A

REPORT

On

“Potential of Life insurance Industry in Surat Market”

Under the Guidance of

COMPANY GUIDE

Mr. Jignesh Madhwani

TABLE OF CONTENTSContents Page No.

Acknowledgements 5List of Tables 6List of Illustrations/Diagrams 7Executive Summary 9Chapter 1: introduction 10

Objective 15 Limitation 17 Research Mythology 19 Data Collection 22

Chapter 2: Life Insurance Industry 23 Industry profile 24 important milestones in the life insurance business 29 Insurance sector reforms 31 IRDA 32

Chapter 3: Contribution of Life Insurance Industry 36 Contribution of Life Insurance in the Economy 36 Flow of Insurance Industry in India 37 Structure of life Insurance Industry 40 Life Insurance industry 41 Aggregation of Long Term Savings 42 Spread of financial services in rural Areas 43 Long term funds for infrastructure Development of Capital

Markets/Economic Growth44

Employment generation 45 Special Features 46 Growth Potential 47 Phase of transition 47

Chapter 4:Company Profile 49 Management 51 Area of Business 56 KMOM progress till date 65 KMOM-the partnership and Lineage 66 Products 69 Hierarchy of KMOM of Surat branch 71

Chapter 5: Survey 72 Data interpretation , editing and coding 73 Graph analysis 73

Chapter 6: Finding and Suggestion 83Chapter 7: Conclusion 84Chapter 8: References 85

Acknowledgement

In preparation of this report by me, I feel great pleasure because it

gives me extensive practical knowledge in my career. I get idea about

Indian Life Insurance Industry by this project.

I express my deep sense of gratitude to My Company Guide Mr.

Jignesh Madhavani for his valuable guidance during my project work. I

also like to all staff of Kotak Life Insurance who guide me in project

work.

I am thankful to Mr. Vikas Singh (Faculty Guide) for valuable

inspiration and guidance provided me through out the course of this

project. They have patient and critically gone the subject matter.

I would like to take opportunity to express my gratitude towards all

of them who have contributed directly or indirectly in my project work.

‘

Chirag PatelList of Tables

Name of Tables Page no Potential of Life Insurance sector 38 Market share of LIC and all private

player38

Individual Market share of Insurance company

39

Total asset of Life Insurance companies

41

Total premium generated 41 The future premium income

Generated will be41

Untimely death benefit to policy holder in the past

44

Age vise classification 73 Gender wise classification 74 Income wise classification 75 No of member having insurance 76 How many person having insurance

in family77

Different policy bought by customers

78

Fully insured and under insured persons

79

Market share of different life insurance policy

80

List of Illustrations/Diagrams

Name of Illustrations/Diagrams Page No

Kotak : Area of Business 57 Age vise classification 73 Gender wise classification 74 Income wise classification 75 No of member having insurance 76 How many person having insurance in

family77

Different policy bought by customers 78 Fully insured and under insured persons 79 Market share of different life insurance 80

Chapter 1:

Introduction

Executive Summary

The service industry is one of the fastest growing sectors in India today.

The upcoming sectors which are really showing the graph towards

upwards are - Telecom, Banking, and Insurance. These sectors really

have a lot of responsibility towards the economy.

Amongst the above-mentioned areas insurance is one sector, which took

a lot of time in positioning itself. The insurance business of non-life

companies was not much in problems but the major problem was with

life insurance. Life Insurance Corporation of India had monopoly for

more than 45 years, but the picture then was completely different.

Previously people felt that “Insurance is only for classes not for

masses” but now the picture is vice-versa.

The story of insurance is probably as old as the story of mankind. The

same instinct that prompts modern businessmen today to secure

themselves against loss and disaster existed in primitive men also. They

too sought to avert the evil consequences of fire and flood and loss of

life and were willing to make some sort of sacrifice in order to achieve

security. Though the concept of insurance is largely a development of

the recent past, particularly after the industrial era – past few centuries –

yet its beginnings date back almost 6000 years.

Life Insurance in its modern form came to India from England in the

year 1818. Oriental Life Insurance Company started by Europeans in

Calcutta was the first life insurance company on Indian Soil. All the

insurance companies established during that period were brought up

with the purpose of looking after the needs of European community and

these companies were not insuring Indian natives. However, later with

the efforts of eminent people like Babu Muttylal Seal, the foreign life

insurance companies started insuring Indian lives. But Indian lives were

being treated as sub-standard lives and heavy extra premiums were

being charged on them. Bombay Mutual Life Assurance Society

heralded the birth of first Indian life insurance company in the year

1870, and covered Indian lives at normal rates. Starting as Indian

enterprise with highly patriotic motives, insurance companies came into

existence to carry the message of insurance and social security through

insurance to various sectors of society. Bharat Insurance Company

(1896) was also one of such companies inspired by nationalism. The

Swadeshi movement of 1905-1907 gave rise to more insurance

companies. The United India in Madras, National Indian and National

Insurance in Calcutta and the 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 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 formation of IRDA, entrance of private life insurance companies

into India with one foreign partner, compulsory training of Insurance

agents etc. developments started to take place. And this was the time

when these companies started searching for proper channel partners who

can help the organization in expanding its network and business in India.

Channel partners are those who are going to be into direct selling of

company’s products i.e. the insurance policies. They are the link

between the customers and the management or company. These channel

partners are people with different profiles. They are selected on some

grounds like their network of people, their problem handling ability,

convincing power and lot many things.

The main idea behind company’s Questionnaire Survey is to find out

and analyze the proper profile that can be recruited by company as a

channel partner. Company has been focusing on some of the profile that

can be very beneficial for the company. For example Chartered

Accountants, Tax Consultants, Postal agents, Bank’s Daily Collection

Agents etc. the main idea behind targeting the above profile is strong

client network which is really very important for an insurance company.

The project title is “Potential of Life Insurance Industry in

Surat Market”. This shows the scope for private insurance companies

have great opportunities to cover the market and can insure the

customer. With the initiation of the deregulation in the Indian insurance

market, the monopoly of big public sector companies in life insurance

market has been broken. New private players have entered the market

and with their innovative approaches and better use of distribution

channels and technology, they are eating in to the shares of established

public sector companies in Indian Insurance Market. Since the

deregulation has been put in to place, the market share of LIC has come

down to 71.4% in life insurance market while the private players have

captured around 17% market in the general insurance segment. This

report includes the key private players in the insurance market such as

ICICI Prudential, Kotak Life Insurance Bajaj Allianz, Birla Sun life, and

TATA AIG. It also includes the leading competitors in the life insurance

and general insurance segments along with their market shares.

Chapter 2

Objective

Limitation

Methodology

Data collection

1. Objective:

The main of the present study of is accomplish the following

objective.

Proper understanding and analysis of life insurance industry.

To know about brand awareness of Kotak Life Insurance and

customer’s preference about Kotak Life Insurance.

Conduct market survey on a sample selected from the entire

population and derived opinion on that research.

According the market survey come know about how much

potential of insurance market in our city.

And base on analysis of the result thus obtained make a

report on that research.

Training aims at recruiting maximum number of Life

Advisors and to Sell the maximum policies for the company

and bring the business for the company which ever is going

at the particular point of time.

Along with it I will be gaining the thorough knowledge of

insurance sector. This will give me in more confidence in

marketing products given to me.

As the Kotak Life Insurance well reputed company in India

it’s great chance for me to observed different products launch

by other competitor companies like ICICI prudential, Bajaj

alliance ,LIC, Max New York life etc. In all, it is to

understand the overall working of the Life insurance sector.

The objective behind the project is as follows:

To find the right candidate.

To about their family background, occupation, social

relation, Qualification, Age.

Finalize candidates for the IRDA training

5: Limitation:

Some of the difficulties and limitations faced by me during

my training are as follows:

Lack of awareness among the people – This is the biggest

limitation found in this sector. Most of the people are not aware

about the importance and the necessity of the insurance in their

life. They are not aware how useful life insurance can be for their

family members if something happens to them.

Perception of the people towards Insurance sector – People still

consider insurance just as a Tax saving device. So today also there is

always a rush to buy an Insurance Policy only at the end of the

financial year like January, February and March making the other 9

months dry for this business.

Insurance does not give good returns – Still today people think

that Insurance does not give good returns. They are not aware of the

modern Unit Linked Insurance Plans which are offered by most of the

Private sector players. They are still under the perception that if they

take Insurance they will get only 5-6% returns which is not true

nowadays. Nowadays most of the modern Unit Linked Insurance Plans

gives returns which are many times more than that of bank Fixed

deposits, National saving certificate, Post office deposits and Public

provident fund.

Lack of awareness about the earning opportunity in the

Insurance sector – People still today are not aware about the earning

opportunity that the Insurance sector gives. After the privatization of

the insurance sector many private giants have entered the insurance

sector. These private companies in order to beat the competition and to

increase their Insurance Advisors to increase their reach to the

customers are giving very high commission rates but people are not

aware of that.

Increased competition – Today the competition in the Insurance

sector has became very stiff. Currently there are 14 Life Insurance

companies working in India including the LIC (life insurance

Corporation of India). Today each and every company is trying to

increase their Insurance Advisors so that they can increase their reach

in the market. This situation has created a scenario in which to recruit

Life insurance Advisors and to sell life Insurance Policy has became

very very difficult.

RESEARCH METODOLOGY

Research always starts with a question or a problem. Its purpose is to

question through the application of the scientific method. It is a

systematic and intensive study directed towards a more complete

knowledge of the subject studied. Marketing research is the function

which links the consumer, customer and public to the marketer through

information- information used to identify and define marketing

opportunities and problems generate, refine, and evaluate marketing

actions, monitor marketing actions, monitor marketing performance and

improve understanding of market as a process.

Marketing research specifies the information required to address these

issues, designs, and the method for collecting information, manage and

implemented the data collection process, analyses the results and

communicate the findings and their implication.

I have prepared our project as descriptive type, as the objective of the

study demands the answers of the question related to find the potentiality

of life insurance in Surat: How much potential is there in Surat?

The Marketing Research Process

As marketing research is a systemic and formalized process, it follows a

certain sequence of research action. The marketing process has the

following steps:

Formulating the problems

Developing objectives of the research

Designing an effective research plan

Data collection techniques

Evaluating the data and preparing a research report

There are two types of data collection method use in my project report.

– Primary data

– Secondary data.

For my project, I decided on primary data collection method for

observing working of company and approaching customers directly in

the field, tele-calling, cold calling, campaigning and through references

to know their interest in business with company in my project and also

make questionnaire for creating database of business class people is

Surat city for company.

I decided on Secondary data collection method was used by referring

to various websites, books, magazines, journals and daily newspapers

for collecting information regarding project under study.

DATA COLLECTION

After the research methodology, research problem in marketing

has been identified and selected; the next step is together the requisite

data. There are two types of data collection method – primary data and

secondary data.

In our live project, we decided primary data collection method

because our study nature does not permit to apply observational method.

In survey approach we had selected a questionnaire method for taking a

customer view because it is feasible from the point of view of our

subject & survey purpose. We conducted 200 sample of survey in our

project.

Chapter: 3

Industry profile:

important milestones in the life insurance

business

Insurance sector reforms

The Insurance Regulatory and

Development Authority (IRDA)

Brief History of the Insurance Sector in India

The business of life insurance in India in its existing form started in

India in the year 1818 with the establishment of the Oriental Life

Insurance Company in Calcutta. 

The story of insurance is probably as old as the story of mankind. The

same instinct that prompts modern businessmen today to secure

themselves against loss and disaster existed in primitive men also. They

too sought to avert the evil consequences of fire and flood and loss of

life and were willing to make some sort of sacrifice in order to achieve

security. Though the concept of insurance is largely a development of

the recent past, particularly after the industrial era – past few centuries –

yet its beginnings date back almost 6000 years.

Life Insurance in its modern form came to India from England in the

year 1818. Oriental Life Insurance Company started by Europeans in

Calcutta was the first life insurance company on Indian Soil. All the

insurance companies established during that period were brought up

with the purpose of looking after the needs of European community and

these companies were not insuring Indian natives. However, later with

the efforts of eminent people like Babu Muttylal Seal, the foreign life

insurance companies started insuring Indian lives. But Indian lives were

being treated as sub-standard lives and heavy extra premiums were

being charged on them. Bombay Mutual Life Assurance Society

heralded the birth of first Indian life insurance company in the year

1870, and covered Indian lives at normal rates. Starting as Indian

enterprise with highly patriotic motives, insurance companies came into

existence to carry the message of insurance and social security through

insurance to various sectors of society. Bharat Insurance Company

(1896) was also one of such companies inspired by nationalism. The

Swadeshi movement of 1905-1907 gave rise to more insurance

companies. The United India in Madras, National Indian and National

Insurance in Calcutta and the 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 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 amend the Life Insurance Act 1938

was introduced in the Legislative Assembly. However, it was much later

on the 19th of January 1956 that life insurance in India was nationalized.

About 154 Indian insurance companies, 16 non-Indian companies and

75 provident were operating in India at the time of nationalization.

Nationalization was accomplished in two stages; initially the

management of the companies was taken over by means of an

Ordinance, and later, the ownership too by means of a comprehensive

bill. The Parliament of India passed the Life Insurance Corporation Act

on the 19th of June 1956, and the Life Insurance Corporation of India

was created on 1st September, 1956, with the objective of spreading life

insurance much more widely and in particular to the rural areas with a

view to reach all insurable persons in the country, providing them

adequate financial cover at a reasonable cost.

LIC had 5 zonal offices, 33 divisional offices and 212 branch offices,

apart from its corporate office in the year 1956. Since life insurance

contracts are long-term contracts and during the currency of the policy it

requires a variety of services need was felt in the later years to expand

the operations and place a branch office at each district headquarter. Re-

organization of LIC took place and large numbers of new branch offices

were opened. As a result of re-organization servicing functions were

transferred to the branches, and branches were made accounting units. It

worked wonders with the performance of the corporation. It may be seen

that from about 200.00 Crores of New Business in 1957 the corporation

crossed 1000.00 Crores only in the year 1969-70, and it took another 10

years for LIC to cross 2000.00 crore mark of new business. But with re-

organization happening in the early eighties, by 1985-86 LIC had

already crossed 7000.00 crore Sum Assured on new policies.

Today LIC functions with 2048 fully computerized branch offices, 100

divisional offices, 7 zonal offices and the corporate office. LIC’s Wide

Area Network covers 100 divisional offices and connects all the

branches through a Metro Area Network. LIC has tied up with some

Banks and Service providers to offer on-line premium collection facility

in selected cities. LIC’s ECS and ATM premium payment facility is an

addition to customer convenience. Apart from on-line Kiosks and IVRS,

Info Centers have been commissioned at Mumbai, Ahmedabad,

Bangalore, Chennai, Hyderabad, Kolkata, New Delhi, Pune and many

other cities. With a vision of providing easy access to its policyholders,

LIC has launched its SATELLITE SAMPARK offices. The satellite

offices are smaller, leaner and closer to the customer. The digitalized

records of the satellite offices will facilitate anywhere servicing and

many other conveniences in the future.

From then to now, LIC has crossed many milestones and has set

unprecedented performance records in various aspects of life insurance

business. The same motives which inspired our forefathers to bring

insurance into existence in this country inspire us at LIC to take this

message of protection to light the lamps of security in as many homes as

possible and to help the people in providing security to their families.

Some of the important milestones in the life

insurance business in India are:

1850Non life insurance debuts with triton insurance company. 1870

Bombay mutual life assurance society is the first Indian owned life

insurer

1912 The Indian Life Assurance Companies Act enacted as the first

statute to regulate the life insurance business.

1928  The Indian Insurance Companies Act enacted to enable the

government to collect statistical information about both life and non-life

insurance businesses.

1938 Earlier legislation consolidated and amended to by the

Insurance Act with the objective of protecting the interests of the

insuring public.

1956 245 Indian and foreign insurers and provident societies taken over

by the central government and nationalized. LIC formed by an Act of

Parliament, viz. LIC Act, 1956, with a capital contribution of Rs. 5

Crore from the Government of India.

The General insurance business in India, on the other hand, can trace its

roots to the Triton Insurance Company Ltd., the first general insurance

company established in the year 1850 in Calcutta by the British. Some of

the important milestones in the general insurance business in India are:  

1907    The Indian Mercantile Insurance Ltd. set up, the first company to

transact all classes of general insurance business. 

1957    General Insurance Council, a wing of the Insurance Association

of India, frames a code of conduct for ensuring fair conduct and sound

business practices. 

1968    The Insurance Act amended to regulate investments and set

minimum solvency margins and the Tariff Advisory Committee set up. 

1972    The General Insurance Business (Nationalization) Act, 1972

nationalized the general insurance business in India with effect from 1st

January 1973. 107 insurers amalgamated and grouped into four

companies’ viz. the National Insurance Company Ltd., the New India

Assurance Company Ltd., the Oriental Insurance Company Ltd. and the

United India Insurance Company Ltd. GIC incorporated as a company.

Insurance sector reforms

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

RBI Governor R. N. Malhotra, was formed to evaluate the Indian

insurance industry and recommend its future direction. 

  

The Malhotra committee was set up with the objective of

complementing the reforms initiated in the financial sector. The reforms

were aimed at “creating a more efficient and competitive financial

system suitable for the requirements of the economy keeping in mind the

structural changes currently underway and recognizing that insurance is

an important part of the overall financial system where it was necessary

to address the need for similar reforms…”   In 1994, the committee

submitted the report and some of the key recommendations included.

1997    Insurance regulator IRDA set up 

2000    IRDA starts giving licenses to private insurers: Kotak Life

Insurance ICICI prudential and HDFC Standard Life insurance

first private insurers to sell a policy 

2001    Royal Sundaram Alliance first non life insurer to sell a

policy 2002    Banks allowed to sell insurance plans.

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.

  

The Act has defined certain terms; some of the most important ones are

as follows

  

appointed day means the date on which the Authority is established

under the act. Authority means the established under this Act.

Interim Insurance Regulatory Authority means the Insurance Regulatory

Authority set up by the Central Government through Resolution No.

17(2)/ 94-lns-V dated the 23rd January, 1996.

  

Words and expressions used and not defined in this Act but defined in

the Insurance Act, 1938 or the Life Insurance Corporation Act, 1956 or

the General Insurance Business (Nationalization) Act, 1972 shall have

the meanings respectively assigned to them in those Acts

  

A new definition of "Indian Insurance Company" has been

inserted. "Indian insurance company" means any insurer being a

company (a) which is formed and registered under the Companies Act,

1956 

(b) in which the aggregate holdings of equity shares by a foreign

company, either by itself or through its subsidiary companies or its

nominees, do not exceed twenty-six per cent. Paid up capital in such

Indian insurance company (c) whose sole purpose is to carry on life

insurance business, general insurance business or re-insurance business. 

Chapter: 4

Contribution of Life Insurance Sector in the Economy

FLOW OF Insurance Industry in India

STRUCTURE OF INSURANCE INDUSTRY: Snap Shot Industry Aggregation of Long Term Savings Spread of financial services in rural Areas

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

Employment generation Special Futures Growth Potential Phase of transition

FLOW OF Insurance Industry in India

• Structure of Insurance Industry: Snap Shot

• Contribution to Indian Economy

• Special Features

STRUCTURE OF INSURANCE INDUSTRY: Snap Shot

Historical Perspective(i) Prior to 1956 242 companies operating(ii) 1956 - 2001 Nationalization – LIC monopoly player – Government control

(iii) 2001 -- Opened up sector

IndustrySnap Shot - Contd.• (a) LIC – Fully owned by Government (b) Postal Life Insurance• (ii) Private players -1. Bajaj Allianz Life Insurance Co. Ltd.2. Birla Sun Life Insurance Co. Ltd. (BSLI)3. HDFC Standard Life Insurance Co. Ltd. (HDFC STD LIFE)4. ICICI Prudential Life Insurance Co. Ltd. (ICICI PRU)5. ING Vysya Life Insurance Co. Ltd. (ING VYSYA)6. Max New York Life Insurance Co. Ltd. (MNYL)7. MetLife India Insurance Co. Pvt. Ltd. (METLIFE)8. Kotak Mahindra Old Mutual Life Insurance Co. Ltd.9. SBI Life Insurance Co. Ltd. (SBI LIFE)10. TATA AIG Life Insurance Co. Ltd. (TATA AIG)11. Reliance Life Insurance12. Aviva Life Insurance Co. Pvt. Ltd. (AVIVA)13. Sahara India Life Insurance Co. Ltd. (SAHARA LIFE)

14. Shriram Sunlam• (iii) Other likely players – PNB Life Insurance, Axa Bharti Enterprises

Potential of the Insurance sector:

Source: Financial Express-Delhi.

Market share:

2001-02 2002-03 2003-04 2004-05 2005-

06LIC

98% 94% 87% 78% 72%PrivatePlayers 2% 6% 13% 22% 28%

Total population 1.1 billion

Total population of Insurable class

253 millions

Total population insured

88.5 millions

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

Market Share

Company Indian Promoter/

Partner

Foreign Insurance

Market share

based on premium

Aviva life Dabur Aviva, UK 1.12Bajaj

AllianzBajaj Auto Allianz,

Germany6.12

Birla sun life

Aditya Birla group

Sun Life, Canada

1.84

HDFC Standard

HDFC Standard Life, UK

2.96

ICICI Prudential

ICICI Bank

Prudential, UK

7.11

ING Vysya

Vysya Bank

ING Insurance,

Netherlands

0.63

Kotak Mahindra,

Old Mutual

Kotak Mahindra

Bank

Old Mutual South Africa

0.71

Max New York

Max India New York Life, US

1.32

MetLife Jammu & Kashmir

Bank

MetLife, US

0.40

Sahara Life

Insurance

Sahara India

None 0.80

SBI Life SBI Cardiff, France

1.52

Tata AIG Tata Group

AIG, US 1.78

CONTRIBUTION TO INDIAN ECONOMY

(i) Life Insurance is the only sector which garners

long term savings

(ii) Spread of financial services in rural areas and

amongst socially less privileged

(iii) Long term funds for infrastructure

(iv) Strong positive correlation between

development of capital markets and insurance/

pension sector

(v) Employment generation

Aggregation of Long Term Savings

(i) Total Assets of Life Insurance Companies

2002-2003 2003-2004 2004-20052,80,450Cr 3,52,608Cr 4,23,000 Cr

(ii) Total Premium generated

2002-2003 2003-2004 2004-200557,708 Cr 66,278 Cr 79,000 Cr

(iii) Industry is growing @ 19 p.a.

(iv) At this growth rate, the future premium income generated will be

2005-2006 2006-2007 2007-200894,000 Cr 1,12000 Cr 1,33,000 Cr

(v) Life Insurance funds account for 15% of household savings.

(vi)The industry has the potential to increase the share to 20%.

Spread of financial services in rural areas and amongst socially

underprivileged

• IRDA Regulations provide certain minimum business to be done

(i) In rural areas

(ii) In the socially weaker sections

• Life Insurance offices are spread over nearly

1400 centers.

• Presence of representative in every tensile –

deeper penetration in rural areas.

• Insurance agents numbering over 6.24 lakhs

in rural areas.

• Policies sold in rural areas (2004-05) - No. of

policies - 55 lakhs Sum assured 46,000 cr

• Social security - No. of lives covered 2003-04

17.4 lakhs 2004-05 42.1 lakhs

Long term funds for infrastructure

• For GDP to grow at 8 to 10%, qualitative improvement in

infrastructure is essential.

• Estimates of funds required for development of infrastructure vary

widely.

• An investment of 6, 19,600 crore is anticipated in the next 5 years

(Source : SSKI India)

• Tenure of funding required for infrastructure

normally ranges from 10 to 20 years.

• Major portion of these funds are routed through debt/private

equity participation

Development of Capital Markets/Economic Growth

•Industry also contributes in economic development through investments

in capital market. Present level of investments is over Rs. 40,000 crore.

(Mark to Market basis around 80,000 Crores).

•Annual Investment of around 9000 Crores in capital markets.

•Contribution to Five Year Plans9th Plan 2, 30,900 Crores Last Two

Years 1, 70,900 Crores

• Helps inculcate a sense of security by protecting earning of people in

case of untimely death. Benefits to Policy Holders

2002-2003 2003-2004 2004-2005

20,800 Cr 24,200 Cr 28,700 Cr

EMPLOYMENT GENERATION

• Life insurance industry provides increased

employment opportunities.

• Employees in insurance sector as on 31st March,

2005 is around 2 lakhs.

• Many agents depend on insurance for their

Livelihood–No. of agents on 31st March 2004 –

15.59 lakhs

•Brokers, corporate agents, training establishments

provide extra employment opportunities.

• Many of these openings are in rural sectors.

SPECIAL FEATURES

• Tax clubbing of various savings short term and long term into same

bracket have a bias towards short term savings.

• Distinction between the short term savings and long term savings is

critical from investor’s point of view. More prone to inflationary

pressures

• Clearly, long term savings more than 10 years deserve special

consideration under tax regime.

GROWTH POTENTIAL

At present insurance penetration in India is quite low –

2.26% of GDP.

PHASE OF TRANSITION

• Life Insurance industry is under the phase of infancy after 50 years of

monopoly

• Competition from within and other sectors of financial market

• Needs environmental support till it reaches a comfort zone

Chapter: 5

Company profile

Management

Areas of Business

KMOM- Progress till date

KMOM- the Partnership and

Lineage

Products

Hierarchy of KMOM Life

Insurance Ltd. (Surat Branch)

COMPANY PROFILE

Stock broking businesses in the UK. Kotak Group was established in

1985.Kotak Mahindra Bank is the parent company of the group. Kotak

Group entered into the life insurance business in 2001. Kotak Mahindra

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

Mahindra Bank Ltd. (76%) and Old Mutual plc. (24%) Old Mutual

plc.Is a world-Class international financial services company. It was

established in South Africa before 160 years.

OLD MUTUAL is the largest financial services business in South

Africa, through its life insurance, asset management, banking and

general insurance operations. The company serves 4 million life

insurance policyholders and employs over 13 000 South Africans in its

local operations.

In the USA, OLD MUTUAL is one of the top ten fixed annuity

businesses offering an array of specialist asset management skills

through its 23 asset management businesses. The company’s US Life

business recorded sales of $4 billion at the end of 2002.

Operations in the United Kingdom are focused on wealth management,

through Gerrard as one of the leading private client

The OLD MUTUAL Group has the ability to cater for a variety of

consumer segments and offers a comprehensive and innovative range of

products for all income groups.

Mission:

“At Kotak Life Insurance, we aim to help customers take important

financial decisions at every stage in life by offering them a wide range

Of innovative life insurance products, to make them financially

independent.”

MANAGEMENT

MR. UDAY KOTAK is the CEO of the company.

Other Top Management persons are as follows:-

Mr. Gaurang Shah (Managing Director)

Mr. Gaurang Shah is the Managing Director of Kotak Mahindra

Old Mutual Life Insurance Limited.

Mr. Gaurang Shah is a Chartered Accountant and a Cost and Works

Accountant. He has also done his Company Secretary ship from the

Institute of Company Secretaries of India. Mr. Gaurang Shah has

been with the Kotak Group for the past eight years where he has

held different positions of great responsibility and juggled multiple

tasks effectively. His cumulative experience, primarily in financial

services, stands at over 21 years, several of those in building the

retail finance business. At Kotak Life Insurance, Mr. Shah will

focus on developing new lines of businesses and leveraging the

company's existing competencies and network to steer Kotak Life

Insurance on its ongoing growth path with even greater thrust. Mr.

Shah has a commendable expertise in managing a large number of

employees.

Mr. Shah has been previously associated with Kotak Mahindra

Primus since its inception and has contributed towards its growth to

become a Rs.2000 Cr plus business. Before coming to Kotak Life

Insurance, Gaurang Shah was Group Head of Retail Assets for

Kotak Mahindra Bank. The Retail Assets include commercial

vehicles, personal loans, structured products, car loans and loans

against shares.

Mr. G Murlidhar (Chief Financial Officer)

Mr. Murlidhar is a Chief Financial Officer and

Company Secretary of Kotak Life Insurance. Mr.

Murlidhar is an associate member of the Institute of

Chartered Accountants of India, an associate member of

the Institute Of Company Secretaries of India, and

graduate member of the Institute of Cost & Works

Accountants of India. Mr. Murlidhar possesses over 20-

year work experience and has earlier worked with

National Dairy Development Board (NDDB), MDS

Switchgear Limited and Nicholas Piramal India Limited

and Ion Exchange Ltd. Prior to Kotak Life Insurance; he

held the position of VP-Finance at Gujarat Glass Ltd.

As Chief Financial Officer at Kotak Life Insurance, he oversees all

aspects of Finance including Operations, Regulatory, Internal

Control, Finance, Accounts and Treasury.

Mr. Nandip Vaidya (Vice President - Sales)

Mr. Nandip Vaidya is the Vice President - Sales at Kotak Life

Insurance. Mr. Vaidya holds a B.Tech (Mechanical) degree from IIT

Mumbai and has also completed his Post Graduate Diploma in Business

Management from IIM-Ahmedabad.

He started his career as a Management Consultant at A.F. Fergusson.

After completing 5 years there, he moved onto various positions within

the Kotak Mahindra group starting from Car Financing (Kotak

Mahindra Finance Ltd) to Stock broking & Distribution of investment

products/ Mutual funds (Kotak Securities). Mr. Vaidya set up the private

banking business and private equity fund for the Kotak group.

Mr. Arun Patil (Vice President - Sales & Management

Development)

Mr. Eksteen de Waal is the Sales Training Head of Kotak Life

Insurance. He joined on secondment from Old Mutual South Africa for a

period of two years. Eksteen is a post- graduate in Law and practiced

Law as well as lectured at South African Universities before joining the

Life Insurance Industry. He has over 23 years' experience in the Life

Insurance Industry. He worked for Sanlam Life in South Africa for 3

years before joining Old Mutual more than 20 years ago. Eksteen started

with Old Mutual as a Legal Adviser and after that held various

positions. He sold life assurance for some time, served as Head of Old

Mutual's Training Division, Head of Old Mutual's Trust Company,

Project Leader for implementing a new Sales Process with McKinsey's,

Head of Conventions and Motivation, Head of Agency Marketing and

finally Head of Banc assurance with Old Mutual Bank. In addition he

played a role in the wider Industry. He was Vice-President of the South

African Insurance Institute for two years as well as Vice-President of the

Financial Planning Institute for three years. In this time Eksteen

pioneered the introduction of the CFP qualification into South Africa.

He has traveled widely during his career, working in the USA and

England and also implemented Training Programme in Namibia,

Zimbabwe, Malawi and Kenai. His current role is to substantially

upgrade the level of Training and assist in the implementation of

Performance Management Systems in Kotak Life Insurance.

AREAS OF BUSINESS

Kotak Mahindra one of India's leading financial institutions was born in

1985 as Kotak Capital Management Finance Limited. This company was

promoted by Mr. Uday Kotak, Mr. Sidney A. A. Pinto and Kotak &

Company. Industrialists Mr. Harish Mahindra and Mr. Anand Mahindra

took a stake in 1986, and that's when the company changed its name to

Kotak Mahindra Finance Limited.

It's been a steady and confident journey to growth and success.

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