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The liberalization of the Indian insurance sector has been the

subject of much heated debate for some years. The policy makers

where in the catch 22 situation wherein for one they wanted

competition, development and growth of this insurance sector

which is extremely essential for channeling the investments in to

the infrastructure sector. At the other end the policy makers had

the fears that the insurance premium, which are substantial, would

seep out of the country; and wanted to have a cautious approach

of opening for foreign participation in the sector.

As one of the rare occurrences the entire debate was put on the

back burner and the IRDA saw the day of the light thanks to the

maturing polity emerging consensus among factions of different

political parties. Though some changes and some restrictive

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clauses as regards to the foreign participation were included the

IRDA has opened the doors for the private entry into insurance.

Whether the insurer is old or new, private or public, expanding the

market will present multitude of challenges and opportunities. But

the key issues, possible trends, opportunities and challenges that

insurance sector will have still remains under the realms of the

possibilities and speculation. What is the likely impact of opening

up Indiaƞs insurance sector?

The large scale of operations, public sector bureaucracies and

cumbersome procedures hampers nationalized insurers. Therefore,
potential private entrants expect to score in the areas of customer
service, speed and flexibility. They point out that their entry will
mean better products and choice for the consumer. The critics
counter that the benefit will be slim, because new players will
concentrate on affluent, urban customers as foreign banks did until
recently. This seems to be a logical strategy. Start-up costs-such
as those of setting up a conventional distribution network-are large
and high-end niches offer better returns. However, the middle-
market segment too has great potential. Since insurance is a
volumes game. Therefore, private insurers would be best served
by a middle-market approach, targeting customer segments that
are currently untapped

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I would like to thank my project guide |
cc

 ,
Regional Sales Support Manager RELIANCE Life Insurance, Bareilly
for guiding me through my summer internship and research
project. His encouragement, time and effort are greatly
appreciated.

I would like to thank  
c c | , for supporting me

during this project and providing me an opportunity to learn
outside the class room. It was a truly wonderful learning
experience.

I would like to dedicate this project to my parents. Without their

help and constant support this project would not have been
possible.

Lastly I would like to thank all the respondents who offered their
opinions and suggestions through the survey that was conducted
by me in Bareilly.

Once again my gratitude to the c  c  . For

their kind co-operation.

c %c
c

 

I RAFIA NAEEM of MBA 3rD SEMESTER of Ơ M.J.P.Rohilkhand

Universityơ hereby declare that the summer training report entitled
ƠINSURANCE SECTORơ IN RELIANCE LIFE INSURACNE is an
original word and the same has not been submitted to any other
institute for the award of any other degree.

Signature of candidate

RAFIA NAEEM
MBA (Marketing)
IIIrd Semester

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In todayƞs corporate and competitive world, I find that insurance

sector has the maximum growth and potential as compared to the

other sectors. Insurance has the maximum growth rate of 70-80%

while as FMCG sector has maximum 12-15% of growth rate. This

growth potential attracts me to enter in this sector and RELIANCE

LIFE INSURANCE has given me the opportunity to work and get

experience in highly competitive and enhancing sector.


The success story of good market share of different market

organizations depends upon the availability of the product

and services near to the customer, which can be distributed

through a distribution channel. In Insurance sector,

distribution channel includes only agents or agency holders of

the company. If a company like RELIANCE LIFE INSURANCE,

TATA AIG, MAX etc have adequate agents in the market they

can capture big market as compared to the other companies.

Agents are the only way for a company of Insurance sector

through which policies and benefits of the company can be
explained to the customer.

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

world, Insurance happens to be a mega opportunity in India. Itƞs a
business growing at the rate of 15-20 per cent annually and presently
is of the order of Rs 1560.41 billion (for the financial year 2006 ƛ
2007). Together with banking services, it adds about 7% to the
countryƞs Gross Domestic Product (GDP). The gross premium
collection is nearly 2% of GDP and funds available with LIC for
investments are 8% of the GDP.

Even so nearly 65% of the Indian population is without life insurance

cover while health insurance and non-life insurance continues to be
below international standards. A large part of our population is also
subject to weak social security and pension systems with hardly any
old age income security

A well-developed and evolved insurance sector is needed for

economic development as it provides long term funds for
infrastructure development and strengthens the risk taking ability of
individuals. It is estimated that over the next ten years India would
require investments of the order of one trillion US dollars.

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Ê 
Ê
 

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 non - Indian lives, as Indian lives were
considered more risky to cover. The Bombay Mutual Life Insurance
Society started its business in 1870. It was the first company to
charge the same premium for both Indian and non-Indian lives.

The Oriental Assurance Company was established in 1880. The

General insurance business in India, on the other hand, can trace
its roots to Triton Insurance Company Limited, the first general
insurance company established in the year 1850 in Calcutta by the
British. Till the end of the 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 the 1920's and 1930'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 the

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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 Life Insurance Corporation (LIC) was
born. Nationalization was justified on the grounds that it would
create the 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 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 and grouped into four companies- National
Insurance Company, New India Assurance Company, Oriental
Insurance Company and United India Insurance Company. These
were subsidiaries of the General Insurance Company (GIC).

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ÊÊ

 The Indian Life Assurance Companies Act enacted as the first
statute to regulate the life insurance business.

 The Indian Insurance Companies Act enacted to enable the

government to collect statistical information about both life and non-
life insurance businesses.

 Earlier legislation consolidated and amended by the Insurance

Act with the objective of protecting the interests of the insuring
public.

  245 Indian and foreign insurers along with provident societies
were taken over by the central government and nationalized. LIC was
formed by an Act of Parliament- LIC Act 1956- with a capital
contribution of Rs. 5 crore from the Government of India.

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Reforms in the Insurance sector were initiated with the passage of

the IRDA Bill in Parliament in December 1999. The IRDA since its

incorporation as a statutory body in April 2000 has fastidiously

stuck to its schedule of framing regulations and registering the

private sector insurance companies. Since being set up as an

independent statutory body the IRDA has put in a framework of

globally compatible regulations. c

The other decision taken simultaneously to provide the supporting
systems to the insurance sector and in particular the life insurance
companies was the launch of the IRDA online service for issue and
renewal of licenses to agents. The approval of institutions for
imparting training to agents has also ensured that the insurance
companies would have a trained workforce of insurance agents in
place to sell their products.

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The life insurance industry in India grew by an impressive 47.38%, with premium
income at Rs. 1560.41 billion during the fiscal year 2006-2007. Though the total volume
of LIC's business increased in the last fiscal year (2006-2007) compared to the previous
one, its market share came down from 85.75% to 81.91%.

The 17 private insurers increased their market share from about 15% to about 19% in a
year's time. The figures for the first two months of the fiscal year 2007-08 also speak of
the growing share of the private insurers. The share of LIC for this period has further
come down to 75 percent, while the private players have grabbed over 24 percent.

With the opening up of the insurance industry in India many foreign players have
entered the market. The restriction on these companies is that they are not allowed to
have more than a 26% stake in a companyƞs ownership.

Since the opening up of the insurance sector in 1999, foreign investments of Rs. 8.7
billion have poured into the Indian market and 19 private life insurance companies have
been granted licenses.

Innovative products, smart marketing, and aggressive distribution have enabled

fledgling private insurance companies to sign up Indian customers faster than anyone
expected. Indians, who had always seen life insurance as a tax saving device, are now
suddenly turning to the private sector and snapping up the new innovative products on
offer. Some of these products include investment plans with insurance and good returns
(unit linked plans), multi ƛ purpose insurance plans, pension plans, child plans and
money back plans. (www.wikipedia.com)

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|   is a term increasingly used to refer to insurance

characterized by low premium and low caps or low coverage limits,
sold as part of atypical risk-pooling and marketing arrangements,
and designed to service low-income people and businesses not
served by typical social or commercial insurance schemes.

The institutions or set of institutions implementing micro-insurance

are commonly referred to as a microinsurance scheme.

ÚÊÚ
 Ê  

1.
Micro-insurance is insurance with low premiums and low caps
/ coverage. In this definition, Ơmicroơ refers to the small
financial transaction that each insurance policy generates.
The Micro-insurance Regulations, issued in 2005 by the
Indian Insurance Regulatory and Development Authority
(IRDA), for example, adopted this definition in explaining
Ơmicro-insurance productsơ as those within defined (low)
minimum and maximum caps. The IRDAƞs characterization of
micro-insurance by the product features is further
complemented by their definition for micro-insurance agents,
those appointed by and acting for an insurer, for distribution
of micro-insurance products (and only those products).

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2.
Micro-insurance is a financial arrangement to protect low-

income people against specific perils in exchange for regular
premium payments proportionate to the likelihood and cost
of the risk involved. The author of this definition adds that
micro-insurance does not refer to: (i) the size of the risk-
carrier (some are small and even informal, others very large
companies); (ii) the scope of the risk (the risks themselves
are by no means Ơmicroơ to the households that experience
them); (iii) the delivery channel: it can be delivered through
a variety of different channels, including small community-
based schemes, credit unions or other types of microfinance
institutions, but also by enormous multinational insurance
companies, etc.

3.Micro-insurance is synonymous to community-based

financing arrangemen including community health funds,
mutual health organizations, rural health insurance, revolving
drugs funds, and community involvement in user-fee
management. Most community financing schemes have
evolved in the context of severe economic constraints,
political instability, and lack of good governance. The
common feature within all, is the active involvement of the
community in revenue collection, pooling, resource allocation
and, frequently, service provision.

4.
Micro-insurance is the use of insurance as an economic

instrument at the Ơmicroơ (i.e. smaller than national) level of
society. This definition integrates the above approaches into
one comprehensive conceptual framework. It was first
published in 1999, pre-dating the other three approaches,
and has been noted to be the first recorded use of the term
Ơmicro-insuranceơ. Under this definition, decisions in micro-
insurance are made within each unit, (rather than far away,
at the level of governments, companies, NGOs that offer
support in operations, etc.).

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Insurance functions on the concept of risk pooling, and likewise,

regardless of its small unit size and its activities at the level of
single communities, so does micro-insurance. Micro-insurance links
multiple small units into larger structures, creating networks that
enhance both insurance functions (through broader risk pools) and
support structures for improved governance (i.e. training, data
banks, research facilities, access to reinsurance etc.). This
mechanism is conceived as an autonomous enterprise,
independent of permanent external financial lifelines, and its main
objective is to pool both risks and resources of whole groups for
the purpose of providing financial protection to all members
against the financial consequences of mutually determined risks.

The last definition therefore, includes the critical features of the

previous three:

1.
transactions are low-cost (and reflect membersƞ willingness to

pay);
2.
clients are essentially low-net-worth (but not necessarily
uniformly poor);
3.
communities are involved in the important phases of the
process (such as package design and rationing of benefits);
and
4.
the essential role of the network of microinsurance units is to
enhance risk management of the members of the entire pool
of microinsurance units over and above what each can do
when operating as a stand-alone entity.

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Insurance coverage in developing countries is low, with only 3 %
of losses caused by disasters in developing countries are covered
by insurance. Even allowing for influxes of donor aid an average of
90% of the costs reconstruction are borne by the governments of
affected countries which can severely impact economic growth,
for example after Hurricane Mitch struck the island of Honduras
the government faced reconstruction bills of $1250/capita, and 5
years after the event GDP was 6% below pre-Mitch estimations of
growth . Increasing insurance coverage is seen as a way of
transferring the risk from disasters away from vulnerable countries
and populations to the global insurance market, and additionally
provides a more dignified way of coping with losses than reliance
on foreign aid .

Vulnerable communities are not helpless in the face of disasters,

and a variety of informal coping mechanisms are employed to help
reduce the impact of disasters or shocks and minimize the
disruption to livelihoods that these events cause. These strategies
vary, but common mechanisms include diversifying assets,
strengthening personal and communal networks which can be
relied upon in a crisis, reciprocal borrowing schemes, Ɲself-
insuranceƞ (accessing microcredit or savings to deal with losses)
and the sale of assets to raise capital . In some areas informal
insurance groups also exist, generally organized through existing
community groups or networks, for example funeral groups in
Uganda . These coping mechanisms are useful for dealing with
small and individual risks but can be overwhelmed by large losses,
in particular if these are covariate and affect all members of the
community at the same time . By transferring risk formal
microinsurance can decrease the vulnerability of communities and
individuals to disasters and aid in coping with large and covariate
events. Microinsurance schemes are varied, but can be divided into
2 broad categories; conventional or indemnity microinsurance

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In economics, the ‰c cc  is the largest, but
poorest socio-economic group. In global terms, this is the four
billion people who live on less than $2 per day, typically in
developing countries. The phrase Ơbottom of the pyramidơ is used
in particular by people developing new models of doing business
that deliberately target that demographic, often using new
technology. This field is also often referred to as the " c cc
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Several books and journal articles have been written on the
potential market by members of business schools offering
consultancy on the burgeoning market. They include ? c
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Crossroads by Stuart L. Hart of Cornell University and the first
empirical article, Reinventing strategies for emerging markets
Beyond the transnational model, by Ted London of the University
of Michigan and Hart. London has also developed a working paper,
commissioned by the United Nations Development Programme,
that explores the contributions of the BoP literature to the poverty
alleviation domain.

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The phrase Ơbottom of the pyramidơ was used by U.S. president
Franklin D. Roosevelt in his April 7, 1932 radio address, The
Forgotten Man, in which he said ƠThese unhappy times call for the
building of plans that rest upon the forgotten, the unorganized but
the indispensable units of economic power...that build from the
bottom up and not from the top down, that put their faith once
more in the forgotten man at the bottom of the economic
pyramid.ơ

The more current usage refers to the 4 billion people living on less
than $2 per day, as first defined in 1998 by à

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by both in their booksc? c!

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à   by Prahalad in 2004 and Capitalism at the Crossroads by
Hart in 2005.

Prahalad proposes that businesses, governments, and donor

agencies stop thinking of the poor as victims and instead start
seeing them as resilient and creative entrepreneurs as well as
value-demanding consumers. He proposes that there are
tremendous benefits to multi-national companies who choose to
serve these markets in ways responsive to their needs. After all the
poor of today are the middle-class of tomorrow. There are also
poverty reducing benefits if multi-nationals work with civil society
organizations and local governments to create new local business
models.

However, there is some debate over Prahalad's proposition. Aneel

Karnani, also of the Ross School at the University of Michigan,
argued in a 2007 paper that there is no fortune at the bottom of

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the pyramid and that for most multinational companies the market
is actually very small. Karnani also suggests that the only way to
alleviate poverty is to focus on the poor as producers, rather than
as a market of consumers. Additional critiques of Prahalad's
proposition have been gathered in Advancing the 'Base of the
Pyramid' Debate.

Meanwhile, Hart and his colleague Erik Simanis at Cornell

University's Center for Sustainable Global Enterprise advance
another approach, one that focuses on the poor as business
partners and innovators, rather than just as potential producers or
consumers. Hart and Simanis have led the development of the
Base of the Pyramid Protocol, an entrepreneurial process that
guides companies in developing business partnerships with
income-poor communities in order to "co-create businesses and
markets that mutually benefit the companies and the
communities". This process has been adopted by the SC Johnson
Company and the Solae Company (a subsidiary of DuPont.

Furthermore, Ted London at the William Davidson Institute at the

University of Michigan focuses on the poverty alleviation
implications of Base of the Pyramid ventures. He has identified the
BoP Perspective as a unique market-based approach to poverty
alleviation. London has also developed the BoP Impact Assessment
Framework, a tool that provides a holistic and robust guide for BoP
ventures to assess and enhance their poverty alleviation impacts.
Companies, non-profits, and development agencies in Latin
America, Asia, and Africa have implemented this framework.

Another recent focus of interest lies on the impact of successful

BoP-approaches on sustainable development. Some of the most
significant obstacles encountered when integrating sustainable
development at the BoP are the limits to growth that restrict the
extended development of the poor, especially when applying a
resource-intensive Western way of living. Nevertheless, from a
normative ethical perspective poverty alleviation is an integral part
of sustainable development according to the notion of

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intragenerational justice (i.e. within the living generation) in the

Brundtland commission's definition. Ongoing research addresses
these aspects and widens the BoP approach also by integrating it
into corporate social responsibility thinking.



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Prahalad is one of nine children. His father was a well-known
Sanskrit scholar and judge in Chennai. When he was 19, Prahalad
was recruited by the manager of the local Union Carbide battery
plant. He worked there for four years. Prahalad calls his Union
Carbide experience a major inflection point in his life.

There Prahalad wrote a doctoral thesis on multinational

management in just two and a half years, graduating with a D.B.A.
degree in 1975.

He then returned to India, where he taught at the IIM-A. He

returned to the United States, as an assistant professor at the
University of Michigan

Loyola College, Chennai / University of Madras (B.Sc. 1960), Indian

Institute of Management Ahmedabad (Post Grad Diploma in
Business Administration 1966), Harvard Business School (D.B.A.
1975).

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C. K. Prahalad is the author of a number of well known works in
corporate strategy including The Core Competence of the
Corporation (Harvard Business Review, May-June, 1990). He has
authored several international bestsellers, including: "Competing
for the Future"(with Gary Hamel), 1994, "The Future of
Competition," (with Venkat Ramaswamy), 2004 and "The Fortune
at the Bottom of the Pyramid: Eradicating Poverty through Profits,"
Wharton School Publishing, 2004. His new book with co-author M.
S. Krishnan is called The New Age of Innovation.

He was co-founder and became CEO of Praja Inc ("Praja" from a

Sanskrit word "Praja" which means "citizen" or "common people").
The goals of the company ranged from allowing common people to
access information without restriction (this theme is related to the
"bottom of pyramid" or BOP philosophy) to providing a testbed for
various management ideas. The company eventually laid off 1/3rd
of its workforce and was sold to TIBCO. He is still on the board of
TiE, The Indus Entrepreneurs.

Prahalad has been among top ten management thinkers in every

major survey for over ten years. Business Week said of him: "a
brilliant teacher at the University of Michigan, he may well be the
most influential thinker on business strategy today." He is a
member of the Blue Ribbon Commission of the United Nations on
Private Sector and Development. He is the first recipient of the Lal

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Administration presented by the President of India in 2000


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C.K. Prahalad, author of The Fortune at the Bottom of the
Pyramid; Eradicating Poverty through Profit (Wharton School
Publishing, 2004), has long championed the notion that business --
rather than government handouts -- represents the most effective
solution to poverty. In a keynote speech at the recent TiE
Entrepreneurship Summit in New Delhi, he noted that India must
pay more attention to entrepreneurship, which he described as
"the essence of development."

"We need to connect the poor through entrepreneurship, which

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c

enables wealth creation through transparent and legitimate

means," Prahalad said. He emphasized that businesses could
create wealth for themselves, too, through poverty alleviation.
"The poor deserve world class products and services."

C.K. Prahalad, author of The Fortune at the Bottom of the

Pyramid; Eradicating Poverty through Profit (Wharton School
Publishing, 2004), has long championed the notion that business --
rather than government handouts -- represents the most effective
solution to poverty. In a keynote speech at the recent TiE
Entrepreneurship Summit in New Delhi, he noted that India must
pay more attention to entrepreneurship, which he described as
"the essence of development."

"We need to connect the poor through entrepreneurship, which

enables wealth creation through transparent and legitimate
means," Prahalad said. He emphasized that businesses could
create wealth for themselves, too, through poverty alleviation.
"The poor deserve world class products and services."

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In India, many poverty alleviation programmes are being
implemented by the Government agencies, International donors,
Non- governmental organizations and other private development
facilitating agencies. Due to these sustained efforts, the poverty
level in India has come down from 26% in 1999-2000 to 22% in

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c

2004-051 and the Indiaƞs rank in UNDPƞs Human Development

Index has moved to 127 in 2005. Of late, the micro credit
movement has been making a silent revolution in Rural India
through the emergence of vibrant Self Help Groups (SHGs) and it
has become an effective tool to address the problem of poverty
and empowerment. The provision of micro credit has enabled the
poor households to increase their income and build their assets.
But, still they are vulnerable to withstand unexpected events and
remain exposed to multiple risks, which take away the gains made
due to their association with the SHGs. Besides, the poor living in
risk prone area ( E.g. Floods & Tsunami), are not willing to invest
further for their enterprise development fearing that their business
assets are exposed to risks. Provision of savings and credit services
helped in managing smaller risks, which they frequently face. But,
for securing against most unexpected bigger loss events, micro
insurance (MI) will be the best option to ensure them a social and
economic security. MI is the provision of insurance cover to the low
income households.

ÚÊ   Êc

Insurance provides the much needed cover against the unexpected

loss events and ensures the households financial security.
The provision of insurance cover will encourage the poor to
undertake a higher risk, which will result in higher income. Well
developed insurance sector is needed for a fast economic
development of a country as it provides the long term funds for
infrastructure development and strengthen the risk taking ability of
the people. The life insurance sector has contributed Rs4284520
millions as invested funds as at the end of Mar 2005, whereas the
non-life sectorƞs total investments stood at Rs374119.70 millions as
of Mar 20052. These funds have been invested in government
securities, market securities and in social and infrastructure sectors
benefiting the nation. Thus, Insurance assumes significance by not
cccccccccccccccccccccccccccccccccccccccc cccccccc
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only reducing the vulnerability of the poor, but also in enabling a

faster recovery from the loss event and helping the nation in
development of the infrastructure sector.

As per the Sigma Report (2/2005) of Swiss Re, the World

Insurance premium rose to 3244 billion US Dollars in 2004 and
Indiaƞs share in the world Insurance market accounted for only
0.66% (19th rank) with total premium volume of 21249 million US
Dollars. Insurance penetration is an indication for the level of risk
awareness by public and it shows how significant the insurance is
with in an economy. It is defined as Gross Insurance premium as a
percentage of GDP (Gross Domestic Product). Indiaƞs Insurance
penetration is 3.17% of GDP in 2004, which is less than half of the
worldƞs average of 7.99% .

Insurance Density or Density of premium is used to judge the

relative progress of the industry across countries and it is a sign of
the maturity of the industry in a country. It is measured as Per
capita Insurance premium. Higher the insurance density, more
diverse will be the insurance products accessed. Indiaƞs Insurance
Density is just 19.7 US dollars, less than the world average of
511.5 US dollars. Among the top ten emerging markets, India
attained the 5th rank with 16919 million US dollars as life insurance
premium in 2004 ( 7.5% share of emerging markets) and 4330
million US dollars as non life premium in 20043 (3.0% share of
emerging markets).

In India, only 10% of people have some kind of social protection.

Table: 1, shows the exclusion magnitude of selected countries.

ccccccccccccccccccccccccccccccccccccccccc  c $%c c c &'(cc

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Countries % of Excluded people in Millions
Exclusion
India 90 950
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Bangladesh 93 134
Pakistan 97 147
Source: ILO / STEP.

India, with its huge economy and large population, is the most
promising emerging market in the world.

In 1956,. Government of India merged 240 private insurance

companies to form the government owned Life Insurance
Corporation of India (LIC). General Insurance business was also
nationalized in 1972. In the post nationalization phase, the general
insurance business was undertaken by the General Insurance
Corporation (GIC) and its four subsidiaries viz. United India
Insurance company limited, Oriental Insurance company limited,
National Insurance company limited and New India Assurance
company limited. Passing of IRDA (Insurance Regulatory and
Development Authority) 1999 bill was a milestone. In 2000, the
IRDA opened up the Insurance industry, which attracted many
players into the field. The Insurance Division in the Department of
Economic Affairs, Ministry of Finance, Government of India, makes
appointment of Chief executives to the Nationalized Insurance
companies and appointment of members of IRDA and exercises
control for over all policy formulations. The foreign companies
were allowed to enter the insurance sector through joint venture
with the Indian companies and the foreign companies equity stake
restricted to 26% cap. This has set in a healthy competition
leading to roll out of a series of customer focused products. As of
now, there are 14 life insurers (out of this 1 public sector insurer),
14 non life insurers (out of this 6 public sector insurers) and one
re-insurer ( 1 public sector re-insurer). The premium underwritten
by the insurance industry has grown from Rs456775.70 millions in
2000-01 to Rs836451.10 millions in 2003-04. According to a ILO
(2005) study, the expected market size of the life insurance
industry by 2008 is Rs800 to 1000 billion and the expected market
size of non-life industry by 2008 is Rs250 billion.

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Earlier, in India, the Micro insurance initiative was on a bank-

driven basis. The assets (mainly dairy animals, sheep and goat )
created under the poverty alleviation programs by the banks were
insured and the lives of the beneficiaries were covered by
Government of India under a group insurance policy. As most of
the non life insurance companies had master policy with the banks
at the apex level, the claim servicing was not given attention in the
field, which resulted in inordinate delay in settlement of claims and
a negative image was created about the insurance companies
among the poor.

 &Ê Ê  Êc

In 2002, IRDA prescribed rural and social sector obligations for the
insurance companies to achieve. Every insurer who begins to carry
on insurance business after the commencement of IRDA act 1999,
shall comply with the following obligations.
 Ê 


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For existing insurers as on the date of commencement of IRDA act,

the quantum of insurance business to be done shall not be less
than what has been recorded by them for the accounting year
ended 31st Mar 2002. IRDA has modified the rural area definition
later upon request from the insurers. The latest definition of rural
area is the area not qualified as urban area with municipality or
corporation or cantonment board or notified town area.

IRDA brought out the micro insurance regulations in Nov 2005.

The days ahead are going to be hectic for the insurers, as lot of
micro insurance products launches are expected. The international
organizations like UNDP, ILO, World Bank, DFID, USAID and GTZ
have been instrumental in initiating and supporting the various
models of micro insurance programs in India through grants and
technical assistance.


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In India, NGOs, MFIs, CBOs and SHGs are the main intermediaries
in micro insurance distribution. Four different Micro insurance
delivery models are being practiced, which are categorized based
on where the risk is borne. Post offices also offer life insurance
products, which are mostly endowment types and preferred by
some rural poor. Its performance is not reflected in IRDA reports.


c
 


Among the Micro insurance delivery models in India, the most

popular model is the partner ƛ agent model (E.g. Kalvi Kendra
NGO & LIC ), wherein the Insurers bears the risk and the NGO or
MFI does the front end works like canvassing, collection of
premium, maintaining the database of clients and assisting in claim
processing. Partner ƛ Agent model is a better option, as the NGO /
MFI takes care of the information asymmetry problems (moral
hazard, frauds and adverse selection) & helps to reduce the
distribution cost, whereas the formal insurer, who bears the risk, is

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technically competent, adequately capitalized and have sufficient

reserves to manage even co-variant risk induced claims.

‰



In provider model, the service provider ( E.g. Voluntary Health
Services, Chennai), bears the risk. This model is followed by very
few only. Here, in case of health insurance, the out patient care is
also covered in the insurance scheme.


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In community managed insurance programs ( E.g. Kadamalai

Kalanjia Vattara Sangam of DHAN foundation), the risk is borne by
the Community Based Organization. As the provider & community
managed models are not getting the re-insurance cover, managing
co-variant risk is a challenge. For most of the community managed
Micro Insurance programs, the technical assistance is provided by
international re-insurers like Interpolis Re. As the capital
requirements for registering a re-insurer in India is Rs200 crore,
these re-insurers has not got registered themselves with IRDA in
India, right now. If IRDA prescribes a lower capital requirements
for re-insurers, who provide technical assistance and re-insurance
to the community managed micro insurers, more of FDI will flow in
and the micro insurers will be benefited more.


c
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c
The fourth model is like Partner ƛ Agent model, with one more
inclusion, which is the involvement of a health care management
company for co-ordinating & organizing the health insurance
program ( E.g. USAID project implemented by Healing Fields
Foundation (HFF) ). In this model, the salient feature is the
positioning of HFF facilitator at each of the networked hospitalƞs
front desk to take care of the insured clients who come for in-

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patient care. This provides control at the origination point itself and
it is reported that their claim loss ratio is lower at 56%. This
corroborates with the Ugandan experience of Micro Care, where
also, the facilitator takes care at the Hospital reception desk itself
and they reported that this control saved MICRO CARE 40% of
cost of claims due to reduced frauds.
c
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Even though the pamphlets / rural insurance booklets of public

sector insurers mention the existence of many rural / micro
insurance products covering livestock, crops, business assets,
accident and health risks, these are not actively marketed by those
companies nor demanded by the clients in the market. Only a few
products like Cattle insurance and accident insurance covers are
visible. One of the existing weakness is due to the standard
products (e.g. Universal Health Insurance being marketed by all
the public insurers consequent to the policy announcement by the
Government of India in the Union Budget ) offered by the
commercial insurers. But, in rural India, diversity is the hall
mark, which require the customization of the products for each
segment / region. For serving the rural market, the first and
foremost step by the insurers is to focus on new product
development so as to cater to the felt needs of the poor, which is
lacking now.


 ÊÊÊ

Processes are more important as simplified and transparent

processes will lead to cost reduction and more satisfaction to the
clients. The product sales & servicing by the insurers will also be
easy. Sometimes, these processes involve cost to the client much
more than the insurance benefit amount e.g. Getting the
certificates like Police Inquest Report for accidental deaths. As the

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current processes in micro insurance are cumbersome, it leads to

delay in servicing and client dissatisfaction.


  

Pricing is a critical issue, which has to be arrived at carefully. Even

Roth.J and Ramm.G (2005) in their study on Ơ Micro Insurance ƛ
Demand & Market prospects ƛ India , observed that many of the
life policies are being sold in India, at a loss to meet quota
obligations. This is not a good strategy as it can not be continued
for a long period. Likewise, subsidizing the premium will also not
help in developing the MI market.

ivÊ 

In case of the micro insurance products, the cost of distribution in

rural areas is more as the insurance companies do not have any of
their branch in rural areas, but have to operate through some
intermediaries. The distribution channel development has not
taken place in the rural areas.

v



At present the promotional efforts of the many of the insurers

targeting the bottom of the pyramid market is almost negligible.
Even the micro insurance pamphlets of most of the insurers are in
English and not in local languages. Mass media like TV, radio and
paper media have not been put to optimum use for creation of the
awareness about the micro insurance among the target group in
the rural areas.
c
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Ê  Ê' 
   

As the concept of insurance itself has many technicalities, provision

of micro insurance services to poor requires some management
capacity at the NGO / MFI level, which is lacking. The

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organizations which are having professionals as operational heads

at the field units and proper operational systems & procedures are
very few and these only are trusted more by the insurance
companies as the first choice, which is evident from their
delegation of more of their front end functions to the NGOs.
Besides NGO staff, the prospective clients of the target market are
also not aware of the insurance concept and insurance product
options. Insurers also, have not acquainted themselves with the
intricacies of the needs & expectations of the rural clients and lack
an understanding of the perspectives of the target market
environment.

*
 
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ÊÊ


Management Information System (MIS) is a weak area in the field

of Micro Insurance as on date. Even Micro Insurance product-wise
performance of all insurance companies are not published regularly
in any journal, which will facilitate the comparison of products in
the market. As the historical data has not been captured from the
micro insurance clients, the insurers are generally not able to price
their MI products on a real actuarial basis. Professional NGOs like
BASIX has developed IDIAS (Insurance Distribution and
Administration System) software. But, many of the small &
medium NGOs are not using any software at present and
maintaining the data on MI manually, which is a cumbersome work
and effective data-mining analysis is not possible from such non-
formatted data.

*
c Ú
c

After wider consultations, IRDA notified the MI regulations in Nov

2005. Even then, IRDA has not addressed some main issues in
their new regulations. In the new MI regulations of IRDA, SHG has
not been recognized as an entity to take insurance cover in its
name. A live case is quoted in Box.5.
c

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After liberalization and introduction of prudential norms in the

banking sector, the credit flow to agriculture was coming down
(The decadal average growth rates of Direct institutional credit to
agriculture declined from 20.2% in 1970s to 14.0% during 2002-
034. Policy announcement in June 2004 by the Government of
India to double the credit flow to agriculture in next three years,
triggered a robust growth of more than 30% in Bankƞs credit flow
to agriculture in 2004-05. Such a policy announcement by
Government on Micro Insurance is also the need of the hour to
move the top brass of Insurance companies into action.

c
Ê
  Ê
 Ê  
c
The following best practices on MI will be of much help to the NGO
/ insurers, who will be taking up the micro insurance. However, the
NGOs / insurers can adopt these practices to suit to their context.
^


c
i
Before buying a cover for its members, NGO shall take
up a small survey in its client base to know what type
of risk to be covered on a priority and level of
willingness to pay. This will be a big input, while
negotiating with the insurers for a customized product
package.c
i
While enrolling for insurance, each member should be
given a brief / pamphlet (in local language) ,
mentioning all the important policy terms.c
i
Members should be explained about the exclusion
clause (e.g. what are all the diseases not covered and
so on )c

cccccccccccccccccccccccccccccccccccccccc cccccccc
c

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c

i
Better to introduce the insurance after the stabilization

of savings and credit program, so that the additional
cost involved for administration is reduced.c
c
^



  
c
i
Members find it easy to pay in small lump sum. But, for
the company, it adds to its transaction cost of
providing the insurance services. Hence, the group can
pay the premium from its funds / or it can lend it to its
members and the members will pay to the group in
easy instalments with or without interest as per the
groupƞs choice.c
i
While disbursing bank loans also, premium can be
collected.c
i
Insurance month is celebrated and during the month,
more awareness building & premium collection is
carried out.c
i
One time premium may be collected from the member
and the amount is placed in a fixed deposit and the
interest from that fixed deposit is used to pay the
Insurance premium every year.
c
^

 Ú Ê
c
i
Cashless facility to the Health insurance optees in tie
up with the select hospitals. Claim payment is directly
made to the hospital or through the federation to the
hospital.c
i
Cover for senior citizens also. But, the sum assured can
be limited.c
i
Health insurance product without any sub limits for
various categories like transport, room rent, doctorƞs
fees and so on. Only the upper limit is indicated.c
i
Provision of funeral expenses of Rs3000 paid to the
deceased family from the federation and the amount

c % c
c

given is adjusted, from the claim received from the

insurance company.c
c
^

 ÊÊÊ

i
Proposal forms and claim forms are in local language.c
i
Limited co-payments ƛ Members of Kadamalai Kalanjia
Vattara Sangam bear the 25% of the medical expenses
and only 75% of the expenses is reimbursed. This is to
protect from overstatement of the bills by the membersc
i
Following Simple processes (e.g. accepting the Death
certificate by the President of the Panchayat instead of
insisting from the Revenue authorities)c
i
Creating a computerized MIS (IDIAS of BASIX) for
micro insurance.c
i
Reflecting on the practices and experiences every year
and reorienting the strategies (Kadamalai Kalanjia
Vattara Sangam reviews the operations and financial
position of the insurance fund every year and they
change the premium rates and the benefits offered, in
consultation with the community and the actuarial
experts so as to run it on a sustainable manner)c
i
NGOƞs Continued dialogue with the insurers and
organizing interactive workshops for bringing out
improvements in product features / processes based on
the feedback from the clients.c
c

Ú
As the Micro insurance sector is in its infancy, all the stakeholders
viz Government, International donors, Regulator, Insurers, Banks,
NGOs & SHGs have to put in their concerted efforts in building the
sector. Government and International donors shall launch a
Micro Insurance pilot project in a few districts to demonstrate to

c %#c
c

the mainstream insurers that micro insurance can be profitably

delivered to the poor in a sustainable manner provided needed
flexibilities are in built in the products and processes customized
for the target market. Donors shall support the development of
exclusive MI- MIS package and its operationalization at the field
level. Government shall dedicate a Special Fund for innovations
which will assist the pioneering stakeholders, to experiment with
the innovative products, flexible processes. Government & donors
shall fund the capacity building programs to all stakeholders. The
Best practices dissemination, which involves organizing workshops,
facilitating a continuous dialogue among the practitioners,
arranging exposure visits to the pioneering institutions in the field
of MI and bringing out Manuals on the Best Practices on MI,
needs a massive budget, for which the Government and the
donors should make a suitable provision.

Even though the recent IRDA guidelines on MI have recognized the

SHGs working for at least 3 years, as MI agents, it has not
recognized the SHGs as an eligible entity to take the insurance
cover in its name. IRDA has to recognize all SHGs / CBOs as an
informal entities and allow the insurers to transact business with
the SHGs / CBOs as done by the RBI in case of SHG Bank linkage
program. IRDA shall revise its guidelines and bring the Community
managed insurance programs, under regulation, as they are real
innovators. IRDA shall prescribe a lower capital requirements as in
Uganda and Sri lanka, so that the international micro insurers
will be attracted into India and they will bring their expertise to
take the sector forward. IRDA shall designate selected institutions
as Resource Institutions on MI and they may be given the
responsibility of nurturing the small NGOs and help them in putting
the systems and procedures in place for effective management of
the MI program. To create an awareness about the concept and
the product options, IRDA & insurers shall take up a multi media
campaign on MI so as to reach more number of rural households.
A National Micro Insurance Information Bureau may be created by
IRDA and it may be assigned the responsibility of maintaining the
online database on MI and the facility can be made available to all

c %$c
c

the stakeholders to store their data. A National level consultative

committee on MI may be formed by the IRDA. The MI practitioners
of various models may be represented in the committee so as to
receive their feedback for policy advocacy.

The insurers should customize the products to different market

segments according to their felt needs. Insurance companies
should organize exclusive capacity building programs to their
management and field staff. Such training programs should also
include exposure visits to the successful micro insurance program.
Rationalizing the procedures and simplifying the operational
processes will lead to cost efficiencies. Routine works can be
outsourced from the NGOs / MFIs, retaining the core underwriting
work alone to the insurance companies. MI is now only NGO/ MFI
driven. The alternate channels like bank branches of commercial
banks, RRBs, co-operatives, in the rural areas, Post offices, Agro
input dealer networks, SHG marketers shall be developed to
increase the outreach.
For the poor to make it affordable, the premium should be as low
as possible. The charging of service tax @10.2% on the premium
adds to their burden. Hence, the government may waive the
service tax on MI products.
c

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Few men in history have made as dramatic a contribution to their

countryƞs economic fortunes as did the founder of Reliance, Sh.

Dhirubhai H Ambani. Fewer still have left behind a legacy that is

more enduring and timeless.


As with all great pioneers, there is more than one unique way of

describing the true genius of Dhirubhai: The corporate

visionary, the unmatched strategist, the proud patriot, the

leader of men, the architect of Indiaƞs capital markets, the

champion of shareholder interest.


But the role Dhirubhai cherished most was perhaps that of

Indiaƞs greatest wealth creator. In one lifetime, he built, starting

from the proverbial scratch, Indiaƞs largest private sector

enterprise.

c %'c
c


When Dhirubhai embarked on his first business venture, he had

a seed capital of barely US$ 300 (around Rs 14,000). Over the

next three and a half decades, he converted this fledgling

enterprise into a Rs 60,000 crore colossusƜan achievement

which earned Reliance a place on the global Fortune 500 list,

the first ever Indian private company to do so.


Dhirubhai is widely regarded as the father of Indiaƞs capital

markets. In 1977, when Reliance Textile Industries Limited first

went public, the Indian stock market was a place patronised by

a small club of elite investors which dabbled in a handful of

stocks.


Undaunted, Dhirubhai managed to convince a large number of

first-time retail investors to participate in the unfolding Reliance

story and put their hard-earned money in the Reliance Textile

IPO, promising them, in exchange for their trust, substantial

return on their investments. It was to be the start of one of

great stories of mutual respect and reciprocal gain in the Indian

markets.

c %(c
c


Under Dhirubhaiƞs extraordinary vision and leadership, Reliance

scripted one of the greatest growth stories in corporate history

anywhere in the world, and went on to become Indiaƞs largest

private sector enterprise.


Through out this amazing journey, Dhirubhai always kept the

interests of the ordinary shareholder uppermost in mind, in the

process making millionaires out of many of the initial investors

in the Reliance stock, and creating one of the worldƞs largest

shareholder families

  




November 2000 ƛ Conferred '|c cc , award

by Chemtech Foundation and Chemical Engineering World in

recognition of his outstanding contribution to the growth and

development of the chemical industry in India


2000, 1998 and 1996 ƛ Featured among '- c./ccc

c %)c
c

c- #c#cc by Asiaweek magazine.


June 1998 - ,c|# by The Wharton School

University of #*, for setting an outstanding

example of leadership. Dhirubhai Ambani has the rare

distinction of being the first Indian to get Wharton School

Dean's Medal


August 2001 ƛ The Economic Times Award for Corporate


Excellence for  c*


Dhirubhai Ambani was named the |c c0/c  by

the Federation of Indian Chambers of Commerce and

Industry (FICCI).


A poll conducted by The Times of India in 2000 voted Him

6) c  c c#cc c 6
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Reliance Life Insurance Company Limited is a part of Reliance

Capital Ltd. of the Reliance - Anil Dhirubhai Ambani Group.

Reliance Capital is one of Indiaƞs leading private sector financial

services companies, and ranks among the top 3 private sector

financial services and banking companies, in terms of net worth.

Reliance Capital has interests in asset management and mutual

funds, stock broking, life and general insurance, proprietary

investments, private equity and other activities in financial

services.

c Reliance Capital Limited (RCL) is a Non-Banking Financial

Company (NBFC) registered with the Reserve Bank of India

under section 45-IA of the Reserve Bank of India Act, 1934.

c Reliance Capital sees immense potential in the rapidly growing

financial services sector in India and aims to become a

dominant player in this industry and offer fully integrated

financial services.

c &+c
c

c Reliance Life Insurance is another step forward for Reliance

Capital Limited to offer need based Life Insurance solutions to

individuals and Corporates.

c
c

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cccccccccccccccccccccccc
c
c

Gautam Doshi,   c

Satya Pal Talwar,   cc

Saumen Ghosh, ) c 

Malay Ghosh ƛ  c1cc(c

Maneesha Thakur,  c

c c
(  c

Saroj K Panigrahi,
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1cc  c

S V Sunder Krishnan%c c4c( 

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 Ê ÊÚ 


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Ê
 Ú  Ê Ê 

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Ê   



Reliance Life Insurance plans to tap Reliance Communications' 2.5-

crore telephony subscriber base to market its products.

The company is considering a series of options to leverage its

relationship with Reliance Communications.

However, a joint product or a co-branded solution would require

approval from the Insurance Regulatory and Development

Authority

Customers of R World, the information and entertainment portal of

Reliance Communications, would also be able to pay premiums

through a bank account, provided the bank is listed on the

network.

c &#c
c

Reliance Life Insurance officials, however, offered no comment

when asked whether there would be an arrangement for payment

of commission to Reliance Communications.

As an alternative channel for distribution, insurance companies

usually tie up with banks. In the case of banc assurance, where

there is a corporate agency tie-up, the commission could range

from 5 per cent to 40 per cent of first-year premium depending on

the commission loaded on to the product at the time of registration

with IRDA.

 
 

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different at every stage, life insurance must offer flexibility and

choice to go with that stage. We are fully prepared and committed

to guide you on insurance products and services through our well-

trained advisors, backed by competent marketing and customer

services, in the best possible way.

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It is our aim to become one of the top private life insurance

companies in India and to become a cornerstone of RLI

integrated financial services business in India.

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ƠTo set the standard in helping our customers manage their

financial futureơ. Create unmatched value for everyone

through dependable, effective, transparent and profitable life

insurance and pension plans.

  

Reliance Life Insurance would strive hard to achieve the 3

goals mentioned below:


Emerge as transnational Life Insurer of global scale and

standard


Create best value for Customers, Shareholders and all Stake

holders

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Achieve impeccable reputation and credentials through best

business practices

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What could make you happier than knowing, that your child's
future is secure? Nothing, we suppose. Which is why, Reliance Life
Insurance brings to you Reliance Secure Child Plan, a unit-linked
Insurance Plan, that gives you the freedom to enjoy today with
your child, because his tomorrow is in safe hands.


Do you see your child becoming a trailblazer?


Will they create the ultimate symphony or give sports a new
dimension?

Our children may just be the ones to end the arms race and wipe
out poverty from the face of the Earth. But for them to be able to
aim for the skies, YOU NEED TO ACT NOW!

Introducing Reliance Secure Child Plan - a unique life insurance

cum savings plan. secure the future of your child.

Ú Ê
Insurance cover on the life of child
Your child is completely protected - we will continue to

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pay the premiums even if you are not alive

Life time income to child in the event of disability
Return Shield option to protect your investment returns
Liquidity in the form of partial withdrawals
Capital guarantee available on maturity and on death of
the child for basic and top-up premiums
Option to package with Accidental Death and Total and
Permanent Disablement Rider, Critical Conditions Rider
and Term Life Insurance Benefit Rider.
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UNDER THIS PLAN THE INVESTMENT RISK IN THE INVESTMENT
PORTFOLIO IS BORNE BY THE POLICYHOLDER.

There are times when late working hours take precedence over
your health check-ups. And there are times when a visit to the
doctor seems more important than dividends on your shares. In
the rat race to make money, we often forget to take care of
ourselves.

We understand this predicament. Here is a plan that will ensure

that your wealth keeps increasing constantly and yet your health
does not take a backseat. The Reliance Wealth Health Plan. A plan
that gives you the benefits of wealth bhi. health bhi.

Life changes. And as it does, so do your priorities. After all, the

circumstances of your life can determine the type of health
coverage you need.

India has made rapid strides in the health sector. Since

Independence, life expectancy has gone up markedly and survival
rates have also increased, still critical health issues remain.
Infectious diseases continue to claim a large number of lives.

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Reliance Wealth + Health Plan, a health insurance plan

underwritten by Reliance Life Insurance Company Limited, is
designed to work in conjunction with contributions towards
savings.


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A Unit Linked plan with Unique Savings Component
Twin benefit of market linked return and health protection
Choose from two different plan options
Flexibility to take care of your familyƞs health
Flexibility to switch between funds / plan options
Option to pay Top-ups


º
àà
UNDER THIS PLAN THE INVESTMENT RISK IN THE INVESTMENT
PORTFOLIO IS BORNE BY THE POLICYHOLDER.

Retirement means different things to different people, while some

want to relax and take a trip around the world, some want to start
up a venture of their own, and pursue a dream harnessed for
years. The power to make your autumn years special lies only with
you. The Reliance Super Golden Years Plan gives you the power
and the right kind of solution - A retirement plan that allows you to
save systematically and generate the much-needed corpus to make
your olden years look golden.

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Invest systematically and secure your golden years
A flexible unit-linked pension product that is different from
traditional life insurance products with Vesting Age

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between 45 & 70 years

Eight different investment funds to choose from
Flexibility to switch between funds
Option to pay Regular, Single as well as Top-up premiums
Flexibility to advance / extend your Vesting Age
Tax free commutation up to one third of Fund Value at
Vesting Age

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Youƞve always loved your family. As a loving person you want to be
rest assured that they will be happy, even if something were to
happen to you. With Reliance Whole Life Plan you can be sure that
your family will receive that timely financial support they need.

Go ahead, live your today to the fullest, without a worry about

tomorrow.


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Insurance protection till age 85
Choice of extending your insurance coverage till age 99
Convenient Premium Payment Term
Wealth creation through bonus additions
More value for your money by way of High Sum Assured
Rebate Get Sum Assured plus Bonuses in case of your
unfortunate death
Option to add two Riders ƛ Critical Illness and Accidental
Death Benefit and Total and Permanent Disablement
Rider
Policy Loan available after three full years premium
payment

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To ensure a bright and secure future, you need to plan from

today. The Reliance Simple Term Plan help you just that.It is

cost effective,pure life insurance plan that offer you

comprehensive and offerdable coverage for a limited period

of time to suit your needs.Ô c

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You pay premium of Rs 100 every year for three years. On death,
during the three year period, your Beneficiary will get Rs 10,000.
On survival to maturity nothing is payable.
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Policy Term: Three years

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 +
Minimum age at entry: 18 years
Maximum age at entry: 44 years
Maximum age at maturity: 47 years


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Sum Assured: Rs 10,000



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+
If the premiums are not paid within the Grace Period, the Policy will
lapse. Grace Period is one month but not less than 30 days.








Only Yearly Mode is allowed.

!  Ê
No claim will be paid on death, if the Life Assured, whether sane or
insane, commits suicide within 12 months from the date of issue of
this Policy or the date of any reinstatement of this Policy.


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In Case the Policy Holder disagrees with any of the terms and
conditions of the policy , he may return the policy to the Company
within 15 days of its receipt for cancellation , stating his/her
objections in which case the company will refund the premium paid
by the Policy Holder after deducting a proportionate premium for
the period the company has been on risk and the expenses incurred
by the company on medical examination and stamp duty charges.
Mktg/Product Brochure/Version 1.7/November 2008
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Reliance Life Insurance offers you products that fulfill your savings
and
protection needs. Our aim is to emerge as a transnational Life
Insurer of global
scale and standard.

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Reliance Life Insurance is an associate Company of Reliance Capital

Ltd., a
part of Reliance - Anil Dhirubhai Ambani Group.Reliance Capital is
one of
India's leading private sector financial services companies. Reliance
Capital has
interests in asset management and mutual funds, stock broking, life
and
general insurance, proprietary investments, private equity and other
activities
in financial services.
Reliance - Anil Dhirubhai Ambani Group also has presence in
Communications, Energy, Natural Resources, Media, Entertainment,
Healthcare and Infrastructure.


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Ê   ÊÊ
$6 No person shall allow or offer to allow, either directly or
indirectly, as
an inducement to any person to take out or renew or continue an
insurance in respect of any kind of risk relating to lives or property in
India, any rebate of the whole or part of the commission payable or
any
rebate of the premium shown on the Policy, nor shall any person
taking
out or renewing or continuing a Policy accept any rebate, except such
rebate as may be allowed in accordance with the published
prospectuses or
tables of the insurer.

06 Any person making default in complying with the provisions of

this section
shall be punishable with a fine which may extend to five hundred
rupees.


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$6 No policy of life insurance effected before the commencement

of this Act
shall after the expiry of two years from the date of commencement
of this
Act and no policy of life insurance effected after the coming into
force of
this Act shall, after the expiry of two years from the date on which it
was
effected be called in question by an insurer on the ground that
statement
made in the proposal or in any report of a medical officer, or referee,
or
friend of the insured, or in any other document leading to the issue
of the
policy, was inaccurate or false, unless the insurer shows that such
statement
was on a material matter or suppressed facts which it was material to
disclose and that it was fraudulently made by the policy-holder and
that
the policy-holder knew at the time of making it that the statement
was
false or that it suppressed facts which it was material to disclose:

06 Provided that nothing in this section shall prevent the insurer

from calling
for proof of age at any time if he is entitled to do so, and no policy
shall be
deemed to be called in question merely because the terms of the
policy are
adjusted on subsequent proof that the age of the life insured was
incorrectly stated in the proposal.

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Reliance Life Insurance is a licensed life insurance company

registered with
Insurance Regulatory & Development Authority (IRDA)
This product brochure gives the salient features of the plan only. For
further
details on all the conditions, exclusions related to Reliance Simple
Term Plan
please contact our Insurance Advisor.
Insurance is the subject matter of the solicitation.
UIN for Reliance Simple Term Plan: 121N007V01
#c c ccc(Reg. No 121)
Registered Office: H Block, 1st floor, Dhirubhai Ambani Knowledge
City,
Navi Mumbai, Maharashtra 400710, India
n Customer Care Number: $7//c8//c/7$7$c& 8/88c7$7$c
n Email: # 
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n Website: ---
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Sec. 80Cc Across All income Upto Rs. 33,990 All the life insurance

Slabsc saved on plans.c

investment of

Rs. 1,00,000.c

Sec. 80 CCCc Across all income Upto Rs. 33,990 All the pension plans.c

slabs.c saved on

Investment of

Rs.1,00,000.c

Sec. 80 Dc Across all income Upto Rs. 3,399 All the health insurance

slabsc saved on riders available with the

Investment of conventional plans.c

Rs. 10,000.c

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TOTAL SAVINGS
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POSSIBLE c
Rs. 33,990 under Sec. 80C and under Sec. 80 CCC , Rs.3,399 under
Sec. 80 D, calculated for a male with gross annual income
exceeding Rs. 10,00,000.

Sec. 10 (10)Dc Under Sec. 10(10D), the benefits you receive are completely tax-

free, subject to the conditions laid down therein.c

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Life Insurance Corporation of India (LIC) was established on 1

September 1956 to spread the message of life insurance in the

country and mobilise peopleƞs savings for nation-building activities.

LIC with its central office in Mumbai and seven zonal offices at

Mumbai, Calcutta, Delhi, Chennai, Hyderabad, Kanpur and Bhopal,

operates through 100 divisional offices in important cities and

2,048 branch offices. LIC has 5.59 lakh active agents spread over

the country.

The Corporation 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

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(International), E.C. Bahrain. It has also entered into an

agreement with the Sun Life (UK) for marketing unit linked life

insurance and pension policies in U.K.

In 1995-96, LIC had a total income from premium and investments

of $ 5 Billion while GIC recorded a net premium of $ 1.3 Billion.

During the last 15 years, LIC's income grew at a healthy average

of 10 per cent as against the industry's 6.7 per cent growth in the

rest of Asia (3.4 per cent in Europe, 1.4 per cent in the US).

LIC has even provided insurance cover to five million people living

below the poverty line, with 50 per cent subsidy in the premium

rates. LIC's claims settlement ratio at 95 per cent and GIC's at 74

per cent are higher than that of global average of 40 per cent.

Compounded annual growth rate for Life insurance business has

been 19.22 per cent per annum

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The general insurance industry in India was nationalized and a government

company known as General Insurance Corporation of India (GIC) was formed by

the Central Government in November 1972. With effect from 1 January 1973 the

erstwhile 107 Indian and foreign insurers which were operating in the country

prior to nationalization, were grouped into four operating companies, namely, (i)

National Insurance Company Limited; (ii) New India Assurance Company

Limited; (iii) Oriental Insurance Company Limited; and (iv) United India

Insurance Company Limited. (However, with effect from Dec'2000, these

subsidiaries have been de-linked from the parent company and made as

independent insurance companies). All the above four subsidiaries of GIC

operate all over the country competing with one another and underwriting

various classes of general insurance business except for aviation insurance of

national airlines and crop insurance which is handled by the GIC.

Besides the domestic market, the industry is presently operating in 17 countries

directly through branches or agencies and in 14 countries through subsidiary and

associate companies.

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!ÚÊ   

Max New York Life Insurance Company Limited is a joint venture that brings

together two large forces - Max India Limited, a multi-business corporate,

together with New York Life International, a global expert in life insurance. With

their various Products and Riders, there are more than 400 product combinations

to choose from. They have a national presence with a network of 57 offices in 37

cities across India.

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Kotak Mahindra Old Mutual Life Insurance Ltd. is a joint venture

between Kotak Mahindra Bank Ltd. (KMBL), and Old Mutual plc.

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Birla Sun Life Insurance Company is a joint venture between Aditya

Birla Group and Sun Life financial Services of Canada.

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Tata AIG Life Insurance Company Ltd.

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SBI Life Insurance Company Limited

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ING Vysya Life Insurance Company Private Limited

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Allianz Bajaj Life Insurance Company Ltd.

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Metlife India Insurance Company Pvt. Ltd.

8
AMP SANMAR Assurance Company Ltd.

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Dabur CGU Life Insurance Company Pvt. Ltd.

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The joint venture bringing together Royal & Sun Alliance Insurance

and Sundaram Finance Limited started its operations from March

2001. The company is Head Quartered at Chennai, and has two

Regional Offices, one at Mumbai and another one at New Delhicc

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ICICI Lombard General Insurance Company Limited is a joint

venture between ICICI Bank Limited and the US-based $ 26 billion

Fairfax Financial Holdings Limited. ICICI Bank is India's second

largest bank, while Fairfax Financial Holdings is a diversified

financial corporate engaged in general insurance, reinsurance,

insurance claims management and investment management.

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Lombard Canada Ltd, a group company of Fairfax Financial

Holdings Limited, is one of Canada's oldest property and casualty

insurers. ICICI Lombard General Insurance Company received

regulatory approvals to commence general insurance business in

August 2001.

 

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Cholamandalam MS General Insurance Company Limited (Chola-

MS) is a joint venture of the Murugappa Group & Mitsui

Sumitomo.

Chola-MS commenced operations in October 2002 and has issued

more than 1.4 lakh policies in its first calendar year of operations.

The company has a pan-Indian presencec with offices in Chennai,c

Hyderabad, Bangalore, Kochi, Coimbatore, Mumbai, Pune, Indore,

Ahmedabad, Delhi, Chandigarh, Kolkata and Vizag.c

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Tata AIG General Insurance Company Ltd. is a joint venture

company, formed from the Tata Group and American International

Group, Inc. (AIG). Tata AIG combines the strength and integrity of

the Tata Group with AIG's international expertise and financial

strength. The Tata Group holds 74 per cent stake in the two

insurance ventures while AIG holds the balance 26 per cent stake.

Tata AIG General Insurance Company, which started its operations

in India on January 22, 2001, offers the complete range of

insurance for automobile, home, personal accident, travel, energy,

marine, property and casualty, as well as several specialized

financial lines.

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78% of the people contacted prefer LIC policy to any other and therefore

it is ranked no.1 by that percent of respondents.

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Cover Future Uncertainty 55 55

Tax Deductions 20 20

Future Investment 25 25

TOTAL 100 100

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55% of the respondents believe that covering future uncertainty is the

biggest benefit of an insurance policy.

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Whereas, 20% and 25% of them believe that the other benefits are Tax

deduction and future investments respectively.

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Money Back Guarantee 15 15
Larger Risk Coverance 37 37
Easy Access to Agents 7 7
Low Premium 30 30
Companyƞs Reputation 11 11
TOTAL 100 100



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Majority of the respondent (37%) found Larger risk coverance as the

most attracted feature of the all.

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LIFE POLICY 75 75

NON LIFE POLICY 25 25

MICRO 45 45


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A saving tool 81 81%

A tax saving device 74 74%

A tool to protect your family 100 100%




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81% of the respondents have perception of micro Insurance being a saving

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saving device.

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protect your family.

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Yes 70 70%

No 30 30%

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Of the sample size of 400 surveyed respondents 70% of the respondents are

having micro Insurance policy.

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present or their policy is already matured.

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And at present 100% of the respondents are with the view that Insurance is

a tool to protect your family.

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Satisfied 60 60%

Not satisfied 40 40%

Not Responded 0 0.0%

Total 100 100%


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60% of the respondents are more or less satisfied with their existing policy.

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40% of the respondents are not satisfied with their existing policy.


In this case all of those who have taken a policy have responded.

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Rigid plans 67 67%
Non user friendly 29 29%
Unsatisfactory services 26 26%
Non Aggressive 35 35%
Satisfactory 24 24%
Good 10 10%
Very good 0 0%

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67% of the respondents have the opinion that Indian micro Insurance

Companies have Rigid plans.


29.5% feel that Indian micro Insurance companies are Non-user friendly.


26.5% feel that services of Indian micro Insurance companies are

Unsatisfactory.


35.75% of the respondents are with the view that Indian micro Insurance

companies are Non-aggressive.


24% of the respondents feel that products and services of Indian micro

Insurance companies is Satisfactory.

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Whereas only 10.25% feel that it is Good enough.


And according to the data, no single person has felt that it is very good.

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A trusted name 82 82%
Friendly service & 71 71%
responsiveness
Good plans 81 81%
Accessibility 49 49%

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82% customers look for a Trusted name in a company for insurance.

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Friendly service & responsiveness and Accessibility are also important factors

looked by customers in a company.

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The objective of the study refer to know about Life
Insurance and Micro Insurance in context of Bottom
Of Pyramid.
During the study I have to find out views of mass
population regarding the micro insurance, from where
they get the knowledge about it,for whom micro
insurance is most beneficial,which companies are
more focusing on micro insurance,what are the
benefit of micro insurance and what are the future
prospects of micro insurance .
The above are the objective which will be studied in
the project

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Our exhaustive research in the field of Life Insurance threw up

some interesting trends which can be seen in the above analysis. A

general impression that we gathered during Data collection was

that people does not have immense awareness and knowledge

about micro insurance and its products. But they are beginning to

look beyond simple insurance and are willing to trust and get

secure through micro insurance with their small income.

People in general have been impression by the marketing and

advertising campaigns of micro-insurance companies and its

policies. A high penetration of print , radio and Television ad

campaigns over the years is beginning to have itƞs impact now.

The general satisfaction levels among public with regards to policy

and agents still requires improvement. But therein lays the

opportunity for micro insurance to flourish in the market and form

it own place, and Reliance is trying hard in this regard.

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1. The most vital problem is of ignorance. Mass public should made
aware of the benefits of micro insurance. Nobody will take initiative
to get policies of micro insurance until and unless they get full
knowledge about it.

2. Bottom of pyramid that is low income group people should

made to realize that ignorance is no longer bliss and they should
make themselves aware in this regard.

3.Micro insurance policies offer security and investment especially

people of bottom Of Pyramid but most of people are not even
aware of what actually Micro Insurance is and moreover they are
still unaware of it.

4.So the Insurance companies should try to change the mindset of

the Bottom Of Pyramid people.The companies should target for
more and more low income group people and as well as
housewives.

5.The companies may try to highlight some of the additional

benefits of micro insurance such as tax benefit, financial security
etc. So these are enough to drive Bottom Of Pyramid peopleƞs
attention towards it.

6.Now the most important reason for hindrance of micro insurance

is that government as well as big organization are not taking
initiatives to make it aware . If possible more and more
organization, government and ngoƞs indulge themselves in this
sector .Thus they try to attract people in getting knowledge about
the importance of micro insurance and finally motivate them to
take policies.
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