AND FUNCTIONS

29

Subject to the provisions of IRDA Act (1990), IRDA will: regulate,


promote and ensure orderly growth of the insurance business and reinsurance business, which will include the following main functions
(excerpts):

Issue to the applicant a certificate of registration, renew, modify,


withdraw, suspend or cancel such registration;

Protection of the interest of the policy holders in matters


concerning assigning off policy, nomination by policy holders,
insurable interest, settlement of insurance claim, surrender value of
policy and others terms and conditions of contracts of insurance;

Specifying requisite qualifications, code of conduct and practical


training for intermediary or insurance intermediaries and agents.

Promoting and regulation professional organizations connected


with the insurance and re-insurance business;

30

Levying fees and other charges for carrying out the purposes of the
Act;

Calling for information from, undertaking inspection of,


conducting enquiries and investigations including audit of the
insurers, intermediaries, insurance intermediaries and other
organizations connected with the insurance business;

Specifying the percentage of life insurance and general insurance


business to be undertaken by the insurer in the rural or social
sector.

31

IRDA has so far granted registration to 12 private life insurance


companies and 9 general insurance companies. If the existing public
sector insurance companies are included, there are currently 13 insurance
companies in the life side and 13 companies operating in general
insurance business. General Insurance Corporation has been approved as
the "Indian rein surer" for underwriting only reinsurance business.

PROTECTION OF THE INTEREST OF POLICY HOLDERS

IRDA has the responsibility of protecting the interest of insurance


policyholders. Towards achieving this objective, the Authority has taken
the following steps:

IRDA has notified Protection of Policyholders Interest Regulations


2001 to provide for: policy proposal documents in easily

32

understandable language; claims procedure in both life and nonlife; setting up of grievance redress machinery; speedy settlement
of claims; and policyholders' servicing. The Regulation also
provides for payment of interest by insurers for the delay in
settlement of claim.

The insurers are required to maintain solvency margins so that they


are in a position to meet their obligations towards policyholders
with regard to payment of claims.

It is obligatory on the part of the insurance companies to disclose


clearly the benefits, terms and conditions under the policy. The
advertisements issued by the insurers should not mislead the
insuring public.

All insurers are required to set up proper grievance redress


machinery in their head office and at their other offices.

33

34

BAJAJ-ALLIANZ: COMPANY PROFILE

Bajaj Allianz Life Insurance Co. Ltd. is a union between Allianz AG,
the worlds leading insurer and Bajaj Auto, one of Indias most respected

35

names. Allianz AG is a leading insurance conglomerate globally and


largest asset manager in the world, managing assets worth over 989
billion Euros (Rs. 49, 84,560 crores). Allianz AG has more than 110 years
of financial experience in over 70 countries and Bajaj Auto, trusted over
55 years in Indian market, are committed to offer financial solutions that
provide all the security the customers need by offering various products.

Bajaj Allianz General Insurance Co. Ltd. is a joint venture between


Bajaj Auto and Allianz AG of Germany. Both enjoy a reputation of
expertise, stability and strength.
Bajaj Allianz General Insurance received the Insurance Regulatory and
Development Authority (IRDA) certificate of Registration (R3) on May
2, 2001 to conduct General Insurance business (including Health
Insurance business) in India. The Company is authorized and has paid up
capital of Rs 110 crores. Bajaj Auto holds 74% and the remaining 26% is
held by Allianz AG, Germany.
In its first year of operations, the company has acquired No. 1 status
among the private non-life insurers. As on March 31, 2003.Bajaj Allianz
General Insurance maintained its leadership position by garnering a

36

premium income of Rs.300 Crores. Bajaj Allianz also became one of the
few companies to make a profit in its first full year of operations. Bajaj
Allianz made a profit after tax of Rs.9.6 crores.

Bajaj Allianz today has a network in more than 485 cities spread across
the length and breadth of the country. From Surat to Siliguri and Jammu
to Thiruvananthapuram, all the offices are interconnected with the Head
Office at Pune.
In the first half of the financial year, 2004-05, Bajaj Allianz garnered a
premium income of Rs. 405 crores, achieving a growth of 84% and
registered a 52% growth in net profits of Rs.20 Crores over the last year
for the same period. In the financial year 2003-04, the premium earned
was Rs.480 Crores, and the profit zoomed by 125% to Rs. 21.6 Crores

VISION
To be the first choice insurer for customers.
To be the preferred employer for staff in the insurance industry.
To be the number one insurer for creating shareholder value.

MISSION
As a responsible, customer focused market leader, Bajaj Allianz is

37

determined to understand the insurance needs of the consumers and


translate it into affordable products that deliver value for money.

ALLIANZ GROUP
Allianz Group is one of the world's leading insurers and financial
services providers. Founded in 1890 in Berlin, Allianz is now present in
over 70 countries with almost 174,000 employees. At the top of the
international group is the holding company, Allianz AG, with its head
office in Munich.
Allianz Group provides its more than 60 million customers worldwide
with a comprehensive range of services in the areas of:
Property and Casualty Insurance,
Life and Health Insurance,
Asset Management and Banking.
Easy access and reach across the country

38

Bajaj Allianz Life has offices now in over 485 towns across the country
enabling customer to buy our products and get quality efficient service
almost anywhere across the country.

ALLIANZ AG- A GLOBAL FINANCIAL POWERHOUSE


Worldwide 2nd by Gross Written Premiums - Rs.4, 46,654 cr.
3rd largest Assets Under Management (AUM) & largest amongst.
Insurance cos. - AUM of Rs.51, 96,959 cr.
12th largest corporation in the world.
49.8 % of global business from Life Insurance.
Established in 1890, 110 yrs of Insurance expertise.
70 countries; 173,750 employees worldwide.

BAJAJ AUTO

39

Bajaj Auto Ltd, the flagship company of the Rs. 8000 crore Bajaj group
is the largest manufacturer of two-wheelers and three-wheelers in India
and one of the largest in the world.
A household name in India, Bajaj Auto has a strong brand image & brand
loyalty synonymous with quality & customer focus.

AN STRONG INDIAN BRAND- HAMARA BAJAJ


One of the largest 2 & 3 wheeler manufacturers in the world.
21 million+ vehicles on the roads across the globe.
Managing funds of over Rs 4000 cr.
Bajaj Auto finance one of the largest auto finance companies in
India.
Rs. 4,744 cr. turnover & profits of 538 cr. in 2002-03.
It has joined hands with Allianz to provide Indian consumers with
a distinct option in terms of life insurance products.

40

As a promoter of Bajaj Allianz Life Insurance Co. Ltd., Bajaj Auto


has the following to offer
Financial strength and stability to support the Insurance
Business.
A strong brand-equity.
A good market reputation as a world class organization.
An extensive distribution network.
Adequate experience of running a large organization.

Bajaj Allianz Life Insurance Company has developed insurance


solutions that cater to every segment and age-income profiles. For
companies it provides comprehensive 'Employee Benefit Solutions'
(Group Term Life, EDLI, Gratuity, Superannuation, Key man Insurance
and more); for the individual Invest Gain (a unique life insurance plan
where sustenance of income is combined in the same plan that also pays
a lump sum), Cash Gain (Money Back), Child Gain (Children's plan),
Risk Care (Pure Term), Lifetime Care (whole life), Term Care (term with
return of premium), Swarna Vishranti (Retirement Plan), Protector
(Mortgage term insurance plan), Unit Gain (Unit Linked Plan), Unit Gain

41

Single Premium, Unit Gain Plus, Unit Gain Plus SP, Lifelong Gain Plan,
Unit Gain Single Pension & Unit Gain Easy Pension Plans.
SUPERIOR TECHNOLOGY
In order to ensure speedy and accurate processing of your needs, it has
established world class technology, with renowned insurance software,
which networks all its offices and intermediaries

Using the Web, policies can be issued from any office across the country
for retail products.
Unique, user friendly software is developed to make the process of
issue of policies and claims settlement simpler (e.g. online
insurance of marine policy certificate).
UNIQUE FORMS OF RISK COVER
Special PA cover for Amaranth pilgrims.
Film insurance.
Event management cover.
Sports & Entertainment Insurance Package.
42

RISK AND MANAGEMENT


Its methodology is tried, tested and proven the world over and involves:
Risk identification: Inspections.
Risk analysis: Portfolio review and gap analysis.
Risk retention.
Risk Transfer: To an insurer as well as re insurer (as required).
Creation of need based products.
Ongoing dialogue and proclivity.

43

44

COMPANY PROFILE
LIFE INSURANCE CORPORATION OF INDIA
(LIC)

Life Insurance Corporation of India (LIC) was formed in September,


1956 by an Act of Parliament, viz., Life Insurance Corporation Act, 1956,
with capital contribution from the Government of India. The then Finance
Minister, Shri C.D. Deshmukh, while piloting the bill, outlined the
objectives of LIC thus: to conduct the business with the utmost economy,
an spirit of trusteeship; to charge premium no higher than warranted by
strict actuarial considerations; to invest the funds for obtaining maximum
yield for the' policy holders consistent with safety of the capital; to render
prompt and efficient service to policy holders, thereby making insurance

45

widely popular. Since nationalization, LIC has built up a vast network of


2,048 branches, 100 divisions and 7 zonal offices spread over the
country. The Life Insurance Corporation of India also' transacts business
abroad and has offices in Fiji, Mauritius and United Kingdom. LIC is
associated with joint ventures abroad in the field of insurance, namely,
Ken-India ,Assurance Company Limited, Nairobi; United Oriental
Assurance Company Limited, Kuala Lumpur and Life Insurance
Corporation (International) E.C. Bahrain. The Corporation has registered
a joint venture company in 26th December, 2000 in Kathmandu, Nepal by
the name of Life Insurance Corporation (Nepal) Limited in collaboration
with Vishal Group Limited, a local industrial Group. An off-shore
company L.I.C. (Mauritius) Off-shore Limited has also been set up in
2001 to tap the African insurance market.

GENERAL INSURANCE

General insurance business in the country was nationalized with effect


from

1st

January,

1973

by

the

General

Insurance

Business

(Nationalization) Act, 1972. More than 100 non-life insurance companies


including branches of foreign companies operating within viz., the

46

National Insurance Company Ltd., the New India Assurance Company


Ltd., the Oriental Insurance Company Ltd., and the United India
Insurance Company Ltd. with head offices at Calcutta, Bombay, New
Delhi and Madras, respectively. General Insurance Corporation (GIC)
which was the holding company of the four public sector general
insurance companies has since been de linked from the later and has been
approved as the "Indian Re-insurer" since 3rd November 2000. The share
capital of GIC and that of the four companies are held by the
Government of India. All the five entities are Government companies
registered under the Companies Act. The general insurance business has
grown in spread and volume after nationalization. The four companies
have 2699 branch offices, 1360 divisional offices and 92 regional offices
spread all over the country. GIC and its subsidiaries have representation
either directly through branches or agencies in 16 countries and through
associate or locally incorporated subsidiary companies in 14 other
countries. A wholly- owned subsidiary company of GIC, i.e. Indian
International Pvt. Ltd. is operating in Singapore and there is a joint
venture company, viz. Kenindia Assurance Ltd. in Kenya. A new wholly
owned subsidiary called New India International Ltd., UK has also been
registered.

47

OBJECTIVES OF LIC

Spread Life Insurance widely and in particular to the rural areas and to
the socially and economically backward classes with a view to reaching
all insurable persons in the country and providing them adequate
financial cover against death at a reasonable cost.
Maximize mobilization of people's savings by making insurancelinked savings adequately attractive.
Bear in mind, in the investment of funds, the primary obligation to its
policyholders, whose money it holds in trust, without losing sight of
the interest of the community as a whole; the funds to be deployed to
the best advantage of the investors as well as the community as a
whole, keeping in view national priorities and obligations of
attractive return.
Conduct business with utmost economy and with the full realization

48

that the moneys belong to the policyholders.


Act as trustees of the insured public in their individual and collective
capacities.
Meet the various life insurance needs of the community that would
arise in the changing social and economic environment.
Involve all people working in the corporation to the' best of their
capability in furthering the interests of the insured public by
providing efficient service with courtesy.
Promote amongst all agents and employees of the Corporation a
sense of participation, pride and job satisfaction through discharge of
their duties with dedication towards achievement of Corporate
Objective.

49

50

COMPANY PROFILE
ICICI PRUDENTIAL LIFE INSURANCE

ICICI Prudential Life Insurance Company is a joint venture between


ICICI Bank and Prudential plc. The stake of the companies in the joint
venture is 76% and 24% respectively, which was incorporated on July 20,
2000. It was one of the first players to commence operations when the
insurance industry was opened to the private sector in 2000. Since
inception the company has written over 2 million policies. The company
has over network of 70,000 advisors, 9 banc assurance as well as over
190 corporate agent and broker tie- ups. It is also the only life insurer in
India to get IFS AAA (ind) rating, by Fitch Ratings. ICICI offers a wide

51

range of flexible products that meet the needs of Indian customers at


every step in life.
The authorized capital of the company is Rs.2300 Million and the paid up
capital is Rs. 1500 Million. The Company was granted Certificate of
Registration for carrying out Life Insurance business, by the Insurance
Regulatory and Development Authority on November 24, 2000. It
commenced commercial operations on December 19, 2000, becoming
one of the first few private sector players to enter the liberalized area.
For the financial year 2005-2006 which ended on March 31,
2006, the company registered Rs. 24.12 billion of weighted new
business premium and wrote 837,963 policies. The sum assured in
force stands at Rs 458.88 billion.

ICICI and Prudential to formed Prudential ICICI Asset


Management Company in 1933, which has today emerged as one of
the leading mutual funds in India. After the success of this joint
venture, the two companies joined hands once again in 2000 to
form ICICI Prudential Life Insurance Company, with a commitment
to provide leading edge life insurance solutions.

52

ICICI BANK
ICICI Bank is India's second-largest bank with total assets of
about Rs. 2,513.89 billion (US$ 56.3 billion) on March 31, 2006
and profit after tax of Rs. 25.40 billion (US$ 569 million) for the
year ended March 31, 2006. ICICI Bank has a network of about 614
branches and extension counters and over 2,200 ATMs. ICICI Bank
offers a wide range of banking products and financial services to
corporate and retail customers through a variety of delivery
channels and through its specialized subsidiaries and affiliates in
the areas of investment banking, life and non-life insurance,
venture capital and asset management. ICICI Bank set up its
international banking group in fiscal year 2002 to cater to the cross
border needs of clients and leverage on its domestic banking

53

strengths to offer products internationally. ICICI Bank currently


has subsidiaries in the United Kingdom, Russia and Canada,
branches in Singapore, Bahrain, Hong Kong, Sri Lanka and Dubai
International Finance Centre and representative offices in the
United States, United Arab Emirates, China, South Africa and
Bangladesh. Its UK subsidiary has established a branch in Belgium.
bank in India in terms of market.
ICICI Bank's equity shares are listed in India on the Bombay Stock
Exchange and the National Stock Exchange of India Limited and its
American Depositary Receipts (ADRs) are listed on the New York
Stock Exchange (NYSE).
ICICI Bank has formulated a Code of Business Conduct and Ethics
for its directors and employees.
On June 5, 2006, ICICI Bank, with free float market capitalization
of about Rs. 480.00 billion (US$ 10.8 billion) ranked third amongst
all the companies listed on the Indian stock exchanges.
ICICI Bank was originally promoted in 1994 by ICICI Limited, an
Indian Financial Institution, and was its wholly-owned subsidiary.
ICICI's shareholding in ICICI Bank was reduced to 46% through a
54

public offering of shares in India in fiscal 1998, an equity offering


in the form of ADRs listed on the NYSE in fiscal 2000, ICICI
Bank's acquisition of Bank of Madura Limited in an all-stock
amalgamation in fiscal 2001, and secondary market sales by ICICI
to institutional investors in fiscal 2001 and fiscal 2002. ICICI was
formed in 1955 at the initiative of the World Bank, the Government
of India and representatives of Indian industry. The principal
objective was to create a development financial institution for
providing medium-term and long-term project financing to Indian
businesses. In the 1990s, ICICI transformed its business from a
development financial institution offering only project finance to a
diversified financial services group offering a wide variety of
products and services, both directly and through a number of
subsidiaries and affiliates like ICICI Bank. In 1999, ICICI become
the first Indian company and the first bank or financial institution
from non-Japan Asia to be listed on the NYSE.
After consideration of various corporate structuring alternatives in
the context of the emerging competitive scenario in the Indian
banking industry, and the move towards universal banking, the
managements of ICICI and ICICI Bank formed the view that the
55

merger of ICICI with ICICI Bank would be the optimal strategic


alternative for both entities, and would create the optimal legal
structure for the ICICI group's universal banking strategy. The
merger would enhance value for ICICI shareholders through the
merged entity's access to low-cost deposits, greater opportunities
for earning fee-based income and the ability to participate in the
payments system and provide transaction-banking services. The
merger would enhance value for ICICI Bank shareholders through a
large capital base and scale of operations, seamless access to
ICICI's strong corporate relationships built up over five decades,
entry into new business segments, higher market share in various
business segments, particularly fee-based services, and access to
the vast talent pool of ICICI and its subsidiaries. In October 2001,
the Boards of Directors of ICICI and ICICI Bank approved the
merger of ICICI and two of its wholly-owned retail finance
subsidiaries, ICICI Personal Financial Services Limited and ICICI
Capital Services Limited, with ICICI Bank. The merger was
approved by shareholders of ICICI and ICICI Bank in January
2002, by the High Court of Gujarat at Ahmedabad in March 2002,
and by the High Court of Judicature at Mumbai and the Reserve

56

Bank of India in April 2002. Consequent to the merger, the ICICI


group's financing and banking operations, both wholesale and
retail, have been integrated in a single entity.

PRUDENTIAL PLC

Established as the Prudential Mutual Assurance and Loan Association in


1848, today it is an international financial services company with a
product range which extends from personal banking insurance, pensions
and retail investments, to institutional fund management and property
investments.
Its portfolio of well-known and respected brands, including Prudential,
M&G Investments, Jackson National Life, Prudential Corporation Asia
and Egg, has attracted more than 19 million customers (and policy
holders and unit holders) worldwide. Across the Group it has 234
billion of funds under management (at 31 December 2005).

57

Prudential has significant operations in the UK, the US and Asia,


contributing to a diversity of earnings. Worldwide it employs more than
20,000 people and our shareholders number 60,942 (at 31 December
2005). It is listed on the London and New York stock exchanges.
In Asia, Prudential Corporation Asia has 23 operations in 12 countries.
These include strategic partnerships with some of the regions leading
players, including CITIC Group (for life business in China), ICICI Bank
(for life and mutual fund business in India) and Bank of China
International (for Mandatory Provident Fund business in Hong Kong).
Prudential Corporation Asia offers a wide range of savings, protection
and investment products tailored to the needs of our customers in each of
the 12 markets in which it operates. In addition to its life insurance
operations Prudential has asset management businesses in India, Hong
Kong, Japan, Taiwan, Malaysia, Singapore, Korea, Vietnam and China
managing over 26 billion (as of 30 June 2005).

58

59

MARKET SHARE ANALYSIS


PARTICULARS

2004-05

2005-06

2006-07

LIC

87.7

71.04

71.44

PRIVATE PLAYERS

12.3

28.96

28.56

60

61

INNOVATIVENESS

COMPAN
Y

LIC

BAJAJ ALLIANZ

ICICI
PRUDENTIAL

SCORE

128

106.9

122.1

62

RANK

QUALITY & DEPTH OF MANAGEMENT

63

COMPAN
Y

LIC

BAJAJ ALLIANZ

ICICI
PRUDENTIAL

SCORE

163.9

96

95.1

RANK

64

FINANCIAL PERFORMANCE

COMPANY

LIC

BAJAJ ALLIANZ

ICICI
PRUDENTIAL

SCORE

158

115.8

78.6

RANK

65

ETHICS & TRANSPARENCY

COMPAN
Y

LIC

BAJAJ
ALLIANZ

ICICI
PRUDENTIAL

SCORE

158

115.8

78.6

RANK

66

QUALITY OF PRODUCTS & SERVICES

COMPAN
Y

LIC

BAJAJ ALLIANZ

ICICI
PRUDENTIAL

SCORE

163.1

111

114.1

RANK

67

PEOPLE PRACTICES/
TALENT MANAGEMENT
COMPAN
Y

LIC

BAJAJ
ALLIANZ

ICICI
PRUDENTIAL

SCORE

139

102

114.1

RANK

68

GLOBAL COMPETITIVENESS

COMPANY

LIC

BAJAJ ALLIANZ

ICICI
PRUDENTIAL

SCORE

124

94.1

71

RANK

69

TOP 5 INSURANCE COMPANIES

POINTS

SURVEY-2006

Birla Sun Life

ICICI Lom General

ICICI Pru Life

Bajaj Allianz General

LIC

70

POINTS

SURVEY-2005

SBI Life

Birla Sun Life

ICICI Pru Life

HDFC Standard Life

LIC

TOP 5 INSURANCE COMPANIES- 2006

71

TOP 5 INSURANCE COMPANIES- 2005

72

RESEARCH OBJECTIVE

The report identifies the position of Bajaj Allianz in the current insurance
market as a fast emerging insurance company. It gives the detailed
background of the company and its whereabouts before the two insurance
tycoons namely- LIC and ICICI Prudential. It also highlights the

73

potential of the company to penetrate and sustain in the insurance sector


leaving many big players far behind.

RESEARCH DESIGN
The research design for the comparative study is of exploratory type and
the focus is given to discover the possible measures, by detailed analysis,
for the company which would be helpful up to some extent to retain a
good position in the competitive market. The research design is not
formal and rigid one as the focus depends upon the availability of new
ideas and relationship among variables.

DATA COLLECTION METHOD


For the purpose of study both primary as well as secondary data have
been used. The secondary data have been collected from various
magazines, newspapers, company annual reports, and websites. For the
collection of primary data structured and undisguised questionnaire has
been used.

74

For the purpose of knowing whereabouts of the company in the present


insurance market secondary data has disclosed many important
information as- market share of the company and its potential before the
insurance market leaders on the basis of various attributes

Primary data have been helpful to explore the opinion of general public
and their future insurance plans with the company. On the basis of
information extracted from the primary data various measures are found
which would be helpful to it in making new strategies in near future.

SAMPLING

As per the sampling procedure is concerned, the finite universe is taken


into consideration. The sampling units include- businessmen, government
employees, and private employees bounded to Uttar Pradesh(Lucknow)
only.

75

The sampling is based upon probability sampling methods. The reason isit is the only sampling method that provides essentially unbiased
estimates having measurable precision. The sample size was 60.

ANALYSIS

Which company has played a major role in the field of insurance?

COMPANY

PRIVATE
EMPLOYEES

GOVERNMENT
EMPLOYEES

BUSINESSMEN

76

LIC
BAJAJ
ALLIANZ
ICICI
PRUDENTIA
L
OTHERS

10

13

10

Which insurance company has been successful in making strong


public base by advertisement?

COMPANY

PRIVATE
EMPLOYEES

GOVERNMENT
EMPLOYEES

BUSINESSMEN

77

LIC
BAJAJ
ALLIANZ
ICICI
PRUDENTIA
L
OTHERS

12

14

12

Do you think the insurance policy is totally in the direction of


public welfare?
OPTIO
N
YES

PRIVATE
EMPLOYEES

GOVERNMENT
EMPLOYEES

BUSINESSMEN

10

13

12

78

NO

Can't
Say

The life insurance policy opted by you is from which company?

COMPANY

PRIVATE
EMPLOYEES

GOVERNMENT
EMPLOYEES

BUSINESSMEN

79

LIC
BAJAJ
ALLIANZ
ICICI
PRUDENTIA
L
OTHERS

10

16

12

Do you think LIC would continue to loose its grip over the

insurance market in coming days?

OPTIO
N

PRIVATE
EMPLOYEES

GOVERNMENT
EMPLOYEES

BUSINESSMEN

80

YES

15

NO

14

18

Can't
say

If any life insurance need arises in your family, then which

company would you prefer to get insured with after analyzing all
insurance players?
81

COMPANY
LIC
BAJAJ
ALLIANZ
ICICI
PRUDENTIA
L
OTHERS

PRIVATE
EMPLOYEES

GOVERNMENT
EMPLOYEES

BUSINESSMEN

15

11

Which private company do you think would be able to make its

grip stronger over insurance market in coming days?

82

COMPANY
BAJAJ
ALLIANZ
ICICI
PRUDENTIA
L
OTHERS

PRIVATE
EMPLOYEES

GOVERNMENT
EMPLOYEES

BUSINESSMEN

FINDINGS
From the analysis of the above study it can be revealed that-

83

LIC has played a major role in the field of insurance, while Bajaj
Allianz and ICICI Prudential stay behind it.

In making strong public base by advertisement LIC is not behind


anyone in the race despite private players are generally supposed to
deliver comparatively more advertisements.

A majority of private employees, government employees, and


businessmen are insured with LIC which is a tough challenge for
private players especially Bajaj Allianz and ICICI Prudential.

Majority of people still trust a lot in LIC despite its gradually


loosening grip over the insurance market. They hope it will
recapture the market share lost by it.

Majority of people would like to get insured with LIC despite of


the fact that private players like Bajaj Allianz and ICICI Prudential
are equipped with a lot of beneficial products, not less than LIC. Its
really a matter of consideration.

84

Talking about private players, majority of people hope and are


confident for the comparatively brighter future of Bajaj Allianz
than any other private player, which is a good indication and
response for the company.

CONCLUSION

85

The story of insurance sector, however, is the meteoric rise of Bajaj


Allianz General, the second largest private general insurer after ICICI
Lombard General. Bajaj Allianz has been winning image points by
mixing transparency with innovativeness. The company, last year,
boosted its public profile by insuring production of the movie Bunty Aur
Bubly and the TV show Nach Baliye. Bajaj Allianz is also driving deeper
into the hinterland for growth.
The entry of private insurance companies has expanded the product
segment to meet different levels of customer requirements. The most
powerful competitor is LIC which has vast market and very firm grip on
its traditional customers. In life insurance segment ICICI Prudential is the
main challenge for Bajaj Allianz. However, there seems no immediate
cause for alarm for LIC, which continues to top customer rankings for the
sector. Though the private pack nibbled off about 7% more of its market
share in 2005-2006 reducing it to 71%, the company managed to grow its
premium income by 49% for individual policies and 32% for business
policies in2005-2006.

RECOMMENDATIONS
86

Today the Indian consumers are increasingly becoming more aware and
are actively managing their financial affairs. Today, while boundaries
between various financial products are blurring, people are increasingly
looking not just at products, but at integrated financial solutions that can
offer stability of returns along with total protection. To satisfy these
myriad needs of customers, insurance products will need to be
customized. Insurance today has emerged as an attractive and stable
investment alternatively that offers total protection - Life, Health and
Wealth. In terms of returns, insurance products today offer competitive
returns ranging from 7% to 9%. Besides returns, what really increases the
appeal of insurance is the benefit of life protection from insurance
products along with health cover benefits.
Therefore, to beat the competition, more and more transparency should
be ascertained between the company and policy holders. Particularly, in
the emerging boom in insurance sector, Bajaj Allianz should be more
customers centered, and well versed in the handling problem and
grievances of the policy holders. Also it should more concentrate on good
advertising media to make the customers well aware of its products.

87

Data show that more rural people are uninsured till the time which is a
good indication for companys prospects in rural areas. Accordingly,
company should prepare its products for rural people and make them
aware of these products. But, meanwhile, the company should not forget
that marketing of financial instruments in a rural area is not an easy job
and for that company would have to convince the rural customers in a
rural way.

88

BIBLIOGRAPHY

BOOKS
Statistics For Management- Richard I. Levin, David S. Rubin
Fundamentals of Statistics- D.N. Elhance
Research Methodology- C.R. Kothari

MAGAZINES & NEWSPAPERS


The Economic Times
The Times of India

89

Business World
Business Today

WEBSITES
www.bajajallianz.co.in
www.licofindia.com
www.indiainfoline.com
www.iciciprulife.com
www.financialexpress.com
www.theeconomictimes.com
www.licindia.co

90

ACHIEVEMENTS

91

Bajaj Allianz Life Insurance Company Limited is a Union between Allianz


SE, one of the worlds largest Life Insurance companies and Bajaj Auto,
one of the biggest 2- &- 3 wheeler manufacturers in the world.
Allianz SE is a leading insurance conglomerate globally and one of the
largest asset managers in the world, managing assets worth over a Trillion
Euros (Over R. 55,00,000 crores). Allianz SE has over 115 years of
financial experience in over 70 countries.
Bajaj Auto is one of the most trusted name is Indian auto for over 55
years.
At Bajaj Allianz Life Insurance customer delight is our guiding principle.
Ensuring world-class solutions by offering customized products with
transparent benefits, supported by best technology is our business
philosophy.

Key Achievements in FY 2006-07 :


Have sold over 40,00,000 policies to satisfied customers
Is backed by a network of 876 offices spanning the country
Accelerated Growth

Shareholder capital base of Rs 700 cr.

92

DECLARATION
I Puneet Gupta declare that the Summer Training Project Report entitled
TOPIC being submitted to the T.John Business School for the partial
fulfillment of the requirement for the degree of Master of Business
Administration is my own endeavors and it has not been submitted earlier
to any Institution\University for any degree.

Place:
GUPTA Date:
(MMB103702)

PUNEET

93