Mumbai

Portfolio Management In
Insurance

Chennai Business School

Kaustubh Vasant Gholap
Mumbai
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A PROJECT REPORT
On Portfolio Management in Insurance

2007-2008

Unit 4 A, Western Industrial Estate

Opp. SEEPZ, MIDC, Marol,
Andheri (E) 400 093
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Insurance Portfolio Management

Submitted to ICICIPrudential

Name of the Student : Mr. Kaustubh Vasant Gholap

Name of the Guide: Prof. Mahesh Krishnamoorty

Date: 28/06/2008
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Declaration
Date: - 28/06/2008

I am very glad that ICICIPrudential had given me the opportunity to do the

survey about the portfolio management in Insurance according to Indian
Consumers. I am also thankful to Mr. Y. B. Bhide, Associate Dean, Chennai
Business School and Mr. Mahesh Krushnamoorty Sir and Miss. Pallavi Prabhu for
their timely guidance for the completion of this project. Without their
encouragement and appreciation it will not be possible to complete this project.

I hereby declare that this submission is my own work and that, to the best of my
knowledge and belief, it contains no material previously published or written by
another person nor material which has been accepted for the award of any other
degree or diploma of the university or other institute of higher learning, except
where due acknowledgment has been made in the text.

Date: …………………..

Place: …………………
Kaustubh Gholap
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Certificate

This is to certify that the project entitled “Financial Planning Process” submitted by
Mr. Kaustubh V. Gholap to the Chennai Business School Mumbai towards project
submission for INSURANCE – V, as a part of PGPMI program, is a bonafide record of the work
carried out by him under my supervision and guidance.

Signed By

(Prof . Mahesh Krishnamoorthy)

Date ……………………
Place …………………..
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Index
Article I. Executive summery 07

Article II. Life Insurance Industry India 09

Article III. ICICIPrudential Life Insurance 15

Article IV. Portfolio Management 22

Article V. ICICIPrudential Products 30

Article VI. Portfolio Management Process 35

Article VII. Sales Functions 37

Article VIII. Operations Functions 40

Article IX. Competitors Analysis 45

Article X. Customer Profiling 58

Article XI. Conclusion 67

Article XII. Bibliography 68

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Executive Summery

“On life's journey faith is

nourishment, virtuous
deeds are a shelter,
wisdom is the light by
day and right mindfulness
is the protection by night.
If a man lives a pure life,
nothing can destroy him.”

Buddha (Hindu Prince

Gautama Siddharta, the
founder of Buddhism,
563-483 B.C.)
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Executive Summery:-

P ortfolio Management can be described as systematic, continuous, dynamic

and flexible process that involves Identifying and specifying an
investor's objectives, preferences and constraints to develop clear
investment policies, Developing strategies by choosing optimal combinations of
financial and real assets available in the market and implementing the strategies,
Monitoring the market conditions, relative asset values and the investor's
circumstances and Making adjustments in the portfolio to reflect significant
changes in one or more relevant variables. Portfolio management involves timing
the market, selection of superior stocks or groups of stocks, making changes in the
portfolio structure and/or strategy having a long-term investment philosophy.
Portfolio analysis is one of the crucial steps in portfolio management. This
step includes the calculation of risk and return
> Portfolio of different portfolios. For a long time, the focus
of the institutional investors was exclusively on
Management is a common stocks, bonds and short- term securities.
systematic, But with the passage of time, the spectrum
continuous, dynamic of the investible asset categories extended well
and flexible process. beyond these three. They started
> This study shows taking considerable positions in international
the importance of the stocks and bonds. Apart from this,
portfolio they made good commitments to a variety of asset
classes commonly grouped under the name
management in alternative investments. Insurance companies also
Insurance as in started committing their investment patterns in
current scenario alternative investment vehicles.
everyone is more A portfolio insurance program can be executed
concerns about the with the help of listed index options, but most of
investments avenues the portfolio managers are not in favor of the
and the mis options because of the disadvantages of option
premiums being expensive. If the portfolio being
understanding of insured contains a mixture of stock and bonds, use
insurance with mis- of the stock index futures will be more
believes about it. appropriate.
This study shows the importance of the
portfolio management in Insurance as in current scenario everyone is more
concerns about the investments avenues and the mis understanding of insurance
with mis-believes about it.
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Life Insurance Industry India

 Insurance History – India

 Pre-Liberalization

 Insurance Sector Reforms

 Insurance Regulatory and Development Authority

 Important Milestones

 Insurance Sector in 21st century

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B rief History of the Insurance Sector in India

The business of life insurance in India in its existing form started in India in
the year 1818 with the establishment of the Oriental Life Insurance
Company in Calcutta.
The story of insurance is probably as old as the story of mankind. The same
instinct that prompts modern businessmen today to secure themselves against loss
and disaster existed in primitive men also. They too sought to avert the evil
consequences of fire and flood and loss of life and were willing to make some sort
of sacrifice in order to achieve security. Though the concept of insurance is largely
a development of the recent past, particularly after the industrial era – past few
centuries – yet its beginnings date back almost 6000 years.
Life Insurance in its modern form came to India from England in the year
1818. Oriental Life Insurance Company started by
The story of insurance is Europeans in Calcutta was the first life insurance
probably as old as the company on Indian Soil. All the insurance
story of mankind. The companies established during that period were
same instinct that prompts brought up with the purpose of looking after the
modern businessmen needs of European community and these companies
today to secure themselves
against loss and disaster
were not insuring Indian natives. However, later
existed in primitive men with the efforts of eminent people like Babu
also. They too sought to Muttylal Seal, the foreign life insurance companies
avert the evil consequences started insuring Indian lives. But Indian lives were
of fire and flood and loss being treated as sub-standard lives and heavy extra
of life and were willing to premiums were being charged on them. Bombay
make some sort of sacrifice
in order to achieve
Mutual Life Assurance Society heralded the birth of
security. first Indian life insurance company in the year 1870,
and covered Indian lives at normal rates. Starting as Indian enterprise with highly
patriotic motives, insurance companies came into existence to carry the message of
insurance and social security through insurance to various sectors of society.
Bharat Insurance Company (1896) was also one of such companies inspired by
nationalism. The Swadeshi movement of 1905-1907 gave rise to more insurance
companies. The United India in Madras, National Indian and National Insurance in
Calcutta and the Co-operative Assurance at Lahore were established in 1906. In
1907, Hindustan Co-operative Insurance Company took its birth in one of the
rooms of the Jorasanko, house of the great poet Rabindranath Tagore, in Calcutta.
The Indian Mercantile, General Assurance and Swadeshi Life (later Bombay Life)
were some of the companies established during the same period. Prior to 1912
India had no legislation to regulate insurance business. In the year 1912, the Life
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Insurance Companies Act, and the Provident Fund Act were passed. The Life
Insurance Companies Act 1912 made it necessary that the premium rate tables and
periodical valuations of companies should be certified by an actuary. But the Act
discriminated between foreign and Indian companies on many accounts, putting
the Indian companies at a disadvantage.

The first two decades of the twentieth century saw lot of growth in insurance
business. From 44 companies with total business-in-force as Rs.22.44 crore, it rose
to 176 companies with total business-in-force as Rs.298 crore in 1938. During the
mushrooming of insurance companies many financially unsound concerns were
also floated which failed miserably. The Insurance Act 1938 was the first
legislation governing not only life insurance but also non-life insurance to provide
strict state control over insurance business. The demand for nationalization of life
insurance industry was made repeatedly in the past
but it gathered momentum in 1944 when a bill to
In 1993, Malhotra
amend the Life Insurance Act 1938 was
Committee, headed by
introduced in the Legislative Assembly. However,
former Finance
it was much later on the 19th of January 1956 that
Secretary and RBI
life insurance in India was nationalized. About
Governor R. N.
154 Indian insurance companies, 16 non-Indian
Malhotra, was formed to
companies and 75 provident were operating in
evaluate the Indian
India at the time of nationalization.
insurance industry and
Nationalization was accomplished in two stages;
recommend its future
initially the management of the companies was
direction.
taken over by means of an Ordinance, and later,
the ownership too by means of a comprehensive
bill. The Parliament of India passed the Life Insurance Corporation Act on the 19th
of June 1956, and the Life Insurance Corporation of India was created on 1st
September, 1956, with the objective of spreading life insurance much more widely
and in particular to the rural areas with a view to reach all insurable persons in the
country, providing them adequate financial cover at a reasonable cost.

Insurance sector reforms

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

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

The Insurance Regulatory and Development Authority (IRDA)

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

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

The Insurance Regulatory and Development Authority Act, 1999 is an act

to provide for the establishment of an Authority to protect the interests of holders
of insurance policies, to regulate, promote and ensure orderly growth of the
insurance industry and for matters connected therewith or incidental thereto and
further to amend the Insurance Act, 1938, the Life Insurance Corporation Act,
1956 and the General insurance Business (Nationalization) Act, 1972 to end the
monopoly of the Life Insurance Corporation of India (for life insurance business)
and General Insurance Corporation and its subsidiaries (for general insurance
business).

The act extends to the whole of India and will come into force on such date
as the Central Government may, by notification in the Official Gazette specify.
Different dates may be appointed for different provisions of this Act.
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Some of the important milestones in the life insurance business in India are:
British-India Period:
1818: Oriental Life Insurance Company, the first life insurance company on
Indian soil started functioning.
1870: Bombay Mutual Life Assurance Society, the first Indian life insurance
company started its business.
1912: The Indian Life Assurance Companies Act enacted as the first statute to
regulate the life insurance business.
1928: The Indian Insurance Companies Act enacted to enable the government to
collect statistical information about both life and non-life insurance businesses.
1938: Earlier legislation consolidated and
The Insurance Act, 1938 amended to by the Insurance Act with the
had provided for setting objective of protecting the interests of the insuring
up of the Controller of public.
Insurance to act as a 1956: 245 Indian and foreign insurers and
strong and powerful provident societies are taken over by the central
supervisory and government and nationalized. LIC formed by an
regulatory authority for Act of Parliament, viz. LIC Act, 1956, with a
insurance. capital contribution of Rs. 5 crores from the
Government of India.
Life Insurance in India Liberalization of Indian Insurance:
was nationalised by Life Insurance in India was nationalised by
incorporating Life incorporating Life Insurance Corporation (LIC) in
Insurance Corporation 1956. All private life insurance companies at that
(LIC) in 1956. All time were taken over by LIC.
private life insurance In 1993 the Government of Republic of India
companies at that time appointed RN Malhotra Committee to lay down a
were taken over by LIC. road map for privatisation of the life insurance
sector.
While the committee submitted its report in 1994,
it took another six years before the enabling legislation was passed in the year
2000, legislation amending the Insurance Act of 1938 and legislating the Insurance
Regulatory and Development Authority Act of 2000. The same year that the newly
appointed insurance regulator - Insurance Regulatory and Development Authority
IRDA -- started issuing licenses to private life insurers.

1994: Insurance sector invited private participation to induce a spirit of

competition amongst the various insurers and to provide a choice to the consumers.
1997: Insurance regulator IRDA was set up as there felt the need:
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To set up an independent regulatory body, that provides greater autonomy to

insurance companies in order to improve their performance,
In the first year of insurance market liberalization (2001) as much as 16 private
sector companies including joint ventures with leading foreign insurance
companies have entered the Indian insurance sector. Of this, 10 were under the life
insurance category and six under general insurance.

Indian Insurance in 21st Century:

2000: IRDA starts giving licenses to private insurers: ICICI prudential and HDFC
Standard Life insurance first private insurers to sell a policy

2002: Banks allowed selling insurance plans. As TPAs enter the scene, insurers
start setting non-life claims in the cashless mode

2007: First Online Insurance portal, www.insurancemall.in set up by an Indian

Insurance Broker, Bonsai Insurance Broking Pvt Ltd.
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ICICIPrudential Life Insurance

 ICICIPrudential Fact Sheet

 ICICIPrudential Distribution Network

 ICICIPrudential Vision and Values

 ICICIPrudential Business Strategy

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ICICI PUDENTIAL LIFE INSURANCE:-

ICICI Prudential Life Insurance Company is a joint venture between ICICI

Bank, a premier financial powerhouse, and Prudential plc, a leading international
financial services group headquartered in the United Kingdom. ICICI Prudential
was amongst the first private sector insurance companies to begin operations in
December 2000 after receiving approval from Insurance Regulatory Development
Authority (IRDA).
ICICI Prudential Life's capital stands at Rs. 37.72 billion (as on March,
2008) with ICICI Bank and Prudential plc holding 74% and 26% stake
respectively. For the year ended March 31, 2008, the company garnered Retail
New Business Weighted premium of Rs. 6,684
crores, registering a growth of 68% over the last
A joint venture year and has underwritten nearly 3 million retail
between ICICI Bank, policies during the period. The company has assets
held over Rs. 30,000 crore as on April 30, 2008.
India and Prudential
ICICI Prudential Life is also the only private
plc, United Kingdom. life insurer in India to receive a National Insurer
 Capital 37.72 billion Financial Strength rating of AAA (Ind) from Fitch
 AAA Strength ratings. The AAA (Ind) rating is the highest rating,
and is a clear assurance of ICICI Prudential's ability
Ratings from Fitch.
to meet its obligations to customers at the time of
 Over 954 Branches
maturity or claims.
 1015 micro-offices For the past seven years, ICICI Prudential Life
 2,96,000 advisors has retained its leadership position in the life
 21 bancassurance insurance industry with a wide range of flexible
products that meet the needs of the Indian customer
partners
at every step in life.

Distribution
ICICI Prudential Life has one of the largest distribution networks amongst private
life insurers in India. It has a strong presence across India with over 954 branches in
addition to 1,015 micro-offices and an advisor base of over 296,000 (as on April 30,
2008).

The company has 21 bancassurance partners having tie-ups with ICICI Bank, Bank
of India, Federal Bank, South Indian Bank, Shamrao Vitthal Co-Op Bank, Jalgaon
Peoples Co-op Bank, Ernakulam District Co-op Bank, Idukki District Co-op Bank,
Ratnagiri Sindhudurg Gramin Bank are some of the partners.
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ICICIPrudential vision:

To be the dominant Life, Health and Pensions player built on trust by world-
class people and service.

This hope to achieve by:

 Understanding the needs of customers and offering them superior products

and service
 Leveraging technology to service customers quickly, efficiently and
conveniently
 Developing and implementing superior risk management and investment
strategies to offer sustainable and stable returns to our policyholders
 Providing an enabling environment to foster growth and learning for our
employees
 And above all, building transparency in all our dealings

The success of the company will be founded in its unflinching commitment to 5 core
values -- Integrity, Customer First, Boundaryless, Ownership and Passion. Each of
the values describe what the company stands for, the qualities of our people and the
way we work.

Company do believe that they are on the threshold of an exciting new opportunity,
where they can play a significant role in redefining and reshaping the sector. Given
the quality of their parentage and the commitment of their team, there are no limits to
their growth.

Company values :

Every member of the ICICI Prudential team is committed to 5 core values: Integrity,
Customer First, Boundaryless, Ownership, and Passion. These values shine forth in
all they do, and have become the keystones of their success.
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Strategy of Business:-
Since when the tribe of life insurers has grown from 12 to 19, but ICICI still
leads the private sector pack. With a portfolio of over 7 million policies, India's
biggest private sector life insurer has not merely held on to its share but grown it;
at the end of January 2008, the firm commanded 29 per cent of the share owned by
private sector players. Quite some way below was Bajaj Allianz with 21 per cent,
while State Bank of India came in third with 10 per
cent.
How did ICICI achieve
Hitting it off with Ulips
that?
ICICI Prudential's premium income grew at about
100 per cent between March 2003 and March 2007. In Ashvin Parekh‟s
Interestingly enough, the insurer started out with the word who is a national
leader, financial
traditional endowment products and was not the first
to introduce the more popular Unit Linked services, Ernst &
Young, "Their
Insurance Policy(Ulip): the credit for that goes to
Birla Sunlife. strategy has been to
However, in the first full year of operations itself, it grow the portfolio
started offering Ulip policies and was selling more large enough so that
policies than anyone else. Today, Birla Sunlife there is an in-built
doesn't find a place in the top five and players such hedge and in a
market where the
as HDFC Standard Life, which were late to cotton
on to Ulips, may be regretting it. portfolio has a larger
Says Shikha Sharma, managing director, ICICI element of savings
Prudential, "Ulips allowed the customer to engage rather than
with the product unlike in the case of endowment protection, this works
products where there was little transparency. Also, well. And to make
customers were unhappy with endowment products sure they can grow
because it meant the money was locked in for a long the business, they
time." have built a
Sharma believes the systematic investment that distribution
Ulips allow made it easier to attract customers. network."
Besides, the flexibility of the product, which allows
customers to pay varying amounts depending on the
stage of life that they're in, helped bring in the premiums.
Of course, the booming (until now) stock markets have played their part in making
Ulips a hit; they now account for 90 per cent of the fast-growing market. The total
new business premium written by life insurers in FY07 was Rs 75,300 crore (Rs
753 billion) and is expected to grow by about 40 per cent in FY08.
Playing the price card
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It wasn't just that ICICI Prudential rolled out Ulips quickly; the company also
made sure the products were priced competitively. Compared with the competition,
ICICI's upfront charges have always been lower, says N S Kannan, executive
director.
"We didn't believe it would be advisable to start out with a high upfront charge
because India is a cost-conscious market. We have always been at the lower end of
the spectrum - where competitors charged 50-60 per cent of the first year premium,
we have charged 18-20 per cent," he explains.
With charges across the industry now converging at around 20 per cent of first year
premiums, ICICI has come up with a zero-load product. Says Sharma, "Product
innovation is a focus area for us, we need to stay relevant to the consumer."
Another scheme that has been introduced automatically balances the debt and
equity components of the portfolio every quarter. Apart from this, ICICI Prudential
has been quick off the block with retirement solutions and the first to come up with
health products.
Says Sanjay Aggarwal, national industry director, financial services, KPMG, "Any
player that has a good grip on customer segmentation, whether it is by
demographics, class or by geographies, and caters to the various needs of
policyholders should succeed."
Don't worry, be happy
Indeed, while most of the industry believed at one time that insurance would sell if
it was made available, ICICI Prudential decided that like any other consumer
product, insurance policies, too, needed to be pushed.
Sharma recalls how, when the marketing team was thinking up an advertising
campaign, almost everyone, including the company's board, pooh-poohed the idea.
"A lot of people thought we were wasting money and as a result we built our brand
in a vacuum," she says. From the very start, ICICI discarded the "fear" platform
typically used for hawking insurance, choosing instead a "happy" platform to
convey a more positive message.
Of course, the insurer was fortunate to have the strength of the ICICI Bank brand
behind it; that went a long way in instilling confidence in customers that the brand
was trustworthy - a very important attribute in insurance - and would be there for
the long-term. But, as industry watchers point out, other incumbents too were
backed by strong brands, HDFC, SBI and Tata, to name a few.
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Catch them young

Even today after it has rolled out so many campaigns, ICICI remains among the
top advertisers: ad spends, as a percentage of new business premium, range
between 0.5 per cent and 0.75 per cent.
But from here on, it will be more of sustenance advertising, says Kannan, who
expects percentage spends to come off as the business scales up.
In the more recent campaigns, such as the "Jeetey raho" one, the pitch has changed
somewhat, becoming more rational rather than emotive mainly because the
category today is no longer new. The idea now, explains Sharma, is to encourage
long-term financial planning with protection. "And so we focus more on spelling
out the features and benefits," she adds.
Interestingly, even though the target customer is actually a person in the middle- to
high-income group and in the 35-45 age bracket, the insurer's advertising
campaigns target the 30- to 40-year age group.
"People like to feel they're young," jokes Sharma, adding that the average age of
ICICI Prudential's policyholders is about eight years lower than those of LIC. The
idea of reaching out to people in that age group is that insurance is a long-term
product with maturities of 15 and 20 years.

Feet on the street

If ICICI Prudential has managed to sign on 6.5 million policy holders, it is because
the company has built up a strong agent network, who bring in 60 per cent of the
total premium. Today the insurer has nearly 250,000 agents working for it, even
though it doesn't hand out the best commissions in the industry.
Bajaj Allianz's network is about 275,000- strong, while the public sector Life
Insurance Corporation boasts over a million agents. Says Sharma, "Our
commissions are at the lower end compared with peers but we are trying to
compensate them by ensuring that they do better volumes."
The insurer is also rolling out offices at a furious pace; by the end of March 2008,
ICICI Prudential will have around 1,500 offices from around 1,100 currently, of
which nearly 900 will have come up in 2007-08. Bajaj Allianz, too, has around
1,000 offices as of now. "We may slow down the pace somewhat but we should
have in excess of 3,500 branches in five years, " says Kannan.
Of parents and partners
The industry believes ICICI Prudential has a big advantage in that it can leverage
the customer base of its parent ICICI Bank. Says a competitor, "ICICI Bank is the
largest private sector bank in the country and they have strong relationships with
customers."
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Bajaj Allianz, for instance, didn't have that advantage. Bancassurance today fetches
about 27 per cent of ICICI's premium; apart from ICICI Bank, the insurer sells
through Bank of India, Federal Bank, South Indian Bank and some co-operative
and rural banks.
According to Saurabh Tripathi, partner and director, The Boston Consulting
Group, it is distribution that is the key to getting volumes across the spectrum of
retail products. Says he, "Companies that have focused on distribution have been
the winners because product differentiation is difficult in a market where it is easy
to copy."
If ICICI's parent has played a key role in its success, so has its partner. Says
KPMG's Aggarwal, "There aren't too many joint ventures that work well but in this
instance, each of the partners appears to have managed to leverage the strength of
the other and work as a team."
Adds Seshadri Sen, strategist at Macquarie Securities, "Prudential has built up a
successful business in Asia and is committed to India. Moreover, ICICI is
aggressive, so the marriage has worked well." ICICI, for instance, has drawn on
Prudential's experience in the area of products and actuarial knowledge.
Future policy

While ICICI Prudential has done well to stay at the top, the next seven years will
certainly be more difficult than the last seven.
Competition is getting more keen - in the past couple of years, Bajaj Allianz is
believed to have written more policies than Prudential. SBI Life has a stronger
distribution now that it has signed on many more agents and newcomers like
Reliance (which took over AMP Sanmar) are growing at a fast pace. But the strong
growth in the industry has surprised everyone.
Says Sharma, "We didn't expect to grow 100 per cent in 2006-07 and at over 50
per cent on that base in the current year."
In fact, that's one reason why the insurer has chosen to invest in the future and
postpone profits. The 900-odd offices will cost the company approximately Rs 300
crore (Rs 3 billion) and Sharma says that could push the break-even beyond the
2009-10 time frame planned earlier; the accounting profit net of expenses is now
expected sometime in 2011-12. That may mean some pain in the near term but it
could turn out to be the best policy that ICICI Prudential wrote.
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Portfolio Management

 Overview of Portfolio management

 Why Portfolio management is Important?

 What does it Involve?

 Study and Research methodology

 A 4 step strategy for Insurance Portfolio Management

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OVERVIEW OF PORTFOLIO MANAGEMENT

What is Portfolio Management?

In the context of government delivery of key services and improvements,

Portfolio Management is a corporate, strategic level process for co-ordinating
successful delivery across an organization's entire set of programmes and projects.
The total set of programmes and projects within an organization is known as the
“portfolio” and this represents a complete picture of the organisation‟s
commitment of programme and project resources and investment to delivering its
strategic objectives. Portfolio Management at the corporate level provides an
overview of the organisation's total investment such that:

 Programmes and projects can be scrutinised and monitored to

ensure ongoing alignment with strategic objectives and business
imperatives
 The broad allocation of skilled programme & project resources can
be optimized
 New requirements can be evaluated against current commitments
 Programme and project demands on operational business can be
managed and co-ordinated at a corporate level.

It is important to note, that in practice, Portfolio Management is carried out at

many different levels within an organisation. For example, at the corporate level -
the focus of this guidance, at the directorate level, within business units and within
programme and project them.

Why Portfolio Management is important

Most organisations operate in a complex environment with many programmes and

projects going on at any one time. Portfolio Management provides the means to:

 Establish a structure for selecting the right programmes and projects

 Assess whether requirements can be accommodated within existing
organizational capability and capacity
 Allocate the right resources to the right programmes and projects
 Ensure ongoing alignment of programmes and projects with strategic
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objectives and targets

 Resolve conflicts and contentions for scarce and costly resources

 Identify and manage interdependencies between programmes and projects
 Assess the true implications of the aggregate level of programme and
project risk
 Monitor progress on programmes and projects against key outcomes
 Ensure ongoing successful delivery of programmes and project
 Optimise organisational investment
 Maximise returns from investment
 Achieve value for money savings and efficiency gains from programme and

project rationalisation.

What does Portfolio Management involve?

Portfolio Management involves establishing an integrated process which links

programme and project management with effective Portfolio Management
practices that support the successful delivery of the organisations strategic
objectives.

Figure 1: Integrating the Process

The Portfolio Management process involves the collection in one place of pertinent
information about all the programmes and projects in an organisation, and relating
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that information to the business requirements and capabilities of the organisation.

The outputs of Portfolio Management will be informed decisions about choice of
programmes and projects, assignment of priorities, resource allocation,
interdependencies, staffing and skills requirements and deployment, risks and
benefits, and gaps and overlaps in the portfolio.

The Study and Research Methodology:-

TITLE:
To help the customer in achieving the superior returns with adequate seafty
coverage with the help of ICICIPrudential products..
· TITLE JUSTIFICATION :
The above title is self explanatory. The study deals mainly with studying the
Portfolio Management in insurance industry with a special focus on
ICICIPrudential life Insurance. The various segments of the markets divided in
terms of Insurance Needs, Age groups ,Satisfaction levels etc will also studied.
OBJECTIVE
Objective One
· To determine reasons behind opting for an insurance.
· To provide the company with information of customer's Insurance policy if they
have any and reasons for opting for that particular policies.
 To know the most preferred policy.
Objective Two
· To determine customers perception towards private insurance companies and
their expectation form private insurance companies.
· To determine the feedback on services provided by any other insurance agent.
· To study the types of benefits provided by insurance services.
· To determine the use of Internet for valuable information and decision-making
process.
SCOPE OF THE STUDY
A big boom has been witnessed in Insurance Industry in recent times. A large
number of new players have entered the market and are vying to gain market share
in this rapidly improving market. The study deals with Reliance in focus and the
various segments that it caters to. The study then goes on to evaluate and analyse
the findings so as to present a clear picture of trends in the Insurance sector.

RESEARCH DESIGN
· EXPLORATORY & DISCRIPTIVE EXPERIMENTAL RESEARCH
The research is primarily both exploratory as well as descriptive in nature. The
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sources of information are both primary & secondary.

A well-structured questionnaire was prepared and personal interviews were
conducted to collect the customer‟s perception and buying behavior, through this
questionnaire.

Sampling Technique:
Initially, a rough draft was prepared keeping in mind the objective of the research.
A pilot study was done in order to know the accuracy of the Questionnaire. The
final Questionnaire was arrived only after certain important changes were done.
Thus my sampling came out to be judgmental and convenient
Sampling Unit:
The respondents who were asked to fill out questionnaires are the sampling units.
These comprise of employees of MNCs, Govt. Employees, Self Employed etc.
LIMITATIONS OF THE RESEARCH
1. The research is confined to a certain parts of Mumbai and does not necessarily
shows a pattern applicable to all of Country.
2. Some respondents were reluctant to divulge personal information which can
affect the validity of all responses.
3. In a rapidly changing industry, analysis on one day or in one segment can
change very quickly. The environmental changes are vital to be considered in order
to assimilate the findings
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A 4-step strategy to manage insurance portfolio

While many individuals believe they are on a firm wicket with regards to their
investments (read mutual funds, fixed deposits, small savings schemes, among others),
they are usually tentative about their insurance needs. The reasons for this are not far to
seek. For one, insurance has many options often confusing the individual. Secondly,
„insurance awareness‟ among individuals is very low, which when combined with mis-
selling leaves them even more confused.
At a level, managing your insurance portfolio is a relatively straightforward task. It‟s all
about breaking the process down into simpler steps. Once you have the measure of these
steps, you are home. Broadly, managing your insurance portfolio involves four steps:

1) Identify your needs

Like with shopping when a well-defined list helps you focus on the task at hand and
avoid venturing into unrelated avenues, drawing up an insurance list can have the same
effect. To avoid getting swayed by the plethora of insurance options, determine at the
outset what you are looking for. Broadly, the insurance seeker can have one of two needs
a) life cover (through a term plan) or b) investment combined with life cover (through
traditional endowment or a unit linked insurance plan). Although the latter sounds like the
convenient option, we recommend against it. Going for this option will deprive you of the
benefits of selecting the two options i.e. insurance and investment in isolation. In other
words selecting life cover or investment separately is more prudent than selecting a
combination of both.

2) Quantify your needs

Once you have decided why you need insurance its time to answer the question – how
much insurance do I need? Of course, the answer to this question will depend on whether
you wish to opt for a life cover or an investment plan. The reason is because these two
questions will have very different answers.
To understand this better let‟s take the first scenario i.e. you want a life cover. Typically
this will involve planning for all future liabilities and commitments as also setting up a
contingency fund. Those familiar with the jargon know that we are referring to the Human
Life Value over here.
On the other hand, if instead of a pure risk cover, you want to opt for an investment
plan, then you will first have to identify the investment objective like retirement or child‟s
education for instance. Once you have done that, then you will have to quantify the
investment amount to answer the question – how much money do I want to save for my
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retirement? Or - how much

Identify your needs money do I want to save for
my child‟s education?

Quantify your needs 3) Select the insurance

advisor
As we mentioned at the
Select the insurance advisor
beginning, one reason why
insurance has turned out to
Conduct a review regularly be more complicated than
necessary is because of the
quality of insurance advice. Selling insurance as you are aware can be very
remunerative. Not surprisingly, the advice is often biased in favor of insurance
products that garner the highest commissions. So you have to be really sure that
your insurance advisor is honest and competent. If you can’t ascertain this easily,
insist on references whenever possible. Check his recommendations by asking
for comparisons across insurance companies over various parameters.
Understand why he is recommending one insurance plan over another. And if he
is making claims that seem outlandish to you, don’t hesitate to either take it
down in writing from him or get a confirmation from a company official.

Another problem with insurance advisors is that many of them are mutual fund agents
on the side. While, this by itself does not pose a problem, clients often complain of how
their insurance advisor is at times not keen on selling life insurance and invariably makes a
pitch for mutual funds. The solution to this problem lies in identifying your needs. If you
have decided to opt for a life cover for instance, make sure your insurance advisor gets the
point. If he still insists on selling other products then its time to re-evaluate whether he is
the right insurance advisor for you. At times, having sold an insurance policy, the
insurance advisor is no longer interested in servicing the same. References can play a
critical role in weeding out such advisors.

4) Conduct a review regularly

Like all other long-term activities, you must monitor your insurance portfolio closely to
ensure that you are on track to achieve your objectives. For instance, if you have opted for
a life cover (in line with your Human Life Value), then you will have to keep a close eye
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on your liabilities and financial commitments. If there is a discernible upward revision,

then your existing life cover may not prove sufficient and you may have to consider taking
additional cover. The solution to this problem is to opt for a slightly higher cover at the
outset; since pure risk plans are relatively cheap, it will not prove to be expensive.
By now you would have realised that managing your insurance portfolio isn‟t as
difficult as it appears. Like any other activity it involves taking decisions, implementing
them and monitoring the results closely. Of course, your insurance advisor will play a key
role over here, which is why it‟s important to ensure that he is honest and competent.
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ICICIPrudential Product Portfolio

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ICICIPrudential Product Portfolio

Insurance Solutions for Individuals

ICICI Prudential Life Insurance offers a range of innovative, customer-centric

products that meet the needs of customers at every life stage. Its products can be
enhanced with up to 4 riders, to create a customized solution for each policyholder.

Savings & Wealth Creation Solutions

 Save'n'Protect is a traditional endowment savings plan that offers life

protection along with adequate returns.
 CashBak is an anticipated endowment policy ideal for meeting milestone
expenses like a child's marriage, expenses for a child's higher education or
purchase of an asset. It is available for terms of 15 and 20 years.
 LifeTime Gold & LifeTime Plus are unit-linked plans that offer customers the
flexibility and control to customize the policy to meet the changing needs at
different life stages. Each offer 6 fund options - Preserver, Protector,
Balancer, Maximiser, Flexi Growth and Flexi Balanced.
 LifeLink Super is a single premium unit linked insurance plan which combines
life insurance cover with the opportunity to stay invested in the stock market.
 Premier Life Gold is a limited premium paying plan specially structured for
long-term wealth creation.
 InvestShield Life New is a unit linked plan that provides premium guarantee
on the invested premiums and ensures that the customer receives only the
benefits of fund appreciation without any of the risks of depreciation.
 InvestShield Cashbak is a unit linked plan that provides premium guarantee
on the invested premiums along with flexible liquidity options.
 LifeStage RP is a unique and powerful wealth creation insurance solution,
which combines the benefits of automatic asset allocation and quarterly
rebalancing along with increased protection.
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Protection Solutions

 LifeGuard is a protection plan, which offers life cover at low cost. It is

available in 3 options - level term assurance, level term assurance with return
of premium & single premium.
 HomeAssure is a mortgage reducing term assurance plan designed
specifically to help customers cover their home loans in a simple and cost-
effective manner.

Education insurance plans

Education insurance under the SmartKid brand provides guaranteed educational

benefits to a child along with life insurance cover for the parent who purchases the
policy. The policy is designed to provide money at important milestones in the
child's life. SmartKid plans are also available in unit-linked form - both single
premium and regular premium.

Retirement Solutions

 ForeverLife is a traditional retirement product that offers guaranteed returns

for the first 4 years and then declares bonuses annually.
 LifeTime Super Pension is a regular premium unit linked pension plan that
helps one accumulate over the long term and offers 5 annuity options (life
annuity, life annuity with return of purchase price, joint life last survivor
annuity with return of purchase price, life annuity guaranteed for 5, 10 and
15 years & for life thereafter, joint life, last survivor annuity without return of
purchase price) at the time of retirement.
 LifeLink Super Pension is a single premium unit linked pension plan.
Immediate Annuity is a single premium annuity product that guarantees
income for life at the time of retirement. It offers the benefit of 5 payout
options.
 PremierLife Pension is a unique and convenient retirement solution with a
limited premium paying term of three or five years, to suit professionals and
businessmen, especially those who require more flexibility and customization
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while planning their finances.

Health Solutions

 Health Assure Plus: Health Assure is a regular premium plan which provides
long term cover against 6 critical illnesses by providing policyholder with
financial assistance, irrespective of the actual medical expenses. Health
Assure Plus offers the added advantage of an equivalent life insurance cover.
 Cancer Care: is a regular premium plan that pays cash benefit on the
diagnosis as well as at different stages in the treatment of various cancer
conditions.
 Cancer Care Plus: is a wellness plan that includes all the benefits of Cancer
Care and also provides an additional benefit of free periodical cancer
screenings.
 Diabetes Care: Diabetes Care is a unique critical illness product specially
developed for individuals with Type 2 diabetes and pre-diabetes. It makes
payments on diagnosis on any of 6 diabetes related critical illnesses, and also
offers a coordinated care approach to managing the condition. Diabetes Care
Plus also offers life cover.
 Diabetes Care Plus: is a unique insurance policy that provides an additional
benefit of life cover for Type 2 diabetics and pre-diabetics
 Hospital Care: is a fixed benefit plan covering various stages of treatment -
hospitalisation, ICU, procedures & recuperating allowance. It covers a range
of medical conditions (900 surgeries) and has a long term guaranteed
coverage upto 20 years.
 Crisis Cover : is a 360-degree product that will provide long-term coverage
against 35 critical illnesses, total and permanent disability, and death.
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Group Insurance Solutions

ICICI Prudential Life also offers Group Insurance Solutions for companies seeking
to enhance benefits to their employees.

 Group Gratuity Plan: ICICI Prudential Life's group gratuity plan helps
employers fund their statutory gratuity obligation in a scientific manner. The
plan can also be customized to structure schemes that can provide benefits
beyond the statutory obligations.
 Group Superannuation Plan: ICICI Prudential Life offers both defined
contribution (DC) and defined benefit (DB) superannuation schemes to
optimise returns for the members of the trust and rationalise the cost.
Members have the option of choosing from various annuity options or opting
for a partial commutation of the annuity at the time of retirement.
 Group Immediate Annuities: In addition to the annuities offered to existing
superannuation customers, we offer immediate annuities to superannuation
funds not managed by us.
 Group Term Plan: ICICI Prudential Life's flexible group term solution helps
provide affordable cover to members of a group. The cover could be uniform
or based on designation/rank or a multiple of salary. The benefit under the
policy is paid to the beneficiary nominated by the member on his/her death.
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Sales and Operations In Insurance

 Overview of Sales and Marketing

 Difference Between Sales and Marketing

 Insurance Business Model

 Insurance Operations Management

 Operations Sub-divisions

“Patience serves as a protection

against wrongs as clothes do against
cold. For if you put on more clothes
as the cold increases, it will have no
power to hurt you. So in like manner
you must grow in patience when you
meet with great wrongs, and they”
Leonardo da Vinci quotes (Italian
draftsman, Painter, Sculptor,
Architect and Engineer whose genius
epitomized the Renaissance humanist
ideal. 1452-1519)
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Sales And Marketing in Insurance Company

Difference Between Marketing and Sales

Many people mistakenly think that selling and marketing are the same - they
aren't. You might already know that the marketing process is broad and includes all
of the following:
1. Discovering what product, service or idea customers want.
2. Producing a product with the appropriate features and quality.
3. Pricing the product correctly.
4. Promoting the product; spreading the word about why customers should
buy it.
5. Selling and delivering the product into the hands of the customer.
Selling is one activity of the entire marketing process.
Selling is the act of persuading or influencing a customer to buy (actually
exchange something of value for) a product or service.
Marketing activities support sales efforts. Actually, they are usually the most
significant force in stimulating sales. Oftentimes, marketing activities (like the
production of marketing materials and catchy packaging) must occur before a sale
can be made; they sometimes follow the sale as well, to pave the way for future
sales and referrals.

Contrasting the Sales Concept with the Marketing Concept

The concepts surrounding both selling and marketing also differ. There is a need
for both selling and marketing approaches in different situations. One approach is
not always right and the other always wrong - it depends upon the particular
situation.
In a marketing approach, more listening to and eventual accommodation of the
target market occurs. Two-way communication (sometimes between a salesperson
and a customer) is emphasized in marketing so learning can take place and product
offerings can be improved.
A salesperson using the sales concept, on the other hand, sometimes has the
ability to individualize components of a sale, but the emphasis is ordinarily upon
helping the customer determine if they want the product, or a variation on it, that is
already being offered by the company. In the sales approach, not much time is
spent learning what the customer's ideal product would be because the salesperson
has little say in seeing that their company's product is modified. Furthermore, they
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aren't rewarded for spending time listening to the customer's desires unless they
have a product to match their desires that will result in a sale. (Note, however, that
sales people aren't restricted to the use of the sales concept; oftentimes they use the
marketing concept instead.)
At the heart of the sales concept is the desire to sell a product that the business
has made as quickly as possible to fulfill sales volume objectives. When viewed
through the marketing concept lens, however, businesses must first and foremost
fulfill consumers' wants and needs. The belief is that when those wants and needs
are fulfilled, a profit will be made.
Do you see the difference? The selling concept, instead of focusing on meeting
consumer demand, tries to make consumer demand match the products it has
produced. Whereas marketing encompasses many research and promotional
activities to discover what products are wanted and to make potential customers
aware of them.

Agency business model

In India insurance is sold through mainly four channels.
Through branch
Through agency
Through financial institution
Through banks

Independent agency system means of selling and servicing property and casualty
insurance through agents who represent different companies. The agents own the
records of the policies they sell.
Insurance is now governed by a blend of statutes, administrative agency
regulations, and court decisions. State statutes often control premium rates, prevent
unfair practices by insurers, and guard against the financial insolvency of insurers
to protect insureds.
In most states, an administrative agency created by the state legislature devises
rules to cover procedural details that are missing from the statutory framework. To
do business in a state, an insurer must obtain a license through a registration
process. This process is usually managed by the state administrative agency. The
same state agency may also be charged with the enforcement of insurance
regulations and statutes.
Administrative agency regulations are many and varied. Insurance companies
must submit to the governing agency yearly financial reports regarding their
economic stability. This requirement allows the agency to anticipate potential
 39 | P a g e

insolvency and to protect the interests of insureds. Agency regulations may specify
the types of insurance policies that are acceptable in the state, although many states
make these declarations in statutes. The administrative agency is also responsible
for reviewing the competence and ethics of insurance company employees.

Insurance agencies:
Insurance agency can be defined as a group of insurance agents or advisor.
These agents or advisors create a distribution channel to sell the different insurance
products. These advisors are the strongest distribution channel for an insurance
agency. An advisor or agent works as a third party or intermediate between
insurance company and customers. All the advisors in an agency work as a team.
Main work of insurance advisor or agent is to promote and sell different insurance
products of company.

Functions of agency manager:

a person who governs a group of insurance advisors is known as agency
manager. Success of an agency manager depends on the success of their advisors.
work of agency manager is to control the advisors in an efficient way. Agency
manager is like a creature of two wings. He has to recruit advisors as well as to
give sales to the insurance company.
To recruit advisors.
Make them aware of different insurance products.
To give them training session.
To motivate them for efficient work.
To get maximum and efficient work from their advisors.
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Operation work of insurance agency (ICICIPrulife):

Operations management is an area of business that is concerned with

the production of goods and services, and involves the responsibility of ensuring
that business operations are efficient and effective. It is also the management of
resources, the distribution of goods and services to customers, and the analysis of
queue systems.
APICS The Association for Operations Management also defines operations
management as "the field of study that focuses on the effective planning,
scheduling, use, and control of a
manufacturing or service

o perations management defined

as "the field of study that focuses on
organization through the study of
concepts from design engineering,
industrial engineering, management
information systems, quality
the effective planning, scheduling,
management, production
use, and control of a manufacturing
management, inventory management,
or service organization through the
accounting, and other functions as
study of concepts from design
they affect the organization" (APICS
engineering, industrial engineering,
Dictionary, 11th edition).
management information systems,
Operations also refers to the
quality management, production
production of goods and services, the
management, inventory
set of value-added activities that
management, accounting, and other
transform inputs into many outputs.
functions as they affect the
Fundamentally, these value-adding
organization"
creative activities should be aligned
- by The Association for Operations
with market opportunity (see
Management
Marketing) for optimal enterprise
performance.
Origins
The origins of Operations
Management can be traced back to the Industrial Revolution, the same as
Scientific Management and Operations Research. Adam Smith treats the topic of
the division of labor when opening his 1776 masterpiece: An Inquiry into the
Nature and Causes of the Wealth of Nations also commonly known as The Wealth
of Nations. The first documented effort to solve operation management issues
comes from Eli Whitney back in 1798, leading to the birth of the American System
of Manufacturers (ASM) by the mid-1800s. It was not until the late 1950's that the
scholars noted the importance of viewing production operations as systems.
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Historically, the body of knowledge stemming from industrial engineering formed

the basis of the first MBA programs, and is central to operations management as
used across diverse business sectors, industry, consulting and non-profit
organizations.
Operations Management Planning Criteria

 Control by creating and maintaining a positive flow of work by utilizing

what resources and facilities are available
 Lead by developing and cascading the organizations strategy/mission
statement to all staff
 Organize resources such as facilities and employees so as to ensure
effective production of goods and services
 Plan by prioritizing customer, employee and organizational requirements
 Maintaining and monitoring staffing, levels,Knowledge-Skill-Attitude (KSA),
expectations and motivation to fulfill organizational requirements
 Performance Measures for the measurement of performance and
consideration of efficiency versus effectiveness

Every industry has an operational department which supports the market

division.In the reference to the ICICIPrudential Life insurance, development of
insurance products, distribution, planning services products and claims are taken
care by the head office. Back office providers are those persons who take care of
the operational part of the organization and front office providers are the people
who brings sell to the organization. Back office has its own hierarchy which is
connected to head office, and every policy has to be processed to head office. Unit
for the operations is known as processing centre, and processing centre within the
city is known as mini processing centre. Proposal forms come through front office
and the verification of the proposal is done by manually which is known as
scrutiny. After scrutiny the operational staff enters it in SBI Life website, which is
done online. the entry of a proposal is done in a sequential order starting with
scrutiny, inwards, proposal wise inwards, cashier entry, cashier entry approval,
data entry and finally outwards. After finishing all these operations policy issues
from the head office of the state.
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Policy Issuance Process Flow chart

Following is the graphical representation of policy issuance process and the

journey of policy document through various departments in Insurance companies
and various people related to it.
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Operations Sub-segments and Functions

Operations :

 Overall Supervision of operations and backend reconciliation for the

branch.
 Supervision over outsourced Data entry operators to ensure accurate
System updating.
 Co-ordination with central functions as well as external Agencies.
 Generation of Various
MIS as required.
Claims Operations Customer Service :

 Considered as the
backbone of the
Custom ICICIPrudential’s growing
Distribution
er business
Operations
Service
 Manage the Customer
service frame work for the
Underwriting branch.
 Handling customer
related escalated servicing requests and complaints based on the processes
and TATs laid down by the company.
 Ensuring Compliance to Quality of Closure (QOC) norms.
 Ensuring end to end resolution of all Customer interactions
 Handling HNI segment.

Underwriting :

 Giving logical decision based on the information disclosed with regards to

several factors viz. Profile, Financials, Medicals, etc.
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 Strict adherence of the team to the various Underwriting guidelines laid

down by the company from time to time.
 Training of internal Customers on Underwriting norms.
 Error free processing of applications within laid down TATs.

Distribution Operations (D- Ops) :

 End to end supervision of New Agency membership applications within laid

down TATs.
 Training internal customers on the processes.
 Coordination with Central functions.
 Servicing and Query resolution of escalated cases of internal customers viz.
MPCs
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Analysis Of Competition:

Bajaj Allianz life insurance:

Bajaj Allianz life insurance company ltd. Is a joint venture of Allianz AG, one of
the world‟s largest insurance companies and Bajaj auto, one of the biggest two and
three wheeler manufacturing companies in the world. Company is having over
440000 satisfied customers in India. Company is having 550 branches across the
country and over 60000 advisors.

Key features:

Tying up with seven regional rural banks sponsored by Syndicate Bank to

tap the rural market.
Introducing micro-insurance products and coming out with a new capital
guarantee product.
Expanding its agency force from 1.60 lakh to 2 lakh and the branch network
will also be increased from 900 to 1400.

HDFC standard life insurance:

HDFC Standard Life Insurance Company Ltd. is one of India's leading

private insurance companies. It is a joint venture of Housing Development Finance
Corporation Limited, India's leading housing finance institution and a Group
Company of the Standard Life in UK. HDFC as on March 31, 2007 holds 81.9 per
cent of equity venture. Gross premium income of the HDFC for the year ending
March 31, 2007 was Rs. 2, 856 crores and new business premium income was Rs.
1,624 crores. The company has covered over 8, 77,000 lives year ending March 31,
2007. HDFC standard is having 1000 advisors in 11 towns.
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Key features:

Creating corporate agents through HDFC bank in India.

Creating agents to provide total financial consultancy.
Introducing low cost group schemes for companies and NGOs.

Reliance life insurance:

Reliance Life Insurance Company Limited is a part of Reliance Capital Ltd.

of the Reliance - Anil Dhirubhai Ambani Group. Reliance Capital is one of India‟s
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. 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.

Aviva life insurance:

Aviva is UK‟s largest and the world‟s fifth largest insurance Group. It is one
of the leading providers of life and pensions products to Europe and has substantial
businesses elsewhere around the world. Aviva has a joint venture of Dabur, one of
India's oldest, and largest Group of companies. And country's leading producer of
traditional healthcare products. In accordance with the government regulations
Aviva holds a 26 per cent stake in the joint venture and the Dabur group holds the
balance 74 per cent share. Aviva has 193 Branches in India (including rural
branches) supporting its distribution network. Through its Banc assurance partner
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locations, Aviva products are available in more than 2,795 locations across
India. Aviva has a sales force of over 30000 financial planning advisors.

Key features:

Through the “Financial Health Check” (FHC) Aviva‟s sales force has been
able to establish its credibility in the market. The FHC is a free service
administered by the FPAs for a need-based analysis of the customer‟s long-
term savings and insurance needs. Depending on the life stage and earnings
of the customer, the FHC assesses and recommends the right insurance
product for them.
Introduced the concept of Banc assurance in India.
Products to provide customers flexibility, transparency and value for money.
Differentiation in fund management operations.

MetLife insurance:

MetLife India Insurance Company Limited is an affiliate of MetLife, Inc. and

was incorporated as a joint venture between MetLife International Holdings,
Inc.and The Jammu and Kashmir Bank, M. Pallonji and Co. Private Limited and
other private investors. MetLife is one of the fastest growing life insurance
companies in the country. It offers a range of innovative products to individuals
and group customers at more than 600 locations through its bank partners and
company-owned offices. MetLife has more than 32,000 Financial Advisors . It has
approximately 70 million customers all over world. MetLife is working on the base
of six core values-
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Innovation
Long term relationship
Customer centered and result focused vision
Creating high performance organization
Working with integrity, fairness and financial prudence
Partnering with internal and external customers

Max New York life insurance:

Max New York Life Insurance Company Ltd. is a joint venture between New
York Life, a Fortune 100 company and Max India Limited, one of India's leading
multi-business corporations The Company's paid up capital is Rs. 907.4 crore. Max
New York life is working on the base of six core values-

Excellence,
Honesty,
Knowledge,
Caring,
Integrity

The Company practices a lot of importance on its selection process of insurance

advisors which comprises four stages - screening, psychometric test, career
seminar and final interview. 337 agent advisors have qualified for the Million
Dollar Round Table (MDRT) membership in 2007 and Max New York Life has
moved up to 21st rank in MDRT global list.

Key features:
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Max New York Life has adopted prudent financial practices to ensure safety
of policyholder's funds.
Investing significantly in its training programme and each agent is trained
for 152 hours as opposed to the mandatory 100 hours stipulated by the IRDA
before beginning to sell in the marketplace.
Using a five-pronged strategy to pursue alternative channels of distribution
which include the franchisee model, rural business, direct sales force
involving group insurance and telemarketing opportunities, banc assurance
and corporate alliances.

Bharti AXA life insurance: Bharti AXA life insurance is a joint venture between
Bharti, one of India‟s leading business groups with interests in telecom, agri
business and retail, and AXA world leader in financial protection and wealth
management. The joint venture company has a 74% stake from Bharti and 26%
stake of AXA. The company started its operations in December 2006. Now
company is having over 5200 employees across over 12 states in the country.
Company is working on the base of five core values-

Professionalism
Innovation
Team Spirit
Pragmatism
Integrity

Key features:

Using multi-distribution, multi product platform techniques.

Adapting AXA's best practices as a sound platform for profitable growth.
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Leveraging Bharti's local knowledge, infrastructure and customer base.

Delivering high levels of shareholder return.
Building long term value with business partners by enhancing the
proposition to their customers.
Retaining the best talent in India.

Tata AIG life insurance:

Tata AIG Life Insurance Company Limited (Tata AIG Life) is a joint
venture company of the Tata Group and American International Group, Inc. (AIG).
The Tata Group holds 74 per cent stake in the insurance venture with AIG holding
the balance 26 percent. Tata AIG Life provides insurance solutions to individuals
and corporate. Tata AIG Life Insurance Company started to operate its business in
India on April 1, 2001. Tata AIG is having 3000 advisors all over India.

Key features:

Establishing direct mailers; call-centers in 60 centers.

Creating awareness workshops in housing societies.
15-day trial period with refund, premium payment through credit card.

ING Vysya life insurance:

ING Vysya Life Insurance Company Limited a part of the ING group the
world‟s largest financial services provider entered in the private life insurance
industry in India in September 2001.ING Vysya Life is currently present in 246
cities and has a network of over 300 branches, staffed by 7,000 employees and
over 51,000 advisors, serving over 5.5 lakh customers . ING Vysya Life has a
 51 | P a g e

diversified distribution channels,. While Tied Agency remains the strongest

channel, the Alternate Channels business within ING Vysya Life is one of the
fastest growing distribution channels. ING Vysya Life has strengthened its position
as the unparallel leader in the life insurance industry in cooperative banks tie ups.
The company currently has tie ups with 130 cooperative banks across the country.
The Alternate Channels division has Banc assurance, ING Vysya Bank, Corporate
Agents and SMINCE. ING Vysya is working on the base of five core values-

Professionalism
Entrepreneurial
Trustworthy
Approachable
Caring

Birla sun life insurance:

Birla Sun Life Insurance Company Limited (BSLI) is a joint venture

between the Aditya Birla Group and the Sun Life Financial Services of Canada. It
started operations in March 2001 after receiving its registration license from IRDA
in January 2001. Company is having more than 45 branches across India.

Key features:

Focus on unit linked insurance products supported with protection products

to maintain leadership in product innovation.
Use of multi distribution channels- Direct Sales Force, Alternate Channels
and offering convenient channels of purchase to customers.
52 | P a g e

Web-enabled IT systems for superior customer services and issuing policies

on the internet.
High degree of transparency in all business practices and procedures.
Working on operational Business Continuity Plan.
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Growth in premiums of different insurance companies:-

Companies Premium up Premium up Growth %

to oct 07 to oct 06
(Rs.mill.) (Rs.mill.)
ICICI 31831.8 20808.5 53
Prudential
HDFC Standard 10675.7 6595.7 61.9
SBI Life 14717.4 8142.4 80.8
Bajaj Allianz 26498.1 15208.2 74.2
Aviva life 4586.8 3464.2 32.4
insurance
MetLife 2756.0 1162.7 137.0
insurance
Reliance life 8571.2 2803.7 205.7
insurance
Birla sun life 7595.4 3844.7 97.6
insurance
Max new York 6942.0 3720.4 86.6
life insurance
Bharti AXA life 258.7 1.1 22907.8
insurance
Tata AIG 4413.0 3264.8 35.2
ING Vysya 3047.7 2086.7 46.1
Kotak 3476.6 2172.6 60.0
 54 | P a g e

Comparison of ULIP products of different insurance

companies
ICICI Prudential
Fund options- growth fund, balanced fund, income fund, and preserver.
allocation to equities- upto 100% in growth fund, upto 40% in balanced fund, nil
in income fund, 50% in preserver.
minimum premium- 20,000.
min/max age at entry- upto 65 years.
sum assured- annual premium*term/2.
fund management charges- 1.5% in growth fund, 1.0% in balanced fund, .75% in
income and preserver fund.
fixed monthly expenses- 60rs.
partial withdrawals- above one partial withdrawal 100 rs. charge per withdrawal.
charges on top ups- 1%.
switching charges- above 4 switches in a year 100 rs. Per switching.

Birla Sun Life Insurance

fund options- enhancer fund, builder fund, protector fund.
allocation to equities- maximum 35% in enhancer fund, maximum 20% in builder
fund, maximum 10% in protector fund.
minimum premium- 20,000 rs.
min/max age at entry- 30 days to 60 years.
sum assured- face amount + policy fund.
fund management charges- 1% for all the fund options.
fixed monthly expenses- 22 rs.+ annual charges as applicable.
 55 | P a g e

partial withdrawals- 2 free partial withdrawals in a year.

charges on top ups- 2%.
switching charges- 2 free switches in a year, and 100 rs. Per switching.

HDFC Standard Life Insurance

fund options- growth fund, balanced fund, defensive fund, secure fund, liquid
fund.
allocation to equities- 100% in growth fund, 30-60% in balanced fund, 15-30% in
defensive fund, 0% in secure and liquid fund.
minimum premium- 10,000.
min/max age at entry- 18- 65 years.
sum assured- annual premium*term/2, to 40 times the regular premium amount.
fund management charges- .80%.
fixed monthly expenses- 20 rs.
partial withdrawals allowed- above 6 partial withdrawals 250 rs. per withdrawal.
charges on top ups- 2.5% for initial 2 years, after 1%.
switching charges- 24 free switching and then 100 rs. per switching.

SBI Life Insurance

fund options- equity fund, bond fund, growth fund, balanced fund.
allocation to equities- upto 100% in equity fund, upto 20% in bond fund, 40 -
100% in growth fund, 40 – 60% in balanced fund.
minimum premium- 24,000.
min/max age at entry- 7 – 65 years.
sum assured- 5 – 50 times the regular premium amount.
fund management charges- 1.5% for equity fund, 1.35% for growth fund, 1.25%
 56 | P a g e

for balanced fund, 1% for bond fund.

fixed monthly expenses- 60 rs.
partial withdrawals allowed- above 4 partial withdrawals 100 rs. per
withdrawals.
charges on top ups- 1%.
switching charges- above 4 switching 100 rs. per switching.
Max New York Life Insurance
fund options- growth fund, balanced fund, conservative fund, secure fund.
allocation to equities- 20 – 70% in growth fund, 10 – 40% in balanced fund, 0 –
15% in conservative fund, 0% in secure fund.
minimum premium- 15,000.
min/max age at entry- 12 – 60 years.
sum assured- minimum sum assured 100,000 rs.
fund management charges- .90% - 1.25% of net assets in the fund.
fixed monthly expenses- 50 rs.
charges on top ups- nil.
switching charges- above 2 switching per year 500 rs. Per switching.

Reliance Life Insurance

fund options- equity fund, growth fund, balanced fund, capital secure fund.
allocation to equities- upto 100% in equity fund, upto 40% in growth fund, upto
20% in balanced fund, 0% in capital secure fund.
minimum premium- 10,000.
min/max age at entry- 30 days to 65 years.
sum assured- for age of 12 years 5 times, above 12 years 5 times to unlimited.
fund management charges- 1.75% in equity and growth fund, 1.5% in capital
 57 | P a g e

secure fund.
fixed monthly expenses- 40 rs.
partial withdrawals allowed- rs. 100 for every withdrawal.
charges on top ups- 2%.
switching charges- above 1 switching 100 rs. Per switching.
 58 | P a g e

Customer Profiling
1. Ms Saudamini Patil aged 42 running her own business of selling dress material.
Her monthly income is 45,000. She is divorced living with two children’s aged 15
& other aged 13. Her monthly expenses are Rs. 20,000. She has taken a car
loan of Rs. 2, 00,000 at 8% interest and pays monthly EMI of Rs. 8,000 towards
it. Her savings are as follows: Rs. 40,000 in Fixed Deposits, investments in
shares Rs.50, 000, and 30,000 in mutual funds. She wishes to save up some
money for children’s education. She also suffers from high BP & wishes to save
some money for medical expenses. Please do customer profiling for Ms
Saudamini Patil.

Name : Ms Supriya sawant

Age : 42yrs.
Family Members : sujay (15)
sneha (13)

Income : Rs. 45,000 per month (6, 00,000 p.a)

Assets : Fixed Deposits: Rs. 40,000

Invt in Shares : Rs. 50,000.
Invt in Mutual Funds : Rs. 30,000.

Liability : Car loan: Rs. 2, 00,000.

Plans: Save for childrens education.
Medical expenses.

Life Worksheet of Client

Monthly expenses Rs.20, 000
Annual expenses Rs. 2, 40,000
Capital required (annual exp *20) Rs.48, 00,000
Immediate expense (marriage) Rs.5, 00,000

Capital Required (A) Rs. 53, 00,000

Current Assets
Total Savings Rs. 2, 70,000
Monthly Savings (30,000*12) Rs. 3, 60,000

Total (B) Rs. 6, 30,000

Deficit (A-B) Rs.46, 70,000

 59 | P a g e

Life Stage Needs Solution

Married with Protect loved ones & protection LifeGuard

Kids against liabilities
Saving / Investing for the future Traditional
Save 'n' Protect
CashBak
CashPlus

Unit Linked Insurance Solutions

LifeTime Plus
LifeTime Super
PremierLife Gold
LifeLink Super

Retirement planning Traditional

Forever Life

Unit Linked Retirement Solutions

LifeTime Super Pension

Tax Planning All Life Insurance plans - Sec 80C

All Retirement plans - Sec

80CCC(1)

Child's education Education Insurance Plans

Health Concerns Health Assure

Health Assure Plus

Critical Illness Rider

Additional Protection Accident & Disability Benefit Rider

Waiver of Premium Rider

Recommendations:

1. Ms. Supriya sawant her total yealy savings are Rs. 3,60,000.
2. I would recommend ULIP Plan of ICICI Prulife i.e., Smart kid plan
Which will generate adequate corpus for childrens education.
3. Also you have 7 investment options like Flexi-Growth, R.I.C.H., Multiplier, Flexi-
Balanced, Balancer, Protector, and Preserver, based on your financial goals and
 60 | P a g e

risk profile.
4. For her health cover I would recommend Health Assure plus of Rs. 1,
00,000.
5. It covers: Hospitalization Plans: These plans cover your expenses in case you
need to be hospitalized. Within this category, products may have different payout
structures and limits for various heads of expenditure. These plans aim to cover
the more frequent and small ticket medical expenses. Click to know about our
hospitalization plan (Hospital Care).
6. Critical Illness Plans: These plans provide you coverage against critical illnesses
such as heart attack, organ transplants, stroke, and kidney failure among others.
These plans aim to cover infrequent and higher ticket size medical expenses.
Click to know about our critical illness plans (Crisis Cover, Health Assure Plus).
7. I would also recommend Life Time Super Pension Plan of Rs. 1,00,000 so
that after retirement he can have regular income to carry on with his expenses.

2. Mr. ANAND S. is a DGM with ONGC Ltd. earning a monthly income of Rs.3,
60,000. He is 50 yrs married having one son going to school and has dependent
parents. His monthly savings are 70,000 annual fixed bonus of Rs. 3, 25,000. He
owns a flat of his own at Mumbai worth Rs. 70,000, F.D worth Rs. 50,000,
investments in MF of Rs. 100,000 and investments in shares of Rs. 1, 25,000. He
is suffering from diabetes and wishes to save up some money for his son’s
higher education. He is keen to retire at 58 saving a good amount for his post
retirement expenses. Please do a customer profiling.

Name: Mr Pondkule Ajit.

Age: 50yrs.
Family Size: Father (70)
Mother (68)
Spouse (47)
Son (14)
Income: Rs. 3, 60,000p.m (43, 20,000 p.a)
Bonus Rs. 3, 25,000 p.a.
Assets: Fixed Deposits: Rs. 50,000
Flat in Mumbai: Rs. 70, 00,000.
Invt in Shares: Rs. 1, 00,000.
Invt in Mutual Funds: Rs. 1, 25,000.
Plans: Sons Higher Education.
His medical expenses.
His parents medical expenses.
Retirement Plan.
 61 | P a g e

Life Worksheet of Client

Monthly expenses Rs. 85,000

Annual expenses Rs. 10, 20,000
Capital required (annual exp *20) Rs.2, 04, 00,000
Capital Required (A) Rs. 2, 14, 20,000

Current Assets
Total Savings Rs. 72, 75,000
Bonus Rs. 3, 25,000
Monthly Savings (70,000*12) Rs. 8, 40,000

Total (B) Rs. 84, 40,000

Deficit (A-B) Rs.1, 29, 80,000

Life Stage Needs Solution

Nearing Protection against liabilities LifeGuard
Retirement
Retirement planning LifeTime Super Pension

ForeverLife
Tax Planning All Life Insurance plans - Sec
80C

All Retirement Solutions - Sec

80CCC(1)

Recommendations:

1. Mr. Anand S his yearly savings id Rs. 8,40,000.

2. His needs are sons higher education, his medical expenses, his parents medical
expenses, retirement plans.
3. I would recommend ULIP Plan of Life Time Gold of Rs. 3,00,000 a regular
premium unit-linked policy that offers potentially higher returns through the
Multiplier Fund that invests in the top 50 large cap companies.
62 | P a g e

4. This will generate large surplus after his retirement so that he can start his
business.
5. For his sons higher education I will recommend Smart Kid Unit Linked Regular
Premium of Rs. 1,00,000
6. It enables him and his child to accumulate wealth by virtue of the performance of
the underlying market-linked instrument.
7. I would recommend Health Assure Plus for his family of Rs.1,00,000.
8. It covers: Hospitalization Plans: These plans cover your expenses in case you
need to be hospitalized. Within this category, products may have different payout
structures and limits for various heads of expenditure. These plans aim to cover
the more frequent and small ticket medical expenses. Click to know about our
hospitalization plan (Hospital Care).
9. Critical Illness Plans: These plans provide you coverage against critical
illnesses such as heart attack, organ transplants, stroke, and kidney failure
among others. These plans aim to cover infrequent and higher ticket size medical
expenses. Click to know about our critical illness plans (Crisis Cover, Health
Assure Plus).
10. I would also recommend Life Time Super Pension Plan of Rs. 1,00,000 so
that after retirement he can have regular income to carry on with his expenses.
 63 | P a g e

3. Mr. Amit Ravindra Patil is a senior software engineer with Microsoft India Ltd.
earning a monthly income of Rs 60,000. He is 26 yrs single and has dependent
parents. He also have a younger sister whose marriage is his responsibility. His
monthly savings are 20,000 annual fixed bonus of Rs. 1, 50,000. He owns a flat
of his own at Pune worth Rs. 40, 00,000 F.D worth Rs. 50,000, investments in
MF of Rs. 25,000 and investments in shares of Rs. 25,000. His father is suffering
from diabetes and wishes to save up some money for his higher education. He
is keen to retire at 58 saving a good amount for his post retirement expenses.
Please do a customer profiling.

Name : Amit Ravindra Patil

Age : 26 years
Sex : Male
Designation : Senior Software Engineer
Family Details
Members Age Occupation Salary (Rs.) Illness
Father 58 Retired 10,000/- Diabetes - II
Mother 49 Housewife Nil Nil
Sister 19 Student Nil Nil
Income Details
Income Amount (Per Year) (Rs.)
Salary + Incentives 7,20,000/-
Bonus 1,50,000/-
Annual savings 2,40,000/-

Savings & Assets Details

Assets Value (Rs.)
Mutual Funds 25,000/-
Shares 25,000/-
Flat – 1 40,00,000/-
FD 50,000/-

Expense Details
Expenses Amount (Per Year) (Rs.)
Food & Groceries 1,40,000/-
Conveyance 80,000/-
Elect & Telephone 40,000/-
Education(Sister) 20,000/-
Clothing 20,000/-
Insurance (Employee) 20,000/-
Medical 50,000/-
Entertainment & Guest 40,000/-
Miscellaneous 50,000/-
 64 | P a g e

Goals & Objectives

 Retire at age 55 years

 Sister’s marriage at age 26 years
 Purchase of land
 Start small business of farming
 Marry at age 27 years

Issues & Problems

 He want to retire from work at age 55, so he want save a lot for his living
after retirement
 He needs a kitty of 5 lakh rupees for her sister’s marriage after 7 years
 After his retirement he wants to start a small scale business of farming for
which he had to purchase a land and agricultural equipments.
 His father are suffering from diabetes – II, so he want to cover his and
father’s illness with some insurance.
 He want to marry in next 2 years so he want to start savings from now
only that can give him good returns.

Balance Sheet / Networth

Mr. Amit R. Patil

Assets Rs. Rs.
Houses 40,00,000/-
Total Savings 2,40,000/-
Mutual Funds 25,000/-
Shares 25,000/-
FD 50,000/-
Total Assets 43,40,000/-
Liabilities Rs. Rs.
Food & Groceries 1,40,000/-
 65 | P a g e

Conveyance 80,000/-

Elect & Telephone 40,000/-

Education(Sister) 20,000/-
Clothing 20,000/-
Entertainment & Guest 40,000/-
Medical 50,000/-
Insurance (Employee) 20,000/-
Misc 50,000/-
Assets 43,40,000/-
Liabilities 4,20,000/-
Networth (Assets – Liabilities) =39,20,000/-

Young Professional

Life Stage Needs Solution

Young Protect loved ones & protection LifeGuard

against liabilities
Professional
Saving / Investing for the future Traditional
Save 'n' Protect
CashBak
CashPlus

Unit Linked Insurance Solutions

LifeTime Plus
LifeTime Super
PremierLife Gold
LifeLink Super

Retirement planning Traditional

Forever Life

Unit Linked Retirement Solutions

LifeTime Super Pension

Tax Planning All Life Insurance plans - Sec 80C

All Retirement plans - Sec 80CCC(1)

Health Concerns Health Assure

Health Assure Plus

Critical Illness Rider

Additional Protection Accident & Disability Benefit Rider

Waiver of Premium Rider

 66 | P a g e

Recommendations

 He should take high risk as the solvency ratio is quite high and he is having
less responcibility.
 He can invest in ULIP plans Like LifeTime Plus ,LifeTime Super PremierLife
Gold , LifeLink Super which will give him high returns in shorter time.
 He can Insure his father with Diabetes care Plus for the diabetic care.
 He should purchase one health assure plus as at this life stage premiums
are low and it will also give him Tax benefit.
 67 | P a g e

Conclusion :
 Portfolio Management in Insurance is itself a very interesting and
challenging subject and while preparing for the project going deep in
financial terms was a very god learning experience.
 For the first time I actually got the hands on experience on designing the
portfolio and come to know that how difficult this task for the fund
managers.
 I got a very good chance to beat the competitor products with gaining
knowledge about them
 Portfolio management plan was keen process for the benefit of our client
and when it comes for the trust and money working hard and Market
Timing are two important things I came to know about this procedure.
 I also found the analytical view of the process and both macro and micro
look about portfolio.
 Ms Saudamini who was very much concern about the investment and as
being single parent I felt great use of Insurance as a security.
 While as in case of Mr. Amit he is earning well and can take more risk as per
his age and can excel in his financial objective.
 Mr. Pondkule should keenly look into retirement kitty fund and need to
strictly observe their saving and sometimes forceful saving is recommended
 It was an eye opening experience overall as we came to know how much
tough completion is present in market today.
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Bibliography:-

Useful Books:
 Financial Management : Prasanna Chandra
 Investment analysis and Portfolio management : Prassana Chandra

Useful Magazines/News Papers:

 Outlookmoney
 Business World
 Business Today
 BusinessLine
 Businessworld
 Economic times-Insurance Ananlysis

Useful Internet sites:

http://www.telegraphindia.com/1030616/asp/opinion/story_2065311.asp
https://www.insurancemall.in/blog/category/Insurance-News-India.aspx
http://digital.dnaindia.com/epapermain.aspx?queryed=9&eddate=3/27/2008
http://google.com
http://quickmba.com
http://iciciprulife.com
http://lifeinsurancecouncil.com
http://irda.org