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PROJECT REPORTSubmitted For the Partial Fulfillment of the
Degree
ON
METLIFE INDIA
Submitted By:
Anubhav TyagiMBA(IT)
IIIT Allahabad
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ACKNOWLEDGEMENT
Something I never thought about as a student, but that becomes
very clear as a trainee, in such a big organization is that while
making a project, you come to face or have different experiences
and by that you come to know that A project is not produced by
just one person, it takes lot of hard work by lot of talented people
who guide you with there expert advices and experiences.
And for making my project successful I have many person to
thank for helping and guiding me in completion of the project.
I would like to especially thank to Mr. Vijay Chourasia(Internal
guide) and Mr. Abhijeet Mukerji (Branch manager), who kept
the ship afloat for the past two months and shared there expert
advices to make my project full of content and also provided me
the facilities to prepare the project.
Also I would like to thanks, Mr. Sachin Tyagi and Mr. Kumud.
K. Tyagi for correcting, formatting and polishing my work with his
special advices and guidance. Also I appreciate the staff of Metlife
India, Kailash Colony and facility support provided by them for the
past two months.
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Anubhav Tyagi
MBA(IT)IIIT Allahabad
OBJECTIVE
The main objective of the project was to study the
recruitment methodologies of the High Net-Worth
Individuals and High Net-Work Individuals and at the same
time study their inclination towards the businessopportunity available in the insurance sector and their
awareness towards the same. The study also aimed at
knowing the brand recall of MetLife India Insurance.
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INSURANCE SECTOR IN INDIA
The insurance sector in India has come a full circle from being an
open competitive market to nationalisation and back to a
liberalised market again. Tracing the developments in the Indian
insurance sector reveals the 360-degree turn witnessed over a
period of almost two centuries.
A brief history of the Insurance sector
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.
Some of the important milestones in the life insurance business in
India are:
1912: The Indian Life Assurance Companies Act enacted as the
first statute to regulate the life insurance business.
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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 inCalcutta 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.
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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 (Nationalisation) Act,
1972 nationalised 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 acompany.
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
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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:
1) Structure
Government stake in the insurance Companies to be brought
down to 50%
Government should take over the holdings of GIC and its
subsidiaries so that these subsidiaries can act as
independent corporations
All the insurance companies should be given greater freedom
to operate
2) Competition
Private Companies with a minimum paid up capital of Rs.1bnshould be allowed to enter the industry
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No Company should deal in both Life and General Insurance
through a single entity
Foreign companies may be allowed to enter the industry in
collaboration with the domestic companies
Postal Life Insurance should be allowed to operate in the
rural market
Only One State Level Life Insurance Company should be
allowed to operate in each state
3) Regulatory Body
The Insurance Act should be changed
An Insurance Regulatory body should be set up
Controller of Insurance (Currently a part from the Finance
Ministry) should be made independent
4) Investments
Mandatory Investments of LIC Life Fund in government
securities to be reduced from 75% to 50%
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GIC and its subsidiaries are not to hold more than 5% in any
company (There current holdings to be brought down to this
level over a period of time)
5) Customer Service
LIC should pay interest on delays in payments beyond 30
days
Insurance companies must be encouraged to set up unit
linked pension plans
Computerisation of operations and updating of technology to
be carried out in the insurance industry The committee
emphasized that in order to improve the customer services
and increase the coverage of the insurance industry should
be opened up to competition.
But at the same time, the committee felt the need to
exercise caution as any failure on the part of new players
could ruin the public confidence in the industry. Hence, it
was decided to allow competition in a limited way by
stipulating the minimum capital requirement of Rs.100
crores. The committee felt the need to provide greater
autonomy to insurance companies in order to improve theirperformance and enable them to act as independent
companies with economic motives. For this purpose, it had
proposed setting up an independent regulatory body.
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Why Insurance ?
Insurance is desired to safeguard oneself and one's family against
possible losses on account of risks and perils. It provides financial
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compensation for the losses suffered due to the happening of any
unforeseen events.
By taking life insurance a person can have peace of mind and need
not worry about the financial consequences in case of any
untimely death.
Certain Insurance contracts are also made compulsory by
legislation. For example, Motor Vehicles Act 1988, stipulates that a
person driving a vehicle in a public place should hold a valid
insurance policy covering " Act" risks. Another example of
compulsory insurance pertains to the Environmental ProtectionAct, wherein a person using or carrying hazardous substances (as
defined in the Act) must hold a valid public liability (Act) policy.
Basically there are two types of insurance:
1. Life Insurance
2. General Insurance
Insurance - Life
Your family counts on you every day for financial support: food,
shelter, transportation, education, and much more. Insurance
provides you with that unique sense of security that no other form
of investment provides. It gives you a sense of financial support
especially during that time of crisis irrespective of the fluctuations
in the stock market. Insurance provides for your career goals right
from your childhood years.
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Life insurance is all about making sure your family has adequate
financial resources to make those plans and dreams come true. It
provides financial protection to help your family or business to
manage after your death.
Few of the Life insurance policies are:
Whole life policies - Cover the insured for life. The insured does
not receive money while he is alive; the nominee receives the sum
assured plus bonus upon death of the insured..
Endowment policies - Cover the insured for a specific period.
The insured receives money on survival of the term and is not
covered thereafter.
Money back policies - The nominee receives money immediately
on death of the insured. On survival the insured receives money at
regular intervals during the term. These policies cost more than
endowment with profit policies.
Annuities / Children's policies - The nominee receives a
guaranteed amount of money at a pre-determined time and not
immediately on death of the insured. On survival the insured
receives money at the same pre-determined time. These policies
are best suited for planning children's future education and
marriage costs.
Pension schemes - are policies that provide benefits to the
insured only upon retirement. If the insured dies during the term
of the policy,
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his nominee would receive the benefits either as a lump sum or as
a pension every month.
Since a single policy cannot meet all the insurance objectives, one
should have a portfolio of policies covering all the needs.
Insurance - General
Every asset has a value and the business of general insurance is
related to the protection of economic value of assets. Assets would
have been created through the efforts of owner, which can be in
the form of building, vehicles, machinery and other tangible
properties. Since tangible property has a physical shape and
consistency, it is subject to many risks ranging from fire, allied
perils to theft and robbery.
Concepts of insurance have been extended beyond the coverage of
tangible asset. Now the risk of losses due to sudden changes incurrency exchange rates, political disturbance, negligence and
liability for the damages can also be covered.
But if a person judiciously invests in insurance for his property
prior to any unexpected contingency then he will be suitably
compensated for his loss as soon as the extent of damage is
ascertained.
Few of the General Insurance policies are:
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Property Insurance: The home is most valued possession. The
policy is designed to cover the various risks under a single policy.
It provides protection for property and interest of the insured and
family.
Health Insurance: It provides cover, which takes care of
medical expenses following hospitalization from sudden illness or
accident.
Personal Accident Insurance: This insurance policy provides
compensation for loss of life or injury (partial or permanent)
caused by an accident. This includes reimbursement of cost oftreatment and the use of hospital facilities for the treatment.
Travel Insurance: The policy covers the insured against various
eventualities while traveling abroad. It covers the insured against
personal accident, medical expenses and repatriation, loss of
checked baggage, passport etc.
Liability Insurance: This policy indemnifies the Directors or
Officers or other professionals against loss arising from claims
made against them by reason of any wrongful Act in their Official
capacity.
Motor Insurance: Motor Vehicles Act states that every motor
vehicle plying on the road has to be insured, with at least Liability
only policy. There are two types of policy one covering the act ofliability, while other covers insurers all liability and damage caused
to one's vehicles.
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Since a single policy cannot meet all the insurance objectives, one
should have a portfolio of policies covering all the needs.
Of the two types of insurances, MetLife deals in Life Insurance in
India.
MET-LIFE BEGINS::
The origins of Metropolitan Life Insurance Company (MetLife) go
back to 1863, when a group of New York City businessmen raised
$100,000 to found the National Union Life and Limb Insurance
Company.
The new company insured Civil War sailors and soldiers against
disabilities due to wartime wounds, accidents, and sickness. In
1868, after several reorganizations and five difficult years, the
company decided to focus on the life insurance business. A new
company was chartered to sell "ordinary" insurance to the middle
class. The founders chose the name because they had been most
successful in New York City, or the "Metropolitan" District.
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This new venture also faced difficulties. A severe business
depression that began in the early 1870s rapidly put half of the 70
life insurance companies operating in New York State out of
business. Only very large, long-established ordinary life insurance
companies remained strong. Policy lapses over successive years
forced the company to contract until it reached its lowest point in
the late 1870s.
In 1879, MetLife President Joseph F. Knapp turned his attention to
England, where "industrial" or "workingmen's" insurance programs
were widely successful. American companies had not bothered to
pursue industrial insurance up to that time because of the expense
involved in building and sustaining an agency force to sell policies
door
to door and to make the weekly collection of five- or ten-cent
premiums.
By importing English agents to train an American agency force,
MetLife quickly transferred successful British methods for use in
the United States. By 1880, the company was signing up 700 new
industrial policies a day. Rapidly increasing volume quickly drove
down distribution costs, and the new program proved immediately
successful.
The MetLife agent became an important person in the lives of
these striving families. Manuals instructed agents to call at a home
at the same time each week to ensure familiarity and contact. In
the process of collecting premiums, insurance agents listened to
the problems, concerns, and hopes of their clients. So successful
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was this approach that by 1909, MetLife became the nation's
largest life insurer in terms of insurance in force, a leadership
position we continue to hold today in North America.
MetLife Today
In 2001 MetLife was the first insurance company to establish a
financial holding company with a nationally chartered bank.
Leveraging its unparalleled distribution channels, MetLife entered
the retail-banking arena with the launch of MetLife Bank. This will
make an easier and more convenient way for MetLifes customers
to realize their financial goals.
After the tragic events of September 11, MetLife responded
quickly. First and foremost, MetLife was fully committed to its
policyholders. Chairman and CEO Bob Benmosche remarked that
"our focus today is on lending whatever support we can to our
customers," and that MetLife "is fully prepared financially to pay all
claims."
MetLifes support did not end there. In responding to the tragedy,
MetLife and MetLife Foundation made a number of grants to aid
those affected, including: $1 million Foundation grants to both the
September 11th Fund to meet longer-term needs of victims, and to
the Twin Towers fund to assist families and rescue workers.
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MetLife Foundation also matched employee contributions to the
American Red Cross Disaster Relief Fund.
At the same time MetLife, Inc. announced that it had invested $1
billion in a broad array of publicly traded common stocks. The
company said that this was the beginning of a program to
significantly increase MetLifes investment in the public equity
markets, and one way to get back to the basics of building
Americas future.
Additional grants for disaster relief were made in 2001 and 2002
to a number of different organizations including the ChildrensHealth Fund and the Renaissance Economic Development
Corporation.
In 2002 Working Mothermagazine honored MetLife by naming the
company one of the "100 Best Companies for Working Mothers,"
for the fourth consecutive year. In addition, the Minority Corporate
Counsel Association (MCCA) selected MetLifes Law Department as
a
recipient of the Employer of Choice Award for its commitment to
creating and maintaining a diverse and inclusive organization.
On the international front, the Mexican Government selected
MetLife to acquire Aseguradora Hidalgo, S.A., Mexicos largest life
insurer for approximately $965 million. MetLife "has the expertise,
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the resources and the commitment to provide exceptional products
and services to customers in Mexico, one of the fastest growing
life insurance markets," noted Bill Toppeta, president of MetLife
International.
MetLife announced in 2002 that it would be continuing its long-
standing relationship with Snoopy and the rest of the PEANUTS
characters. The company signed a new contract that would allow
the characters to appear in MetLifes domestic and international
advertising for the next 10 years. Commenting on the partnership,
Senior Executive Vice President and Chief Administrative Office
Lisa Weber noted that "Snoopy is our corporate ambassador and
has been an important part of our advertising campaign for 17
years."
For its future successes, the company can draw on the reservoir of
history that has produced an enduring set of corporate values
based on almost 135 years of integrity, social responsibility, strong
leadership, financial strength, and innovative products and
services
With over 137 years of experience and acquiring the 36th
position among the fortune 500 companies, the MetLife
companies serve millions of customers in the Americas and Asia
with one goal in mind to build financial freedom for everyone.
The MetLife companies are a
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leader in group benefits that serve 88 of the top one hundred
FORTUNE 500* companies, and provide benefits to 37 million
employees and family members through its plans sponsors in the
U.S.
The MetLife companies are also ranked #1 in group life and #1 in
commercial dental in the U.S. The MetLife companies are the
number one life insurer in the U.S. with approximately US $2.5
trillion of life insurance in force.
In India, MetLife was incorporated in 2001, and aims to
differentiate itself through customized need based selling, simple
and innovative products, and technology-backed service
experience, to tread its path to build financial freedom for
everyone.
MetLife's stated long-term goal is to become the recognized leader
throughout the world with over 100 million people as customers by
the year 2010. The company took a major step toward realizingthis goal in January 2005, when it announced its intention to
purchase Citigroup's Travelers Life & Annuity and substantially all
ofCitigroup's international business for $11.5 billion.
Vision/Mission
Is to build financial freedom for all through leadership in
providing financial advice and building long-term
relationships through innovative protection, accumulation and
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retirement products, robust underwriting processes and creating
world-class customer service experience for the customers.
Metlife want to provide customers in India with world-class
solutions for financial security, and in the process add significant
value to our shareholders, associates and society.
Core Values
Being Innovative in offering world class and competitive
products to customers.
To build Long Term Relationships with the customers by
creating a world class service experience through operational
excellence and the innovative use of technology
By creating a Customer Centered and Result Focused Vision
that inspires each of the Associates and has their buy-in
Committed to creating a High Performance Organization by
creating an environment that allows each of the Associates
to perform at their peak and hence recognized as an
Employer of Choice
Committed to Partnering with our internal and external
Customers for mutual success
Work with Integrity, Fairness and Financial Prudence in all
the dealings keeping the interests of the Shareholders,
Customers and Associates paramount .
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CORPORATE GOVERNANCE
Venkatesh Mysore Managing Director
Miro Farrugia Chief Financial Officer
Suraj Kaeley Chief Marketing Officer
B Ashwin - Chief Administrative Officer
Anil Kumar K R - Chief Planning Officer
Vikrant Pande Director (Bancassurance and Corporate Agency)
Gaurav Suri Director (Marketing)
Sudip Mukhopadhyay Director (Institutional Business)
Smitashree Menon Director (Human Resources)
K Sriram Chief Actuary
Ajith Vellat Director (Information Technology)
Kailash Kulkarni Director (Agency Sales)
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Rajen Jatar Director (Finance)
Neerav Kaushik Director (Service Delivery)
Shiva Belavadi Director (Institutional Service Delivery &Claims)
Corporate Partners
As the vital channel for MetLifes products,some exemplary banks
and financial institutions have been chosen. These serve as the
interface between the customers and Metlife to aid them to
understand the unique needs and aspirations of every Indian and
update the products of Metlife with features that form the
cornerstones of financial freedom.
METLIFE PRODUCT OVERVIEW:
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1) Met100
Met100 is a limited pay whole-life policy in a non-participating
form. The policy covers the entire life (or till 100 years of age) and
has a guaranteed up-front sum-assured and paid-up value.
Besides, the policyholder has the option to surrender the policy at
any point of time for cash at a pre-decided guaranteed "surrender
value". Met100 thus, assures guaranteed sum assured to the
policyholder on survival at age of 100 or, a guaranteed amount for
the nominee/beneficiary in case of death. Also, on payment of
additional premiums one or more of the various riders like
Accidental death benefit, Term Rider, Waiver of Premium Rider,
Critical Illness rider can be added to the policy.
Highlights
Life Time protection Affordable premiums
Tax Benefit
Access to cash value of the policy
Guaranteed returns in case of survival or death.
2) Met100 Gold
Met100 Gold is a limited pay whole-life policy in participating form,
covering the entire life or till the 100 years of age. A bonus is
declared after the first two years of holding the policy, which is
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credited as reversionary bonus. Besides, the company can also
declare terminal bonus. A unique feature about this policy is that
the participation in the profit continues even after the premium
paying term, provided the premiums have been paid for the full
term. The premium paying modes available are Annual, Semi-
annual, Quarterly, Monthly and Payroll Savings Scheme. Also, on
payment of additional premiums one or more of the various riders
like Accidental death benefit, Term Rider, Waiver of Premium
Rider, Critical Illness rider can be added to the policy.
Highlights:
Life Time protection
Affordable premiums
Tax Advantage
Access to the cash value of the policy
Future prosperity of the company is shared by getting
reversionary and terminal bonuses.
3) Met Sukh
Met Sukh is a money back non-participating policy where assured
lump-sum amount is paid to the policyholder at regular intervals.
Being a non-participating policy, the premium rates, sum assured,
surrender values and paid-up values are guaranteed up-front forMet Sukh. The plan can be availed for the term of 20 years, where
the money is paid every 5 yrs. Premiums for Met Sukh are ceased
on death or on expiry of term - whichever is earlier. Also, on
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survival at the end of 20th year the policyholder receives a 40%
accrued
guaranteed addition. The biggest benefit of Met Sukh however, is
that in case of death during the term of the plan, the nominee/
beneficiary receives the guaranteed sum assured plus accrued
guaranteed additions. On payment of additional premiums one or
more of the various riders like Accidental death benefit, Term
Rider, Waiver of Premium Rider, Critical Illness rider can be added
to the policy.
Highlights
Assured sum at regular intervals
Guaranteed returns at maturity
Waiver of premium in case of death
Protection
Savings
4) Met Bhavishya
Met Bhavishya, a non-participating money-back policy with
guaranteed returns, has been specially designed to meet the
financial requirements for children at their different stages of life.
The insured here is the parent and the child the beneficiary. Thepolicy is suitable for parents in the age group 20-50 years having
children of 0-12 years old. There are two options to choose from
and fixed term benefits periodic additions & terminal additions are
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payable based on the option that you select. The policy can be
customized through 4 riders - Accidental Death Benefit, Critical
Illness (10 illness), Waiver of Premium (Accidental Disability) and
Term Rider
Highlights
Guaranteed returns at regular intervals
Secures the present and the future for the child Waiver of Premium in case of death.
5) Met-Mortgage Protector
Met-Mortgage Protector is a single pay/limited pay policy, specially
designed to protect the dependants of the insurer against the
liabilities incurred on a housing loan. The individual here is insuredand not the asset. The biggest benefit of the policy is its
decreasing term-assurance plan, which reduces the burden on the
dependants, while providing guaranteed sum assured to the
beneficiary. Met Mortgage Protector is available for terms of 5-25
yrs
Highlights
Protect dependents against liabilities incurred on housing
loan.
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Cover continues even after the premium paying term is over.
Flexible terms
6) Met Suvidha
Met Suvidha is a participatory endowment plan that provides
savings and security in one policy. It provides a lot of flexibility in
choosing the
premium paying term between 15-30 years i.e terms are availablefor 15, 16, 17, 1830 years. Met Suvidha has been developed
keeping in
mind people with shorter and irregular earning spans eg.
celebrities. The policy allows for flexibility in paying provides
protection to an individual whenever required, and offers tax
advantage. Also, being a participatory policy it is suitable for
people who would like to share the future prosperity of thecompany by getting reversionary bonuses and terminal bonuses.
7) Met Suvidha(Non- Participating Endowment Assurance)
Met Suvidha provides the savings and security in one policy. It
provides a lot of flexibility for the policy terms between 15 - 30
year i.e for the terms 15,16,17,1830 years. This product isdeveloped keeping people in mind especially people who have
irregular and shorter earning spans. It provides protection to an
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individual during the need and whenever required. It provides tax
advantage
8) Met Suraksha
Met Suraksha is a term assurance plan and provides pure
protection at the cheapest price for a specified period of time. The
policy has a term of 5/10/15/20/25 years and level term is up-to
60 years of age. It is an participating endowment policy. The tax
benefits are provided throughout the premium paying terms. Met
Suraksha provides multiple premium paying options like annual,
semi-annual, quarterly, monthly and payroll savings scheme
(PSP).
USP
Financial security after retirement
Multiple premium paying options Tax benefits throughout the premium paying options.
9) Met Pension Participating Deferred Annuity
Met Pension is structured as a participating endowment and a
participating immediate annuity. This provides only one annuity
option i,e Life Annuity. Being a pension plan it is developed toprovide financial security after retirement. It provides tax benefits
throughout the premium paying options. The death benefit during
the endowment phase will be the return of premium plus the
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reversionary bonus if any. In case of the immediate annuity phase
there will be no benefits in this phase for the beneficiary of the
policy. The maturity benefits at the end of the endowment phase is
equal to the face amount plus guaranteed addition plus attached
reversionary bonuses, if any plus terminal bonus, if any. MetLifes
pension product offers multiple premium paying options.
Highlights
Financial security after retirement
Tax benefits throughout the premium paying options Multiple premium paying options
10) Met Ultimate-"A universal life insurance policy"
Met Ultimate acts as a flexible policy which combines elements of
protection and accumulation simultaneously and provides ready
access to the accumulated cash value. It also acts as a savings
account where
in the premiums are deposited, various charges deducted and
interest credited to the accumulated amount. Met Ultimateprovides minimum guaranteed return(net rate 3.5 p.a) an an
additional bonus interest declared on the investment performance.
It has the facility of tax free withdrawals after two policy years
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from the accumulation account. Met Ultimate offers "Premium
Holidays" where there is no schedule for premium payments after
third policy year which allows for skipping payment of premiums
without lapsing the policy.
Highlights
Flexiblity
Tax benefits
Provides coverage upto 100 years of age
Skipping of premium payments after the third policy yearwithout lapsing the policy.
Tax free withdrawals after two policy years from the
accumulated account.
Flexibility to increase/decrease the Face Amount
]
11) MET GROUP LIFE
Met Group Life is a flexible group insurance policy that would
enable both employer and employees to select the right mix of life
insurance to suit their individual needs. Its a yearly term
insurance product which pays a face amount to the employeesagainst the risk of death thereby assuring peace of mind. Met
Group Life presents a hassle free implementation and flexible
premium paying modes- annual, semi-
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annual, quarterly or monthly. It offers easy enrolment process
with no medical underwriting up to free cover limit, non-
transferable employer liability, non-taxable face-amount for
beneficiary and an additional cover on a contributory basis. Met
Group also offers the option of converting Group Coverage to
Individual Coverage if the employee desires, and the advantage of
covering spouse and children subject to minimum participation
levels.
Highlights
Flexible Group Insurance Policy
Provides protection for employees family
Provides significant increased employee motivation, morale
and loyalty leading to a better work environment
Unit-Linked Plans of MetLife
12)MET-SMART
Met Smart is a transparent, unit linked whole life plan that
matures at age 100. The premium you pay is used partly for
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insurance cover and the balance is invested in funds to buy units.
Met Smart offers 3 insurance options as well as 6 investment
options that you can choose from, based on your risk profile.
Met Smart at a glance:
A Unit linked whole life plan that matures at age 100
Offers you life protection and the advantage of investing in
stocks, debt instruments and government securities
3 insurance options
A never before choice of 6 investment options covering the
complete range of investment possibilities to suit your risk-return profile
Offers you the option of switching between funds
Convenient limited pay option that allows you to complete
premium payment over a fixed term and enjoy the full
benefits
Offers a premium holiday after 3 years
Gives you the freedom to withdraw from your funds.
13)MET-ADVANTAGE
Met Advantage is a unit-linked pension plan that works hard for
you when you stop working. And, like the name suggests, it comes
with the maximum number of advantages. For one, it ensures that
you lead a comfortable lifestyle. Always. More importantly, it helps
you plan ahead, keeping in mind the escalating cost of living.
Whats more, unlike any other plan, Met Advantage comes with six
investment options, seven annuity options, and, much more.
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Met Advantage at a glance:
Transparent unit-linked pension insurance plan
Choice of 6 investment options.
Dump-in option.
Life cover protection up to vesting age
Tax savings on premium up to Rs.3,366* per annum.
Postponement of vesting age
Option of switching between funds
No health check-up
Flexible premium paying terms
Option to commute up to 1/3rd of vesting benefits tax-free
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STRUCTURE OF THE SALES FUNCTION
MetLife India Insurance sales function previously dealt in two
functional structures within the organization. These two
Structures were:
Corporate sales
Agency sales
Corporate/Group Sales:
Corporate sales includes that part of MetLife India Insurance in
which the sales are affected through the various sales manager ,
who on behalf of the company meet various corporate heads and
try to sell group insurance on the condition that all the employees
of that particular corporate will have insurance from MetLife India
Insurance, automatically when they will join that organization.
Group Insurance has been recognized as an ideal tool to enhance
productivity and build employee satisfaction in business houses
and offer value-added benefits to customers of financial
institutions and members of various affinity groups. MetLife Indias
Group Insurance solutions have been created to satisfy the
changing needs of various group customers.
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Agency Sales:
Agency sales includes that part of Met-life in which sales are
affected through various individual agents known as Financial
advisors(or can be called agents) who are basically working with
the company on the commission basis. Leads are generated by
advisors themselves and sales are affected henceforth. The
hierarchy structure of the Agency sales is as under:
o Branch Sales Manager (BSM)/ Center Sales Manager
o Agency Manager (AM)
o Sales Manager(SM)
o Assistant Sales Manager (ASM)
o Financial Advisors(FA)
With the opening up of the insurance sector and with so many
players entering the Indian insurance industry, it is required by the
insurance companies to come up with innovative products, create
more consumer awareness about their products and offer them at
a competitive price. New entrants in the insurance sector had no
difficulty in matching their products with the customers' needs and
offering them at a price acceptable to the customer.
But, insurance not being an off the shelf product and one which
requiring personal counseling and persuasion, distribution posed a
major challenge for the insurance companies. Further insurable
population of over 1 billion spread all over the country has made
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the traditional channels of the insurance companies costlier. Also
due to
heavy competition, insurers do not enjoy the flexibility of incurring
heavy distribution expenses and passing them to the customer in
the form of high prices.
With these developments and increased pressures in combating
competition, companies are forced to come up with innovative
techniques to market their products and services. At this juncture,
banking sector with it's far and wide reach, was thought of as a
potential distribution channel, useful for the insurance companies.
This union of the two sectors is what is known as Bancassurance.
What is Bancassurance?
Bancassurance is the distribution of insurance products through
the bank's distribution channel. It is a phenomenon whereininsurance products are offered through the distribution channels of
the banking services along with a complete range of banking and
investment products and services. To put it simply,
Bancassurance, tries to exploit synergies between both the
insurance companies and banks.
Bancassurance if taken in right spirit and implemented properlycan be win-win situation for the all the participants' viz., banks,
insurers and the customer.
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Advantages to banks
Productivity of the employees increases.
By providing customers with both the services under one
roof, they can improve overall customer satisfaction
resulting in higher customer retention levels.
Increase in return on assets by building fee income through
the sale of insurance products.
Can leverage on face-to-face contacts and awareness about
the financial conditions of customers to sell insurance
products.
Banks can cross sell insurance products Eg: Term insurance
products with loans.
Advantages to insurers
Insurers can exploit the banks' wide network of branches for
distribution of products. The penetration of banks' branches
into the rural areas can be utilized to sell products in those
areas.
Customer database like customers' financial standing,
spending habits, investment and purchase capability can be
used to customize products and sell accordingly.
Since banks have already established relationship with
customers, conversion ratio of leads to sales is likely to be
high. Further service aspect can also be tackled easily.
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Advantages to consumers
Comprehensive financial advisory services under one roof.
i.e., insurance services along with other financial services
such as banking, mutual funds, personal loans etc.
Enhanced convenience on the part of the insured
Easy access for claims, as banks are a regular go.
Innovative and better product ranges
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HYPOTHESIS
This project is based on the study of High net worth individuals
and high net work individuals, there recruitment methodologies
and there inclination towards the available business opportunity in
insurance sector. Keeping this in mind we started thinking about,
that how to know the basic thinking of HNIs i.e what they all have
in there mind while investing there money and time in certain
business and how much they are aware of the opportunities in
which they are investing.
After meeting few clients and collecting some data it was known
that the clients are making their investment decisions with the
advice of different consultancy bodies.
TARGETING HNIs AND BOOST SALES
We are experiencing some of the most turbulent times in history.There are literally thousands of different marketing strategies one
would be using to grow ones business but only a few that one
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need to do consistently that will allow him to make all the money
he desire. Here are some of the strategies:
Do not rely on simple sources of Business
A Marketing Parthenon means having multiple/different sources of
revenue and lead generation instead of relying on just one.
For example, let's say your primary method for generating new
business is through direct mail. What happens if, for whatever
reason, your postcards stop working tomorrow? How will that
impact your business? Now imagine you also generate leads
through the internet, space advertising, referrals, word of mouth,
joint ventures, etc.?
You have now successfully diversified your portfolio like a good
money manager.
Start now by conservatively testing other methods of marketing so
that if one method stops working, it won't put down your entire
business.
Follow up
This is probably the most important marketing strategy, yet only
few follow it. It has been proved time and again that 70% of
people who respond to a cold call or letter will buy the
product/service. But they may not buy from the original caller; the
reason cited is lack of following up the leads.
Whenever a prospect responds to your cold call/letter, it only
shows that he is only interested and there may not be any
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immediate sale. Further, it must be remembered that because
people buy when THEY are ready to buy not when YOU are ready
to sell. So it is up to you to follow up till you close the sale.
Maintain Relationships
Did you know it's far easier to re-sell an existing client than to sell
to someone who doesn't know and trust you? Did you also know
that you lose 1/12 of the value of a client every 30 days you don't
communicate with them?
So knowing these two facts, what's the easiest, most profitable
way to maintain relationships and re-sell existing clients? You
guessed it right.
A Monthly Newsletter! But don't just send a monthly newsletter.
Make sure you also enclose inserts about other products and
services that you offer.
Create A Back-End For Your Business (Cross
Selling)
It's far easier to re-sell to an existing client. It's also... Far More
Profitable! to create a Back-End For Your Business. Once you've
spent the high upfront costs to acquire a new client, it's relatively
inexpensive to send them a letter promoting another product or
service.
For example, once you are successful in selling, say a car
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insurance product, you can sell other related insurance products
such as health insurance, householders insurance etc. by proper
follow up to promote these products.
For the purpose of checking the validity of hypothesis a sample
questionnaire (Refer to Appendix A) was prepared on the basis of
which the findings and analysis were being made.
ANALYSIS BASED ON QUESTIONNAIRE SURVEY
RISK BEARING CAPACITY OF HNIs
Risk is one of the primary factor that an individual have in mind
while investing his/her money or while analyzing any business
opportunity. Due to this I surveyed the people for the amount of
risk they are willing to take while investing there money.
Risk is the potential loss that may on the happening of
certain events.
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The major risks are:
Interest-Rate Risk:
When interest rates rise, bond prices will fall.
Existing bond portfolio will lose value and vice versa.
Reinvestment risk:
Risk is of interim cash flows being reinvested at a lower rate.
Call Risk:
If issuer calls back call option bonds,when interest rate falls,they
can be replaced with cheaper debt.The investor cannot keep a high
coupon bond.
Default risk:
Issuer may default on its obligation to make timely principal and
interest payments.
Inflation risk:
When inflation rates rises, the value of interest payment isreduced. Higher interest rates will make the existing bonds lose
value again.
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Risk and return co-relation:
Risk and return are closely related with each other, they are
inversely proportional to each other. With increase in risk the rate
of return rises and with decrease in risk the rate of return
decreases.
There is one more type of risk that an individual have to face while
investing his/her money in any kind of business or other activity,
and that is Inflation.
Inflation is an increase in the general price level of goods
and services.
Over time, inflation reduces the purchasing power of the rupee
and making it less worth year after year.
To find out the exact situation in the market, I surveyed different
persons and ask about the amount of risk they want to bear in
achieving returns while investing there money in any market orproduct. After collecting the responses I came to the conclusion
that maximum number of people are the one which are in the
category of
low risk ,this means that people are very much protective about
there money and does not want to invest at the places at where
the risk is high (for ex-equity). As seen in the Pie chart below that
people are not willing to take high risk ,but if there are returnsthen they can go towards the options where the risk are
medium(32%) or low(34%).
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Risk Bearing Capacit
high
10%
medium
32%low
34%
no risk
24%
high medium low no risk
The tendency of people to save is now changing and now people
want to earn more income by investing there money in a profit
giving activity. As shown in the chart below that a large mass ofpeople, i.e. 78%, had said yes to the question
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Extra Income Generation
yes
78%
no
22%
yes no
that whether they want to earn more money or not. This clearly
indicates that there is a huge market for the companies who are in
the sector of selling insurance products and other market linkedproducts.
The maximum people in this survey was the persons in the age
group of 25-35 who are young, dynamic and have a large network
of people around them. These young and dynamic persons should
be targeted because from them only there will be the upcoming
entrepreneurs.
INCLINATION OF HNIs TOWARDS FLEXIBLE WORKING
HOURS
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Flexible working hours means that there is no restriction of timings
while working. The need is that the work should be completed on
the due date, not necessary at what timing you have worked to
complete it.
Flexible working hours are nowadays very much accepted pattern
of doing work in an organization. It is very much prevalent in the
IT industries, but now it is being adopted by the other industries or
sector too. Due to the fact that it makes the person feel free in its
job, and also due this the work is being completed to the
perfection.
Our survey also signifies this fact that flexi-working hours are the
choice of today. We surveyed a number of people(High net work
and High net worth individuals) and found out that what actually
they inclined too, so that we understand that while investing there
money and time in the business opportunity available in the
insurance sector, will they be giving there free time to it.
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Flexible Working Hours
yes
80%
no
20%
yes no
As shown in the pie chart above, out of people HNIs surveyed a
large percentage of them showed interest in Flexible working
hours(i.e 80%) as compared to the people who were not
interested in it(i.e 20%).
So, while targeting the High network or High net worth individuals,we should try to make them feel that they need not have to work
at bounded timings, and should make them feel the easiness of
working in flexi working hours and how they can make there
unproductive time, a productive one.
INCLINATION OF HNIs TOWARDS BUSINESS
OPPURTUNITY
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Since the liberalistion of insurance industry the opening of
insurance industry has been a key landmark. The Indian insurance
industry is sitting on a volcano of growth and potential waiting to
explode. Since the last three years that the industry is opened to
private players it has shown a renewed vibrancy resulting in new
opportunities.
These opportunities are in terms of employment, savings,new
channels of insurance distribution, wider coverage to rural areas
and even to the economically deprived section of the society.
Insurance industry is providing business opportunity to HNIs, thatis very much profitable to both the parties i.e inurance company
and the Individual who is joining them. For insurance companies
they are getting there products and policies sold to large mass of
people who comes under the network of these HNIs. At the same
time these HNIs are getting a opportunity of extra income
generation, without effecting there present working or business or
job.
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Other Business Opportunity
yes
62%
no
38%
yes no
Nowadays people are becoming more and more inclined to
generate extra sources of income, They want to invest there
money and free time in fruitfull work which give in return huge
revenues to them.
To find out the exact thinking of HNIs towards these business
opportunities, we surveyed quite a number of people and found
out that the percentage of people who want to earn more
thorough these business opportunities are very much larger then
the ones who do not want to go towards these opportunity. The
pie chart below shows the exact pattern we got after the survey,
i.e 62% people are inclined towards it, while 38% are not.
So while targeting these High net worth and high net work
individuals, one should be clear about the opportunities available
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and have the adequate information to make the individual
understand the opportunity available.
The above analysis of our showed that HNIs are very much eager
to go for the business opportunities available, but the next thing is
that, how many of them are aware of the income generation
source, i.e awareness of the people about these opportunity.
Awareness about the exisiting
business oppurtunity
6
12
23
9
0
5
10
15
20
25
1
no. of people
awarenes
good little no idea want to know
The bar-diagram above clearly indicates that maximum percentage
of people are those who have no idea(around 50%)about the
business opportunities and the fact that really important that only
10-12% people are those who have a good knowledge of these.
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So, for tapping these section of individuals, insurance companies
should make there communication systems more stronger and
finer, so that the information about these opportunities should
reach the individuals adequately.
Also the companies who want to target these HNIs should know
the places where they will find these influential individuals. Such
influencial individual are generally attached to some or the other
community organizations such as by being a member of civic
group, social or political group or any of the religious groups.
The finding done through the questionnaire showed that each of
these HNIs are related to one or the other community
organizations.
Community Groups
14%
32%
12%12%
30%
political social civic religious none
WHY NOT METLIFE?
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MetLife being 136 years old private company in the insurance
sector and holding its 36th position in the list of fortune 500
companies, it is shocking that in the Indian market it is the leastknown company in comparison to other private sector insurance
companies.
The main reason for this is mainly its late entry in the Indian
market (in 2001) wherein the older companies have already
have a stronger foot hold it is just a beginning for this and so it
will have to pay for its share of time to get to the roots. Again itbeing a foreign company Indian mass cannot rely on the same
at such an early stage, they have this thinking that it may anytime
get shut down. They lack trust and faith in MetLife and so fear in
investing their money with it.
Know Met-life?
no
60%
yes
40%
yes no
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Again a reason to why more than 50% of the sample surveyed
doesnt know MetLife is because of its weaker tie-ups with banks
such as Jammu & Kashmir bank, Dhanlakshmi bank and the
Karnataka bank. If it would have made tie-ups with any of the
giants in this insurance sector than may be the competition would
have been much less than it is actually now. Even the other
partners of MetLife are not that strong that would have helped it
gain the same position as it has in the U.S.
MetLife is a private company that believes in its ethics very
strongly and stick to them very tightly. It believes in actions rather
than speech and so it hardly spends its funds in advertising and
publicity because it wants its work to speak for them, so its
advertising as compared to other companies is very weak.
But in here, in the Indian market most of the people go by seeing
the advertisements and the heights of publicity done. This is one
of the major reasons of people not being aware of such a big
company! But now they getting into advertisements and publicity
because this is one of the major pathways to reach out to its
customers and be at their doorsteps as this is what the mass
wants!
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VALIDITY OF HYPOTHESIS
The hypothesis we took when we had started the project was that
the HNIs while investing there money consult with some
consultants, that can be a banker, a investment consultant or a
chartered accountant, also that most of these person want to have
extra income, but the major concern is the risk associated with it
i.e the risk should be less or no risk should be there. Adding to itthese HNIs are inclined towards the new business opportunities
available and are pretty much aware about these opportunities
present. Also that they are not sure about the credibility of the
private companies and thats why they do not want to invest there
money in the private sector i.e they prefer the public sector
companies..
Taking the example of MetLife we also took in the hypothesis that
the foreign companies are the least wanted companies at present
in this sector.
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According to the data we have collected and analysis done that is
shown with the help of pie-charts and bar graphs above in the
project, it is clear that :
HNIs while investing there money use to consult either with
a banker(26%) or investment consultant(32%) or a
chartered accountant(28%).
Most of HNIs want to generate extra income
While investing and generating extra income maximum of
these HNIs major consideration is about the risk factor
associated with the investment. That is most of them were
not interested in taking risk or can only want to have a low
risk investment.
Met-life India pvt limited ,due to having foreign name and
due to the fact of having weak partners in India is lagging
behind as compared to the other companies having strong
Indian partners and a Indian company name attached with
them.
All of the above things we took in hypothesis were proved, to beaccepted but the only thing that our hypothesis failed to prove is
that the awareness about the business opportunities available in
the market is high. Our study showed that maximum
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percentage(23%),were the person who have no idea about these
opportunities and only 8% of the total were having good idea.
ISSUES AND CHALLENGES FACING THE INSURANCE
INDUSTRY
The liberalization followed by growth of the Indian Insurance
industry has opened wide opportunities for Service and
Infrastructure sectors. This growth has to be properly channelised.
Some of the major challenges which have to addressed for
channelising the growth of insurance sector are Product
Innovation, Distribution Network, Investment Management,
Customer Service and Education.
Product Innovation
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Customers are now looking at Insurance as complete financial
solution offering stable returns coupled with total protection.
Companies will need to constantly innovate in terms of product
development to meet ever changing consumer needs.
Understanding the customer better will enable Insurance
companies to design appropriate products, determine price
correctly and increase profitability. In this context Management
Guru Peter Drucker has rightly said "Markets are changing from
Cost lead Pricing to Price lead Costing".
Distribution Network
While companies have been successful in product innovation, most
of them are still grappling with right mix of Distribution Channels
for:
a. Capturing maximum market share to build brand equity.
b. Building strong and Effective Customer relationships.
c. Cost effective customer service.
This calls for Selection of right type of Distribution channel mix
along with prudent and efficient FOS (Fleet On Street)
Management.
1. Distribution Network:
While the traditional channel of tied up advisors or Agents
would be the chief distribution channel, insurer should
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innovate and find new methods of delivering the products to
customers. Corporate agency, brokerage, Bancassurance, e-
insurance, cooperative societies and panchayats are some of
the channels that can be tapped by the insurers to reach the
appropriate market segments.
2. FOS Management
The major issues to be addressed in Insurance FOS
management are High Attrition, lack of Motivation and
Product knowledge. Continuous training, performance linked
reward systems, and career counseling can effectively tacklethese issues.
Customer Education and Service
Insurance, particularly life insurance is never bought but sold. To
convince a large population, which is comparatively not well
informed about the intangible benefits of life insurance, is indeed
an onerous task. This apart, the task would be to position
Insurance as a risk planning tool rather than a tax saving and
investment tool.
In the present competitive scenario, a key differentiator would be
professional customer service in terms of quality of advice on
product choice along with policy servicing. Servicing should focus
on enhancing the customer experience and maximizing customer
convenience. This calls for effective CRM system which eventually
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would create sustainable competitive advantage and build long
lasting relationship.
Investment Management
The most difficult challenge would be to provide returns
comparable to other financial instruments. The problem is further
aggravated by interest rates moving south. Need of the hour for
an insurer is to follow prudent underwriting practices and
efficiently cut down management and administrative expenses.
Insurers must follow best investment practices and have a strong
Asset management Company to maximize returns.
Others
1. Untapped market Segments
Apart from meeting the above challenges, it is important to
increase customer base in semi urban and rural areas which
offer huge potential. The fact that major chunk of business
for life insurance giant, LIC comes from rural and semi urban
areas stands as a testimony. However, this ignores the
difficulties of approaching this segment. Much of the demand
may not be accessible because of large distances or high
costs relative to returns.
2. Health Insurance:
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Health insurance is another growth area which offers huge
potential. Estimates indicate that out of the total potential of
Rs.3000 - 4000 crores only Rs.450 - 500 crores is being
tapped. Lack of requisite infrastructure, non standardization
of pricing and procedures, lack of product variants has
hampered the growth of this lucrative market.
E BROKING
In the Indian market, where insurance is sold after considerable
persuasion , the selling over the net would take some more time.
Also, Insurers need to design products where auto underwriting is
feasible. Certain products like term insurances, vehicle insurances,
mediclaim and others can be sold through internet. But a pure e-
commerce model may not be possible for insurance sector where
Customer-Need-Analysis, Capital-Need-Analysis and other factors
go into determining the exact customer solution. But even then,
selling on internet is very attractive because of low distribution
costs. It makes sense for the insurance companies to supplement
their traditional sales channels withInternet.
The passage of IT bill has given legal sanctity to transactions over
the net and subsequent modification of insurance act allows
payment of premium through credit card. While the technology
capability is there, improvement in bandwidth and infrastructure
are needed to give the required boost to e-commerce on the net.
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FUTURE PERSPECTIVE
Competition will result in the market to grow beyond current rates
and offer additional consumer choice through the introduction of
new products, services and price options. Development of industry
code of conduct, contributing to a common catastrophe reserve
fund and chalking out agreements to settle claims to the benefit of
customer can be expected with concerted efforts from all the
players.
The current impediments such as 26% equity cap on foreign
partner, limited investment avenues, ill defined regulatory role of
IRDA in pension business etc are to be removed in near future. As
the industry evolves, the present classification of life and non life
insurance may change. There may be specialization in each class
of business. In the years to come, we may witness Insurers
underwriting only one or two classes of business such as health
insurance, auto insurance, life insurance, pension provider,property and casualty etc.
Challenges in Distribution
KPMG have prepared a report on `Insurance Trends and Issues`
which examines the future of distribution for both life and general
insurance in India once the sector is opened. It is based on KPMG
research in India and abroad and on insights gained throughworking with clients in different markets. There are four significant
issues which the report examines.
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1. The threat of new players taking over the market has been
overplayed.
2. Nationalized players will continue to hold strong market
share positions, but there will be enough business for new
entrants to be profitable.
3. New companies often overestimate the need for insurance
expertise. They assume that a joint venture is the most
appropriate type of alliance, when in fact many forms are
possible.
4. Both new and existing players must explore new distribution
and marketing channels.
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Insurance sector to drive Indian CRM market
After telecom and banking, its the turn of insurance companies to
deploy customer relationship management (CRM) solutions. As
competition intensifies, insurers are trying every trick in the book
to retain existing customers, with a wide range of services driving
the market for CRM applications in the process
CRM with BI tools can help insurance firms monitor the ebb andflow of customer behaviour, giving them a holistic 360-degree
view of their customers
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While the insurance sector is seeking to maintain a balance
between acquiring customers and developing existing ones,
customer acquisition is vital, as no retention strategy will entirely
stem customer defection. Insurance companies are experiencing
unacceptable levels of customer churn, thanks to which they are
focusing on keeping the customers they already have in a bid to
ensure a net growth in their customer base. Today, the focus is on
selling more products to existing customers to improve
profitability. Customer-focused strategies require CRM (customer
relationship management) to help acquire customers thorough
various touch points and translate operational data into actionable
insights for proactively serving customers.
CRM with BI (Business Intelligence) tools can help insurance firms
monitor the ebb and flow of customer behaviour, giving them a
holistic 360-degree view of their customers.
CRM has helped customers through effective event-basedmarketing and lead tracking to cross- and up-sell products. CRM
helps categorise and segment customers and align products that
best suit them. CRM is helps to expand into rural areas
Insurance companies with huge customer databases, servicing
their customers through numerous branches and call centres will
invest between 15 to 20 percent of their total IT budget on CRMapplications
Current market scenario
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Insurance firms are tactically rolling out an application here and
there rather than strategically implementing a complete CRM
suite. In this, they are on the right track. They (insurance firms)
are taking baby steps, starting with operational CRM to increase
sales force automation. Once they have a sufficiently large
customer database, they use BI tools to mine data from various
sources (such as contact centres and from banks with which they
align) pushing the need for analytical CRM solutions.
CRM technologies such as sales force automation, contact centre
segmentation and campaign management tools are maturing and
finding wider adoption with large insurance companies.
The banking, financial services and insurance (BFSI) sector and
telecom will continue to drive the CRM market, but the uptake of
CRM in the insurance vertical will climb steeply in 2004 and growth
will be rapid and higher [than in other verticals] The insurancevertical has
crossed the threshold of IT and process maturity beyond which an
investment in CRM investments starts yielding good returns. The
need to integrate customer data from multiple channels and to
increase sales force productivity (including that of agents) and
running productive marketing campaigns will continue to drivedemand for CRM software.
Spending on CRM is up
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Insurance firms spend close to 12 percent of their IT budgets on
CRM software and services. The cost includes operational CRM and
spending on BI tools. Industry pundits believe that insurance firms
are looking for CRM initiatives with budgets ranging from Rs 50
lakh going right up to Rs 3 crore. The sector is busy compiling data
on individuals, including their purchasing patterns and buying
preferences of policies, pension plans and the like. In many cases,
policy renewal marketing to existing customers remains an
unsophisticated exercise, often amounting to little more than a
request to renew, with no attempt at putting a value proposition
before the customer. With a little help from CRM software,
insurance firms can sell multiple insurance policies and pension
plans to the same customer.
The opportunity is huge
Within the financial services sector, IT investment in insurance is
expected to grow the fastest with a CAGR of 35 percent in the
five-year forecast period (2001-02 to 2004-05). [Source: IDC
India] Other sub-verticals of the financial services sector are
expected to grow at a
CAGR ranging from 21 to 25 percent. Much of this spending will be
on CRM applications and integrating multiple delivery channels.
IDC says that new delivery channels are evolving as the insurance
market expands.
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According to a report from Indian Infoline (January 2004), India
has the highest number of life insurance policies in force in the
world. The industry is pegged at Rs 400 billion in India. Gross
premium collections stand at 2 percent of the GDP and this has
been growing by 15 to 20 percent per year from the Life Insurance
Corporation of India (LIC) and other government-owned insurers.
Privatisation has led to new players entering this market and it is
expected to grow at a rapid pace.
More than three-fourths of Indias insurable population has no life
insurance, pension cover and post-retirement protection cover. A
substantial part of the insurance marketthe portion dealing in
pension plans and insurance as an investment optionis protected
by a tariff and administered price regime. Competition in pricing is
yet to emerge. Once that happens, as with all dynamic customer-
oriented service industries such as banking and telecom, the race
to gain and retain customer mind share will be on.
Business drivers for CRM
Margins are under pressure: A couple of years ago, LIC dominated
the insurance market with the help of its sales force and channels
and margins were reasonably high. Today, there are close to 20
companies offering both life and general insurance products. All of
them have equally strong international and local partners; all are
focusing upon
similar geographies and target audiences. The new firms selling
life insurance and non-life insurance [pensions, insurance as
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saving, etc] have failed to emulate the LIC model because margins
are getting squeezed. There are several pain areas that new
insurance firms faceacquiring new customers, retaining them,
cross-selling products and controlling rising costs while providing
comprehensive support.
Insurers have added a plethora of products and services to their
kitty. These range from insurance as an investment option to
pension plans. They target the younger generation in the 20 to 30
years age group. The convergence of four factorsprotection,
saving (investment option), loans and pensionhave compelled
insurance companies to align with banks in reaching out to a larger
audience
This trend has led to anotherinsurance companies are joining
hands with banks by becoming channel partners for insurance.
This strategy helps insurance firms increase their footprint to cover
a larger part of the customer base in the 20-30 yearsdemographic. CRM helps connect a banks high net worth
customers with insurance firms.
More than three-fourths of India's insurable population has no life
insurance, pension cover and post-retirement protection cover
giving an indication of the insurance opportunity in India
Customer expectations are rising: Customers, faced with a
dizzying array of insurance products expect customised offerings,
value, ease of access, and personalisation from insurers. Today,
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customers are expecting individual attention, responsiveness,
customisation and
access. At the same time, they dont want to pay a premium for
these services. High customer expectations and lower exit barriers
could lead to increased customer attrition.
Where to beginoperational CRM or analytical
CRM?
The choice between operational and analytical CRM as a starting
point depends upon the insurers needs. Insurance companies with
multiple financial products and a big customer base, such as
integrated insurance solution providers, will leverage their
customer base to cross- and up-sell different financial products,
including insurance. Such providers will benefit from adopting
analytical CRM. Market segmentation, campaign management and
data mining applications will benefit them in many ways.
Call center text mining: This tool can help improve the customer
experience by resolving complaints rapidly. Insurers are using
these tools to mine text from call center transcripts to identify
issues faced by customers.
Text mining tools also help detect and capture other useful
pieces of information around a customers life stage, financial
needs and product interests. These can be used to generate leads
and trigger cross selling. However, to be fully effective, customer
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service representatives must be trained to probe for information
that will help in cross selling during the text-mining phase. Text
mining tools are leading edge today, but are predicted to take off
quickly.
Insurers can use event triggers to generate leads that can be
acted upon quickly, usually within 24 hours
Event-triggering tools monitor incoming transaction and contact
data in near-real-time to recognize changes in a customers
behavior or profile to trigger actions or alerts.
Lead management gets sophisticated: Often the ability of an
insurer to generate leads by means of event-triggering, re-
engineered touch points and cross line-of-business referral can
outstrip their ability to manage said leads. In such a situation,
though the number of leads generated rises, the conversion ratedoes not. It may even drop.
CRM can help provide sales representatives with a mechanism to
prioritise and manage leads.
Pure insurance providers who do not have a large customer base
will derive the maximum value from operational improvements,especially in integrating customer information from multiple
channels and sales force automation.
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Most insurers will look to empower their agents by deploying
partner-facing applications. Apart from making agents more
productive, it will let insurers keep in touch with customers,
otherwise difficult in a primarily channel-driven business.
Analytical CRM insurance companies can enhance Cross- and
up-selling capability to provide market opportunities within an
existing customer database. Information regarding customer
retention or attrition helps determine the likelihood of policy lapses
and helps identify customers worth targeting for retention
campaigns.
Customer segmentation , leverages data to create accurate
categories for use in marketing strategies.
Market automation , combines analytics with campaign
management functionality to help drive a more effective and
efficient marketing campaign.
Broad CRM perspective
CRM module Areas where it can be applied
Collaborative CRM
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Applying collaborative interfaces (such as e-mail, conferencing,
chat, real-time) to facilitate interaction between customers and
organisations, as well as between organisational entities dealing
with customer information
(customers to sales representatives, sales to marketing, agent to
provider)
Operational CRM
Automating horizontal integrated business processes involving
front-office customer touch points-sales, marketing, and customer
service-via multiple, interconnected delivery channels and
integration between front-office and back-office
Analytical CRM
Analysing data created on the operational side of the CRM
equation for the purpose of business performance management.
Analytical CRM is tied to a data warehouse architecture; it is most
often evident in analytical applications that leverage data marts.
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SWOT ANALYSIS:
1. STRENGHTS:
Brand name:
The Metropolitan Life Insurance Company (MetLife ) is the
number one insurer in the U.S. based on over US$2
trillion of life insurance in force. MetLife serves
approximately 9 million individual households in the U.S.
as well as 87 of the Fortune 100 companies. MetLife's
institutional clients have approximately 33 million
employees and members. Headquartered in New York,
MetLife through its affiliates, subsidiaries and
representative offices operates in 15 countries throughout
the Americas, Europe and Asia. The MetLife brand, known
for empowering people