BHARTI AXA LIFE INSURANCEON BRANDING EVALUATION OF BHARTI AXA LIFE INSURANCE

SUBMITTED IN PARTIAL FULFILLMENT OF REQUIREMENT OF POST GRADUATION DIPLOMA IN MANAGEMENT IN INTERNATIONAL BUSINESS

SUBMITTED TO: Dr.Neelam Tandon

SUBMITTED BY: Gagandeep Singh Dhall P.G.D.M (I.B) Roll No: 28

SESSION: 2010-2012

ACKNOWLEDGEMENTI pay my sincere and heartiest gratitude to my Faculty Guide Dr. Neelam Tandon for her continuous motivation and support. I owe enormous intellectual debt towards my Faculty Guide, who has augmented my knowledge in the field of Research Study. She has helped me to learn about the process and giving me valuable insight into the Industrial Scenario. My increased spectrum of knowledge in the field of Research Study is the result of their constant supervision and directions that helped me to absorb relevant and high quality information. My Special thanks to all those Respondents, whom I have interviewed for the purpose of my Primary Data Collection.

Gagandeep Singh Dhall

PREFACEThe contours of insurance business have been changing across the globe and the ripple effects of the same can be observed in the domestic markets as well. An evolving insurance sector is of vital importance for economic growth. While encouraging savings habit it also provides a safety net to both enterprises and individuals. The insurance industry also provides crucial financial intermediation services, transferring funds from the insured to capital investment, which is critical for continued economic expansion and growth, simultaneously generating long-term funds for infrastructure development. In fact investments in infrastructure are ideal for asset-liability matching for life insurance companies given their long term liability profile. Development of the insurance sector is necessary to support the structural changes in the economy. Social security and pension reforms too benefit from a mature insurance industry. The insurance sector in India, which was openedup for private participation in the year 1999 has completed seven years in a liberalized environment. Since opening up of the insurance sector in 1999, 24 private companies have been granted licenses by 31st March, 2007 to conduct business in life and general insurance. Of the 24, 15 were in the life insurance and nine (including a standalone health insurance company) in general insurance. During the last seven years capital amounting to Rs.9625.28 crore was brought in by the private players, of which the contribution of the foreign partners has been Rs.2174.28 crore. During this period the average annual growth of first year premium in the life segment worked out to 47.06 per cent and in the non-life segment it was 16.87 per cent. The industry services the largest number of life insurance policies in the world. Yet Indian insurance industry has scope to further expansion with a large untapped potential. The Authority and the industry have been playing an active role in increasing consumer awareness. Insurance companies in general and private insurance companies in particular, are reaching out to untapped semi-urban and rural areas through advertisement campaigns and by offering products suitable to meet the specific needs

of the people in these segments. The insurers are increasingly introducing innovative products to meet the specific needs of the prospective policyholders. products, imaginative marketing, and aggressive distribution enabled fledgling private insurance companies to sign up Indian customers faster belying expectations at the time of opening up of the sector. At the time of opening up of the sector, life insurance was viewed as a tax saving device. Of late policyholders perspective is slowly changing towards taking insurance cover irrespective of tax incentives. The insurable populace is looking for products which suit their specific requirements. As of now a variety of choices are available in the market meeting the requirements of different cross-sections of the society and across age groups.With the registration of Bharti Axa Life Insurance Co. Ltd., the number of companies operating in the life insurance industry has increased to sixteen. The new entrant commenced underwriting life premium in August, 2006. By end March 2007, there were sixteen life and sixteen non-life insurance companies (including the national re-insurer). Apollo DKV, another standalone health insurance company and Future Generali Insurance Co. Ltd. and Future Generali Indian Life insurance Co. Ltd. were granted Certificate of Registration in 2007-08 and are in the process of commencing operations.

EXECUTIVE SUMMARYIndia has made tremendous progress in the field of healthcare over the last few decades. Several nagging problems have been put to rest and we have eradicated some of the killer epidemics (Smallpox, for example). Research in the field of medicine has also been improving, to be in tandem with the developments taking place elsewhere in the globe. Healthcare delivery to the common man, however, has remained a highly debated issue; and there are several millions of people who remain out of access to even the basic amenities as regards personal care and hygiene. One of the reasons assigned for such an unfortunate situation is the vast geographical spread of the population that remains out of reach for regular medical facilities. For an economy that is growing at a faster rate than most developed nations, there is an urgent need for overcoming such irritants. Another oft-quoted reason for such a situation is the poverty that is the bane of several of these masses. The total percentage of the Indian population that is covered under the umbrella of any form of healthcare protection is pathetically low. While the intention is not to parade insurance as a panacea for all the ills of the society, by improving the numbers of health insurance penetration among a larger section of people who can afford it; we will be creating a platform for the state to concentrate on the less-privileged sections. Unfortunately, health insurance as a viable alternative has not been able to make giant strides of progress, altho ugh it has been growing, of late. A strong factor for the poor performance of health insurance historically has been the moral hazard associated with it. Because of the poor awareness levels about insurance even among the educated elite, exclusive risk coverage schemes have not gained popularity in the Indian domain. Having paid the premium for a certain period, the policyholder imagines an inherent right in the enforcement of a claim. In several instances, he is aided in the process by service providers reportedly; and the entire episode results in a huge claims ratio for the insurers that puts them on the back foot. There is need for all the stakeholders to make the insured understand the basic elements of the insurance coverage. Some areas that insurers on their

part may work on are widening the coverage of the policies perhaps encouraging preventive care among the insured, for one. It is also essential that all the stakeholders join shoulders to take the cause further and ensure that health insurance in India reaches worldclass standards. The grievance redressal system set up by the Authority enables a detailed analysis of policyholder grievances and health insurance stands out as a major area of concern from the customer viewpoint. It was in this backdrop that the IRDA set up The National Health Insurance Working Group towards the end of 2008. This provided a platform for stakeholders of the health insurance industry to work together to suggest solutions to various relevant issues. Some of the Working Groups recommendations were implemented and some are under examination.

TABLE OF CONTENTSContents1. 2. 3. a. b. c. d. e. f. g. 4. 5. 6. 7. 8. 9.

Page No.

Introduction to the Industry .............................................................................1-14 Introduction to the Company ........................................................................15-31 Research Methodology...................................................................................32-35 Title ......................................................................................................................33 Objectives.............................................................................................................33 Scope of the Study................................................................................................33 Significance of the study .....................................................................................33 Research Design...................................................................................................34 Sampling Methodology .......................................................................................35 Limitations ...........................................................................................................35 Facts & Findings.............................................................................................36-45 Data Analysis and Interpretation ...................................................................46-56 Conclusion .....................................................................................................57-62 Recommendations...........................................................................................63-64 Bibliography ..................................................................................................65-67 Annexure.........................................................................................................68-70

a. Questionnaire ...................................................................................................69-70

CHAPTER-1 INTRODUCTION TO INDUSTRY

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INTRODUCTION TO THE INDUSTRYLife insurance or life assurance is a contract between the policy owner and the insurer, where the insurer agrees to pay a sum of money upon the occurrence of the insured individual's or individuals' death or other event, such as terminal illness or critical illness. In return, the policy owner agrees to pay a stipulated amount called a premium at regular intervals or in lump sums. There may be designs in some countries where bills and death expenses plus catering for after funeral expenses should be included in Policy Premium. In the United States, the predominant form simply specifies a lump sum to be paid on the insured's demise. As with most insurance policies, life insurance is a contract between the insurer and the policy owner whereby a benefit is paid to the designated beneficiaries if an insured event occurs which is covered by the policy. To be a life policy the insured event must be based upon the lives of the people named in the policy. Insured events that may be covered include: Serious illness Life policies are legal contracts and the terms of the contract describe the limitations of the insured events. Specific exclusions are often written into the contract to limit the liability of the insurer; for example claims relating to suicide, fraud, war, riot and civil commotion. Life-based contracts tend to fall into two major categories: Protection policies - designed to provide a benefit in the event of specified event, typically a lump sum payment. A common form of this design is term insurance. Investment policies - where the main objective is to facilitate the growth of capital by regular or single premiums. Common forms (in the US anyway) are whole life, universal life and variable life policies.

Costs, insurability, and underwriting

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The insurer (the life insurance company) calculates the policy prices with intent to fund claims to be paid and administrative costs, and to make a profit. The cost of insurance is determined using mortality tables calculated by actuaries. Actuaries are professionals who employ actuarial science, which is based in mathematics (primarily probability and statistics). Mortality tables are statistically-based tables showing expected annual mortality rates. It is possible to derive life expectancy estimates from these mortality assumptions. Such estimates can be important in taxation regulation. The three main variables in a mortality table have been age, gender, and use of tobacco. More recently in the US, preferred class specific tables were introduced. The mortality tables provide a baseline for the cost of insurance. In practice, these mortality tables are used in conjunction with the health and family history of the individual applying for a policy in order to determine premiums and insurability. Mortality tables currently in use by life insurance companies in the United States are individually modified by each company using pooled industry experience studies as a starting point. In the 1980s and 90's the SOA 1975-80 Basic Select & Ultimate tables were the typical reference points, while the 2001 VBT and 2001 CSO tables were published more recently. The newer tables include separate mortality tables for smokers and non-smokers and the CSO tables include separate tables for preferred classes. Recent US select mortality tables predict that roughly 0.35 in 1,000 non-smoking males aged 25 will die during the first year of coverage after underwriting. Mortality approximately doubles for every extra ten years of age so that the mortality rate in the first year for underwritten non-smoking men is about 2.5 in 1,000 people at age 65. Compare this with the US population male mortality rates of 1.3 per 1,000 at age 25 and 19.3 at age 65 (without regard to health or smoking status). The mortality of underwritten persons rises much more quickly than the general population. At the end of 10 years the mortality of that 25 year-old, non-smoking male is 0.66/1000/year. Consequently, in a group of one thousand 25 year old males with a $100,000 policy, all of average health, a life insurance company would have to collect approximately $50 a year from each of a large group to cover the relatively few expected claims. (0.35 to 0.66 expected deaths in each year x $100,000 payout per death = $35 per

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policy). Administrative and sales commissions need to be accounted for in order for this to make business sense. A 10 year policy for a 25 year old non-smoking male person with preferred medical history may get offers as low as $90 per year for a $100,000 policy in the competitive US life insurance market. The insurance company receives the premiums from the policy owner and invests them to create a pool of money from which it can pay claims and finance the insurance company's operations. Contrary to popular belief, the majority of the money that insurance companies make comes directly from premiums paid, as money gained through investment of premiums can never, in even the most ideal market conditions, vest enough money per year to pay out claims.[citation needed] Rates charged for life insurance increase with the insurer's age because, statistically, people are more likely to die as they get older. Given that adverse selection can have a negative impact on the insurer's financial situation, the insurer investigates each proposed insured individual unless the policy is below a company-established minimum amount, beginning with the application process. Group Insurance policies are an exception. Insurance vs. assurance Outside the United States, the specific uses of the terms "insurance" and "assurance" are sometimes confused. In general, in these jurisdictions "insurance" refers to providing cover for an event that might happen (fire, theft, flood, etc.), while "assurance" is the provision of cover for an event that is certain to happen. However, in the United States both forms of coverage are called "insurance", principally due to many companies offering both types of policy, and rather than refer to themselves using both insurance and assurance titles, they instead use just one Types of life insurance Life insurance may be divided into two basic classes temporary and permanent or following subclasses - term, universal, whole life, variable, variable universal and endowment life insurance.

Temporary (Term)

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Term life insurance or 'term assurance' provides for life insurance coverage for a specified term of years for a specified premium. The policy does not accumulate cash value. Term is generally considered "pure" insurance, where the premium buys protection in the event of death and nothing else. (See Theory of Decreasing Responsibility and buy term and invest the difference.) The three key factors to be considered in term insurance are: face amount (protection or death benefit), premium to be paid (cost to the insured), and length of coverage (term). Various (U.S.) insurance companies sell term insurance with many different combinations of these three parameters. The face amount can remain constant or decline. The term can be for one or more years. The premium can remain level or increase. A common type of term is called annual renewable term. It is a one year policy but the insurance company guarantees it will issue a policy of equal or lesser amount without regard to the insurability of the insured and with a premium set for the insured's age at that time. Another common type of term insurance is mortgage insurance, which is usually a level premium, declining face value policy. The face amount is intended to equal the amount of the mortgage on the policy owners residence so the mortgage will be paid if the insured dies. A policy holder insures his life for a specified term. If he dies before that specified term is up, his estate or named beneficiary(ies) receive(s) a payout. If he does not die before the term is up, he receives nothing. In the past these policies would almost always exclude suicide. However, after a number of court judgments against the industry, payouts do occur on death by suicide (presumably except for in the unlikely case that it can be shown that the suicide was just to benefit from the policy). Generally, if an insured person commits suicide within the first two policy years, the insurer will return the premiums paid. However, a death benefit will usually be paid if the suicide occurs after the two year period.

Permanent

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Permanent life insurance is life insurance that remains in force (in-line) until the policy matures (pays out), unless the owner fails to pay the premium when due (the policy expires OR policies lapse). The policy cannot be canceled by the insurer for any reason except fraud in the application, and that cancellation must occur within a period of time defined by law (usually two years). Permanent insurance builds a cash value that reduces the amount at risk to the insurance company and thus the insurance expense over time. This means that a policy with a million dollars face value can be relatively expensive to a 70 year old. The owner can access the money in the cash value by withdrawing money, borrowing the cash value, or surrendering the policy and receiving the surrender value. The three basic types of permanent insurance are whole life, universal life, and endowment. Whole life coverage Whole life insurance provides for a level premium, and a cash value table included in the policy guaranteed by the company. The primary advantages of whole life are guaranteed death benefits, guaranteed cash values, fixed and known annual premiums, and mortality and expense charges will not reduce the cash value shown in the policy. The primary disadvantages of whole life are premium inflexibility, and the internal rate of return in the policy may not be competitive with other savings alternatives. Riders are available that can allow one to increase the death benefit by paying additional premium. The death benefit can also be increased through the use of policy dividends. Dividends cannot be guaranteed and may be higher or lower than historical rates over time. Premiums are much higher than term insurance in the short-term, but cumulative premiums are roughly equal if policies are kept in force until average life expectancy. Cash value can be accessed at any time through policy "loans". Since these loans decrease the death benefit if not paid back, payback is optional. Cash values are not paid to the beneficiary upon the death of the insured; the beneficiary receives the death benefit only. If the dividend option: Paid up additions is elected, dividend cash values will purchase additional death benefit which will increase the death benefit of the policy to the named beneficiary. Universal life coverage6

Universal life insurance (UL) is a relatively new insurance product intended to provide permanent insurance coverage with greater flexibility in premium payment and the potential for a higher internal rate of return. There are several types of universal life insurance policies which include "interest sensitive" (also known as "traditional fixed universal life insurance"), variable universal life insurance, and equity indexed universal life insurance. A universal life insurance policy includes a cash account. Premiums increase the cash account. Interest is paid within the policy (credited) on the account at a rate specified by the company. This rate may have a guaranteed minimum (for fixed ULs) or no minimum (for variable ULs). Mortality charges and administrative costs are then charged against (reduce) the cash account. The surrender value of the policy is the amount remaining in the cash account less applicable surrender charges, if any. Equity-Indexed Universal Life Insurance Equity-Indexed Universal Life Insurance or "EIUL" for short, is a fixed universal life insurance policy that was created in the mid 1990s to address concerns about market volatility and provide an alternative to the low interest rates being offered by interestsensitive UL policies. EIULs differ from interest-sensitive UL policies in that they credit interest to the policy's cash values based on the upward movement of a particular stock market index - usually the S&P500. The insurance company can then credit the gains in the stock market according to one of several different crediting methods. The most popular is the "point-to-point" method. When the policy is issued, the insurance company "pegs" the stock market's value. At the anniversary of the policy, the insurance company checks the value of the underlying stock index and credits the cash value with the difference up to a cap (specified by the company). For example, if a policy owner purchased an EIUL on January, and the insurance company used the S&P500 as the underlying index when crediting interest to policy cash values, and the company set a 12 % cap, the process would work like this: If the S&P500 was 1,100 in January, the insurance company would record the value of the index. On the anniversary of the policy (the next January), the insurance company would record the new value of the S&P500. If the new value of the index was 1,188, that would7

represent a gain of 8%. The insurance company would credit the policy cash values with 8% for that year. If the S&P500 lost value (i.e. the value went from 1,100 to 980), the insurance company would simply record a "0", and the policy would show a year of no growth. The policy owner would not; however, lose any money (principal or interest from a previous year) as a result of a negative return on the S&P500. Limited-pay Another type of permanent insurance is Limited-pay life insurance, in which all the premiums are paid over a specified period after which no additional premiums are due to keep the policy in force. Common limited pay periods include 10-year, 20-year, and paidup at age 65. Endowments Endowments are policies in which the cash value built up inside the policy, equals the death benefit (face amount) at a certain age. The age this commences is known as the endowment age. Endowments are considerably more expensive (in terms of annual premiums) than either whole life or universal life because the premium paying period is shortened and the endowment date is earlier. In the United States, the Technical Corrections Act of 1988 tightened the rules on tax shelters (creating modified endowments). These follow tax rules as annuities and IRAs do. Endowment Insurance is paid out whether the insured lives or dies, after a specific period (e.g. 15 years) or a specific age (e.g. 65). Accidental death Accidental death is a limited life insurance that is designed to cover the insured when they pass away due to an accident. Accidents include anything from an injury, but do not typically cover any deaths resulting from health problems or suicide. Because they only cover accidents, these policies are much less expensive than other life insurances. It is also very commonly offered as "accidental death and dismemberment insurance", also known as an AD&D policy. In an AD&D policy, benefits are available not only for accidental death, but also for loss of limbs or bodily functions such as sight and hearing, etc.

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Accidental death and AD&D policies very rarely pay a benefit; either the cause of death is not covered, or the coverage is not maintained after the accident until death occurs. To be aware of what coverage they have, an insured should always review their policy for what it covers and what it excludes. Often, it does not cover an insured who puts themselves at risk in activities such as: parachuting, flying an airplane, professional sports, or involvement in a war (military or not). Also, some insurers will exclude death and injury caused by proximate causes due to (but not limited to) racing on wheels and mountaineering. Accidental death benefits can also be added to a standard life insurance policy as a rider. If this rider is purchased, the policy will generally pay double the face amount if the insured dies due to an accident. This used to be commonly referred to as a double indemnity coverage. In some cases, some companies may even offer a triple indemnity cover. Related life insurance products Riders are modifications to the insurance policy added at the same time the policy is issued. These riders change the basic policy to provide some feature desired by the policy owner. A common rider is accidental death, which used to be commonly referred to as "double indemnity", which pays twice the amount of the policy face value if death results from accidental causes, as if both a full coverage policy and an accidental death policy were in effect on the insured. Another common rider is premium waiver, which waives future premiums if the insured becomes disabled. Joint life insurance is either a term or permanent policy insuring two or more lives with the proceeds payable on the first death. Survivorship life or second-to-die life is a whole life policy insuring two lives with the proceeds payable on the second (later) death. Single premium whole life is a policy with only one premium which is payable at the time the policy is issued. Modified whole life is a whole life policy that charges smaller premiums for a specified period of time after which the premiums increase for the remainder of the policy. Group life insurance is term insurance covering a group of people, usually employees of a company or members of a union or association. Individual proof of insurability is not

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normally a consideration in the underwriting. Rather, the underwriter considers the size and turnover of the group, and the financial strength of the group. Contract provisions will attempt to exclude the possibility of adverse selection. Group life insurance often has a provision that a member exiting the group has the right to buy individual insurance coverage. Senior and preneed products Insurance companies have in recent years developed products to offer to niche markets, most notably targeting the senior market to address needs of an aging population. Many companies offer policies tailored to the needs of senior applicants. These are often low to moderate face value whole life insurance policies, to allow a senior citizen purchasing insurance at an older issue age an opportunity to buy affordable insurance. This may also be marketed as final expense insurance, and an agent or company may suggest (but not require) that the policy proceeds could be used for end-of-life expenses. Preneed (or prepaid) insurance policies are whole life policies that, although available at any age, are usually offered to older applicants as well. This type of insurance is designed specifically to cover funeral expenses when the insured person dies. In many cases, the applicant signs a prefunded funeral arrangement with a funeral home at the time the policy is applied for. The death proceeds are then guaranteed to be directed first to the funeral services provider for payment of services rendered. Most contracts dictate that any excess proceeds will go either to the insured's estate or a designated beneficiary. These products are sometimes assigned into a trust at the time of issue, or shortly after issue. The policies are irrevocably assigned to the trust, and the trust becomes the owner. Since a whole life policy has a cash value component, and a loan provision, it may be considered an asset; assigning the policy to a trust means that it can no longer be considered an asset for that individual. This can impact an individual's ability to qualify for Medicare or Medicaid. Investment policies With-profits policies

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Some policies allow the policyholder to participate in the profits of the insurance company these are with-profits policies. Other policies have no rights to participate in the profits of the company, these are non-profit policies. With-profits policies are used as a form of collective investment to achieve capital growth. Other policies offer a guaranteed return not dependent on the company's underlying investment performance; these are often referred to as without-profit policies which may be construed as a misnomer. Pensions Pensions are a form of life assurance. However, whilst basic life assurance, permanent health insurance and non-pensions annuity business includes an amount of mortality or morbidity risk for the insurer, for pensions there is a longevity risk. A pension fund will be built up throughout a person's working life. When the person retires, the pension will become in payment, and at some stage the pensioner will buy an annuity contract, which will guarantee a certain pay-out each month until death. Annuities An annuity is a contract with an insurance company whereby the purchaser pays an initial premium or premiums into a tax-deferred account, which pays out a sum at pre-determined intervals. There are two periods: the accumulation (when payments are paid into the account) and the annuitization (when the insurance company pays out). For example, a policy holder may pay 10,000, and in return receive 150 each month until he dies; or 1,000 for each of 14 years or death benefits if he dies before the full term of the annuity has elapsed. Tax penalties and insurance company surrender charges may apply to premature withdrawals (if indeed these are allowed; in most markets outside the U.S. the policy owner has no right to end the contract prematurely). Tax and life insurance Taxation of life insurance in the India Premiums paid by the policy owner are normally not deductible for federal and state income tax purposes.

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Proceeds paid by the insurer upon death of the insured are not included in gross income for federal and state income tax purposes; however, if the proceeds are included in the "estate" of the deceased, it is likely they will be subject to federal and state estate and inheritance tax. Cash value increases within the policy are not subject to income taxes unless certain events occur. For this reason, insurance policies can be a legal and legitimate tax shelter wherein savings can increase without taxation until the owner withdraws the money from the policy. On flexible-premium policies, large deposits of premium could cause the contract to be considered a "Modified Endowment Contract" by the Internal Revenue Service (IRS), which negates many of the tax advantages associated with life insurance. The insurance company, in most cases, will inform the policy owner of this danger before applying their premium. Tax deferred benefit from a life insurance policy may be offset by its low return or high cost in some cases. This depends upon the insuring company, type of policy and other variables (mortality, market return, etc.). Also, other income tax saving vehicles (i.e. Individual Retirement Account (IRA), 401K or Roth IRA) appear to be better alternatives for value accumulation, at least for more sophisticated investors who can keep track of multiple financial vehicles. The combination of low-cost term life insurance and higher return tax-efficient retirement accounts can achieve better performance, assuming that the insurance itself is only needed for a limited amount of time. The tax ramifications of life insurance are complex. The policy owner would be well advised to carefully consider them. As always, the United States Congress or the state legislatures can change the tax laws at any time.

History of insurance Insurance began as a way of reducing the risk of traders, as early as 5000 BC in China and 4500 BC in Babylon. Life insurance dates only to ancient Rome; "burial clubs" covered the cost of members' funeral expenses and helped survivors monetarily. Modern life insurance

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started in late 17th century England, originally as insurance for traders: merchants, ship owners and underwriters met to discuss deals at Lloyd's Coffee House, predecessor to the famous Lloyd's of London. The first insurance company in the United States was formed in Charleston, South Carolina in 1732, but it provided only fire insurance. The sale of life insurance in the U.S. began in the late 1760s. The Presbyterian Synods in Philadelphia and New York created the Corporation for Relief of Poor and Distressed Widows and Children of Presbyterian Ministers in 1759; Episcopalian priests organized a similar fund in 1769. Between 1787 and 1837 more than two dozen life insurance companies were started, but fewer than half a dozen survived. Prior to the American Civil War, many insurance companies in the United States insured the lives of slaves for their owners. In response to bills passed in California in 2001 and in Illinois in 2003, the companies have been required to search their records for such policies. New York Life for example reported that Nautilus sold 485 slaveholder life insurance policies during a two-year period in the 1840s; they added that their trustees voted to end the sale of such policies 15 years before the Emancipation Proclamation. Market trends Life insurance premiums written in 2005According to a study by Swiss Re, the EU was the largest market for life insurance premiums written in 2005 followed by the USA and Japan. Although some aspects of the application process (such as underwriting and insurable interest provisions) make it difficult, life insurance policies have been used in cases of exploitation and fraud. In the case of life insurance, there is a motivation to purchase a life insurance policy, particularly if the face value is substantial, and then kill the insured. The television series Forensic Files has included episodes that feature this scenario. There was also a documented case in 2006, where two elderly women are accused of taking in homeless men and assisting them. As part of their assistance, they took out life insurance on the men. After the contestability period ended on the policies (most life contracts have a standard contestability period of two years), the women are alleged to have had the men killed via hit-and-run car crashes.

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Recently, viatical settlements have thrown the life insurance industry into turmoil. A viatical settlement involves the purchase of a life insurance policy from an elderly or terminally ill policy holder. The policy holder sells the policy (including the right to name the beneficiary) to a purchaser for a price discounted from the policy value. The seller has cash in hand, and the purchaser will realize a profit when the seller dies and the proceeds are delivered to the purchaser. In the meantime, the purchaser continues to pay the premiums. Although both parties have reached an agreeable settlement, insurers are troubled by this trend. Insurers calculate their rates with the assumption that a certain portion of policy holders will seek to redeem the cash value of their insurance policies before death. They also expect that a certain portion will stop paying premiums and forfeit their policies. However, viatical settlements ensure that such policies will with absolute certainty be paid out. Some purchasers, in order to take advantage of the potentially large profits, have even actively sought to collude with uninsured elderly and terminally ill patients, and created policies that would have not otherwise been purchased. Likewise, these policies are guaranteed losses from the insurers' perspective.

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CHAPTER-2 INTRODUCTION TO COMPANY

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INTRODUCTION TO THE COMPANYCORPORATE PROFILE Bharti AXA Life Insurance is a joint venture between Bharti, one of Indias leading business groups with interests in telecom, agri business and retail, and AXA, world leader in financial protection and wealth management. The joint venture company has a 74% stake from Bharti and 26% stake of AXA. The company launched national operations in December 2006. Today, we have over 5200 employees across over 12 states in the country. Our business philosophy is built around the promise of making people "Life Confident". As we expand our presence across the country to cater to your insurance and wealth management needs with our product and service offerings, we continue to bring 'life confidence' to customers spread across India. Whatever your plans in life, you can be confident that Bharti AXA Life will offer the right financial solutions to help you achieve them. PROMOTERS Bharti Enterprises Bharti Enterprises is one of Indias leading business groups with interests in telecom, agri business, insurance and retail. Bharti has been a pioneering force in the telecom sector with many firsts and innovations to its credit. Bharti Airtel Limited, a group company, is one of Indias leading private sector providers of telecommunications services with an aggregate of 60 million customers, spanning mobile, fixed line, broadband and enterprise services. Bharti Airtel was ranked amongst the best performing companies in the world in the BusinessWeek IT 100 list 2007. Bharti Teletech is the countrys largest manufacturer and exporter of telephone terminals. Bharti has a joint venture with ELRo Holdings India Ltd. FieldFresh Foods Pvt. Ltd - for global distribution of fresh fruits and vegetables. Bharti also has a joint venture - Bharti AXA Life Insurance Company Ltd. - with AXA, world leader in financial protection and wealth management. Bharti has recently forayed into the retail business under a company called Bharti Retail Pvt. Ltd. It also has a joint venture

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Bharti Wal-Mart Private Limited with Wal-Mart, for wholesale cash-and-carry and back-end supply chain management operations. AXA AXA Group is a worldwide leader in Financial Protection. AXA's operations are diverse geographically, with major operations in Western Europe, North America and the Asia/Pacific area. AXA had Euro 1,315 billion in assets under management as of December 31, 2006. For full year 2006, IFRS revenues amounted to Euro 79 billion, IFRS underlying earnings amounted to Euro 4,010 million and IFRS adjusted earnings to Euro 5,140 million. The AXA ordinary share is listed and trades under the symbol AXA on the Paris Stock Exchange. The AXA American Depository Share is also listed on the NYSE under the ticker symbol AXA. AXA Asia Pacific Holdings AXA Asia Pacific Holdings Ltd (AXA APH) is listed on the Australian stock exchange and is 52.3% owned by AXA SA. AXA APH is responsible for AXA SAs life insurance and wealth management businesses in the Asia-Pacific region. It has operations in Australia, New Zealand, Hong Kong, Singapore, Indonesia, Philippines, Thailand, China, India and Malaysia. AXA APH had A$106.4 billion in total funds under management and administration at 30 June 2007 and reported a profit after tax before non-recurring items of A$374.0 million for the six months ended 30 June 2007.

BHARTI

AXA

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LTD.

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Opens first branch office in Hyderabad Introduces 2 unit linked products Future Confident and Wealth Confident Plans to roll out over 30 branches by December 2007 Hyderabad, August 22, 2006: Bharti AXA Life Insurance Company Limited kicked off operations with the opening of its first branch office in Hyderabad today. IRDA Chairman, Mr. C.S. Rao graced the branch inauguration ceremony. Bharti AXA has laid out aggressive plans for expansion and will be launching operations across the country in the coming months. The Company is in the process of putting in place a robust product architecture that will cater to different segments of the Indian populace. Besides the metros and mini metros, Bharti AXA will be well represented in the tier 2 and upcountry markets. Bharti AXA plans to roll out over 30 branches by December 2007 and will be supplemented with other points of presence through strategic partnerships. The Company has introduced 2 unit linked products Future Confident and Wealth Confident, both products conceived in keeping with the essence of the brand promise - Be Life Confident. Mr. Sunil Bharti Mittal, Chairman & Group Managing Director, Bharti Enterprises and Chairman, Bharti AXA Life Insurance said The launch of the first branch of Bharti AXA Life Insurance is a major step towards accomplishing Bhartis vision to play a dominant role in the financial services sector. This small step today will be the front runner to a giant foot print in the future, just like our flagship telecom brand Airtel. I am confident that our partnership with AXA will help us become the top 5 insurance brands in the country in a short span of time. Bharti AXA will adopt a multi channel, multi product and a pan India approach. The Bharti AXA combine will leverage Bharti Airtels well-entrenched distribution capabilities, its large customer base of over 25 million, their local knowledge and vast experience in telecom retail while AXA will bring to the partnership their global insurance expertise, best practices, knowledge base and leadership skills in insurance and asset management with the intent to achieve market leadership. The joint venture will also utilise AXAs well established state-of-the-art business processing set up, AXA Business Services to deliver best in class service levels.

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Speaking on the occasion, Mr. Mark Pearson, Regional Chief Executive, AXA Asia Pacific Holdings Limited, said, We are absolutely delighted at the opening of the first branch in India. This signifies AXAs strong commitment to the Indian insurance market along with our partner Bharti. Over time, our ambition is to play a large role in the development of the Indian insurance market. The life insurance industry collected weighted new premium income of Rs. 220.3 billion in FY2005/06, exhibiting a growth of 42% over the previous year. However, with an insurable population estimated to be around 300 million, the current penetration rate is only 12%. Even as a percentage of GDP, the life insurance premium penetration rate stands at a mere 2.35 % (as of March 2005), all pointing towards a huge opportunity for insurance companies in India, which is rated as one of the fast growing economies in Asia. Mr. Nitin Chopra, CEO, Bharti AXA Life Insurance, while speaking on the occasion said Our objective is to become the preferred company in financial protection and wealth management in India. The worldwide success of the AXA brand has come from being Close and Qualified to its customers. Bharti AXA Life Insurance will leverage AXAs learning and best practices to identify compelling consumer insights in the insurance space. Mr. Chopra added Being a second wave entrant, our opportunity lies in bettering our offering and service ahead of the market. Weve put in place a robust business model for Hyderabad which will then be rolled out across the country. Core to the proposition is hiring and training of the best talent. Hyderabad, with a population of over 7 million has over the past few years transformed into a metropolitan city from a mini metro, and expected to grow into a mega polis by 2010. This truly reflects the concerted efforts of the government in encouraging investments by IT and ITES companies. This has made the city a melting pot of various cultures and is representative of a good demographic mix, especially the progressive middle class of young nuclear families. This offers a huge business opportunity and provides a nice platform for the launch. ABOUT BHARTI AXA LIFE INSURANCE COMPANY LTD.

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Bharti AXA Life Insurance Company Ltd is a joint venture between the Bharti Enterprises and global insurance major AXA. The joint venture company has a 74% stake from Bharti and 26% stake of AXA Asia Pacific Holdings Ltd (APH). Bharti Enterprises is one of Indias leading business groups with interests in telecom, agri business and insurance. Established in 1976, Bharti has been a pioneering force in the telecom sector with many firsts and innovations to its credit. Bharti Airtel Limited, a group company, is one of Indias leading private sector providers of telecommunications services with an aggregate of over 25.89 million customers as of end of July 06. The Company was the first private operator to provide mobile services in all the 23 circles in India and also provides telephone services and Internet access over DSL in 92 cities under the Airtel brand. This is complemented by national and international long distance services. Bharti Airtel was recently ranked amongst the top 10 best performing companies in the world in the globally renowned BusinessWeek IT 100 list. Bharti Enterprises is the countrys largest manufacturer and exporter of telephone terminals. Bharti also has a joint venture with ELRo Holdings India Ltd. FieldFresh Foods Pvt. Ltd - for global distribution of fresh fruits and vegetables.

AXA SA, world leader in financial protection and wealth management is ranked 15th in the Fortune list. As a global insurance company with over 50 million customers and 110,000 employees world over, it manages Euro 1064 Billion of funds. The company recorded Euro 72 Billion in Revenues and Euro 3.3 Billion in Profits.

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AXA Asia Pacific Holdings Ltd (AXA APH) is listed on the Australian stock exchange and is 51.6% owned by AXA SA. AXA APH is responsible for AXA SAs life insurance and wealth management businesses in the Asia-Pacific region. It has operations in Australia, New Zealand, Hong Kong SAR, China, Indonesia, the Philippines, Thailand, Singapore, India and Malaysia. AXA APH had AUD87.6 billion in total funds under management, administration and advice at 30 June 2006 and reported a profit after tax before nonrecurring items of AUD 303.8 million for the half year ended 30 June 2006. For more information on AXA Asia Pacific Holdings, visit www.axa-asiapacific.com.au. REVAMPING DISTRIBUTION In early 2007, India's state owned insurer, Life Insurance Corporation (LIC), announced tie-ups with Corporation Bank, Oriental Bank of Commerce, Bank of Punjab and Nedungadi Bank for sale of its products through their branches. The aim of the tie-ups was to diversify LIC's distribution channels and increase product penetration. Industry observers were not surprised by this move. They felt that LIC had no option but to explore new channels of distribution to maintain its position as the market leader. The liberalization of the Indian insurance industry in 2000 led to the entry of private insurance companies with MNC as their partners. Reaching anywhere near LIC's vast network, built over decades, was going to be extremely tough for the new players. Consequently, private insurers decided to rely on aggressive advertising and promotional measures and use hitherto untried distribution channels. Private insurers began exploring the various distribution channels available instead of concentrating on individual agents, a channel LIC had been using for decades. To minimize cost, these companies tied up with established financial services companies and used their distribution network instead of setting up their own network. According to insurance industry observers, distribution was expected to emerge as one of the key factors for the success of private insurers in India. They also felt that insurance intermediaries and new distribution channels would become the strongest drivers of growth for the insurance sector and that multi-channel distribution would become the norm. With even LIC adapting these new channels of distribution, the distribution of insurance products/services seemed all set to undergo a radical overhaul.21

Background Note The life insurance industry in India dates back to 1818, when the Oriental Life Insurance Company set up office in Kolkata. In 1823, the Bombay Life Assurance Company started operations in Mumbai, India The 'Indian Life Assurance Companies Act' was passed in 1912; this was followed by the Indian Insurance Companies Act, 1928. These acts allowed the government to collect data regarding life and non-life businesses conducted by both Indian and foreign insurance companies. Later, the 1928 act was amended and a new act, the 'Insurance Act' was passed in 1938. By the mid-1950s, 154 Indian insurers, 16 foreign insurers and 75 provident societies were operating in the country. The life insurance business was concentrated in urban areas and was confined to the higher strata of society. In 1956, the management of these companies was taken over by the Government of India. LIC was formed in September 1956 through the LIC Act 1956, with a capital of Rs 50 million. One of the main objectives of forming LIC was to make insurance cover available to a large number of people, particularly to the lower segments of society. In 1972, the government took over management control of 106 private general insurance companies and formed the General Insurance Corporation (GIC). Over the years, LIC expanded its network all over the country and became one of the largest corporations in India. LIC had seven zonal offices, 100 divisional offices, 2,048 branch offices and army of agents totaling 6,28,031. Growth in Indian insurance industry was minimal in the 1960s and 1970s because of low savings and the low level of literacy. In addition, the insurance industry lacked sufficient funding and infrastructure. However, changes in the economy in the 1980s, such as growth in the rate of industrialization, improvement in infrastructure, the capital markets, increase in the savings rate and substantial capital formation resulted in tremendous growth in the life insurance industry. Over the years, LIC launched several group insurance and social security schemes to enhance its reach in the rural areas. In the early 1990s, the government felt it necessary to reform the industry, provide better coverage to the citizens and to increase the flow of longterm financial resources to finance the growth of infrastructure. In 1993, the Indian government set up the Malhotra Committee to suggest reforms in the industry. The

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committee, which submitted its report in 1994, recommended opening of the insurance sector to private players, improving service standards, and extending insurance cover to larger sections of the population. Various labor unions and political parties in the country opposed the committee's suggestions. They felt that the entry of private players would lead to job cuts by the nationalized players to make them more competitive. There were a host of other arguments against these reforms. As a result, the government decided to restrict foreign stake in insurance companies to only 26%, which was well below the 51% required by the Insurance Bill for controlling the management of the company. Though one of LIC's basic objectives was to 'provide insurance cover to all Indians,' insurance penetration in India remained very low. According to reports, only 65 million people were covered by insurance. R N Jha, LIC's former Executive Director, commented in his book, Insurance in India, "Insurance coverage has been extended only to about 25% of the insurable population in 40 years". In other words, the insurance market in India was largely untapped. In developed countries, per capita insurance premium1 was much higher than in India. In 1999, per capita insurance premium was only $8 in India while it was $4,800 in Japan, $1000 in Republic of Korea, $887 in Singapore, $823 in Hong Kong and $144 in Malaysia. In the world market, in terms of gross insurance premium, India's share was only 0.3%, though it had the second highest population in the world. In the same year (1999), Japan's share was 31%, the European Union's 25%, South Africa's 2.3% and Canada's 1.7%. And in 2001, while the ratio of insurance premium to the Gross Domestic Product (GDP)2 was 9% in UK and Japan, and 5% in the US, it was only 1.9% in India. Attracted by the huge, untapped insurance market in India, many private players entered the market after the Insurance Bill was passed in late 2000. A majority of these were collaborations between an Indian company and a leading MNC insurance/financial services company (Refer Table I). By 2002, with 0.8 million agents all over the country, LIC had an enviable reach. However, the fact remained that more than 75% of the Indian insurable population was untapped. According to industry observers, one of the main reasons for the low insurance penetration was the poor distribution and marketing strategies adopted by LIC. Prior to23

liberalization, due to its monopoly status, LIC seemed to have had no strategically devised distribution strategies in place. It depended entirely on individual agents, which it had trained over the years to distribute its products. LIC made no efforts to use other distribution channels (Refer Exhibit I for various distribution channels for selling life insurance). LIC's agents were not well qualified for their work. Prior to liberalization of the Indian insurance industry, no minimum qualification was laid down for people who wanted to become insurance agents. Agents generally acted like brokers; they cared more for their commissions than the needs of the customer. As a result, they did not make the effort to educate customers about the insurance products being offered. To distribute insurance products, LIC employed a large number of marketing people as 'Development Officers'. These officers employed and trained a number of agents. Development Officers received bonuses from the business generated by their agents, in addition to their salary. Consequently, LIC ended up paying bonuses and commissions twice for every new policy and subsequent renewal of premiums to both agents and Development Officers. It was reported that after only a few years of recruitment of agents, Development Officers earned huge amounts as commissions. Despite this, the attrition rate among the agents was very high, largely because LIC selected the wrong kind of people in the first place. LIC's bid to implement strict incentive schemes and 'career agent' type of distribution failed due to the powerful Union of Development Officers. However, with the entry of new players, the insurance market changed dramatically. Analysts commented that the private insurers seemed all set to make the industry market-driven, wherein technical expertise and service excellence would be the key success factors. The private companies, to make their presence felt and expand their reach, experimented with new distribution channels. Post-liberalization, a fierce battle commenced in the Indian insurance industry for garnering market share. New insurance companies used all available channels of distribution, right from individual agents and corporate agents to bancassurance. Bancassurance soon emerged as one of the most lucrative insurance distribution channels.

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According to analysts, it not only helped insurance companies increase market penetration and premium turnover, it also helped banks increase their Return on Assets (ROA annual earnings divided by total assets). This was because, even with a constant asset base, bancassurance contributed to enhanced ROA through fee income. (Refer Table III for various bancassurance agreements). Bharti AXA planned to build a multi-channel distribution network, which included agents, corporate agents and strategic alliances with banks, Bharti network and other direct marketing initiatives. In late 2001, it signed a Memorandum of Understanding (MOU) with Standard Chartered Bank for an exclusive bancassurance distribution agreement. According to reports, Standard Chartered was to act as the corporate agent for the company, and the partnership was expected to leverage the bank's 60 branches across the country. Standard Chartered Finance (a subsidiary of Standard Chartered Bank) was also expected to market Bharti AXA products. Companies such as BHARTI AXA , BHARTI AXA, and SBI Life insurance planned to leverage the branch network of their parent companies, BHARTI AXA, BHARTI AXA Bank and SBI respectively, for distributing their products. Reaching out to the bank's existing customers would be very easy for the insurance companies as the banks already had a well-established relationship with their customers. Since SBI had a network of over 9,000 branches, SBI stood to gain a lot by utilizing the bancassurance channel. It was reported that by the end of 2001, 21 branches of SBI were distributing SBI-Cardiff's group policies. Many analysts believed that bancassurance would play a very important role in India because banks were familiar with the target customers' needs, had a strong service delivery mechanism, good quality administration, complete integration of insurance and bank products and services, qualified personnel and an organized tracking system for reporting on agents' time and the results of bank referrals. However, it was also pointed out that the partnership between insurers and banks could run into problems. The most common problems that partners could face were inefficient manpower management, lack of sales culture within the bank, lack of branch personnel's involvement, insufficient product promotions, failure in integrating marketing plans of both bank and insurance company, limited database expertise of the bank and inadequate incentives to the25

bank personnel involved in sales of insurance products. Despite the growing thrust on bancassurance, most of the players believed that individual agents would continue to play a major role in the Indian insurance industry. According to Anuroop Singh, CEO, Bharti AXA Life, the new distribution channels would not be able to completely replace individual agents. He said, "Over 90% of the life insurance schemes the world over are sold through individual agents. Agents will be the primary channel of distribution in India and so we have invested substantially in training our life insurance agent advisers here." Max New York worked towards making the quality of its agents its main differentiating factor. The company adopted the career agent system instead of LIC's general agent system. Max New York paid attention to the agent selection process so as to recruit the best talent available. The selection process comprised four stages screening, psychometric tests, career seminars and final interview. Agents were trained in the various products the company offered and the insurance needs of the customers so that they were in a position to offer them sound advise. The training covered 152-hours, instead of the mandatory 100 hours stipulated by IRDA. The program involved modules on understanding the consumer psyche and the financial market, and developing selling skills and the right attitude. Commenting on the need for training agents, Mr. Debashis Sarkar, senior vice president, marketing, Bharti AXA, said, "Internal employees are all opinion shapers and indirect brand-builders and brand promise needs to be replicated down the chain at every customer touch point." The company also made training an ongoing process, and ensured that the training program addressed the needs of agents through development of skills and knowledge through a program spreading over 500 hours over two years. BHARTI AXA Standard Life decided to rely on individual consultants and corporate agents for distributing its products. According to company sources, individual consultants were expected to play a key role in the sales process. The company therefore invested 20 man-months in developing training programs for consultants.

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The company also trained its consultants through institutions approved by IRDA. In addition, BHARTI AXA Standard Life tied up with corporate agents all over country. It had already tied up with BHARTI AXA and some other banks to distribute its products. To increase its coverage in rural areas, BHARTI AXA Standard Life held talks with NGOs that were involved with BHARTI AXA's housing schemes in rural areas. Bharti AXA announced the appointment of Village Extension Workers (VEWs) who would help create awareness about insurance in villages. Generally, these VEWs were from social improvement projects promoted by the Aditya Birla Group of companies. Each VEW was put in charge of a cluster of 10-15 villages. Many other major private insurers were laying emphasis on the recruitment and development of quality agents to enhance their brand image in the market and attract customers. LIC ran an advertisement campaign that featured one of its most successful agents to highlight its belief in the individual agent system. Meanwhile, the Government of India opened up yet another avenue for distributing insurance products in August 2002: brokers (Refer Exhibit II). Foreign brokerage firms were also allowed, but only through a tie-up with an Indian partner and a 26% cap on equity. IRDA planned to finalize regulations by September 2002 and issue licenses to four categories of brokers - direct general insurance broker, direct life insurance broker, reinsurance broker, composite broker, and insurance consultant (Refer Exhibit III). What Lies Ahead After the decision to allow brokerage firms was announced, many Indian and foreign firms expressed their interest in entering the Indian insurance market. HSBC Bank announced its intention to set up an insurance brokerage firm in India. The Tatas also planned to enter the insurance brokerage business, focusing on both corporate and retail clients (reportedly through a strategic partnership with the Hong Kong based Jardine Matheson group). As marketing, distribution and technical superiority were expected to be the decisive factors for success in the Indian insurance sector in the future, the new players seemed to have a good chance.

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With the growing popularity of new distribution channels in the Indian insurance market, Private insurers hoped to effectively leverage the strengths of the new distribution channels. The above belief was strengthened by the emergence of another new channel the Internet. According to reports, in 2001, around 12% of the insurance products were sold through the Internet, and this figure was expected to grow as Internet penetration increased. Because of increasing competition in a crowded market, private insurers were trying to leverage every possible medium. According to analysts, in the not-too-distant future, even departmental stores, ATMs, Internet kiosks and supermarkets would be selling insurance.

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Some of the other insurance company market penetration

It is heartening to see that Private MNC Insurance Companies in India are using different route to reach millions of un-Insured population. Taking a NBFC route is what look to be Bharti AXA course. Naturally Bankassurance is a crowded area and this may be a pioneer path to choose. It is reported to day that Private life insurer Bharti Axa Life Insurance Company is eyeing non-banking finance companies (NBFC) to distribute its products, said a top company official Thursday. Terming Bharti Axa as part of the second wave of private life insurers in India, V. Srinivasan, chief financial officer, said that NBFCs are well placed to distribute life insurance products. The Rs.3.93 billion capital company has recently appointed Citi Financials to sell its life insurance policies. Like banks, NBFCs are offering different kinds of retail loans and they can tap their client base for our products, he said. According to him, it is lending teams to banks that are more efficient in selling a life insurance policy than the team that canvasses for deposits. More than the depositors, it is

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the loan takers who are receptive to the idea of buying a life insurance policy. Given this, NBFCs can effectively sell life insurance products, he reasoned. With competition hotting up, Indian insurers are devising new ways to reach customers through various traditional and alternative channels. Till the opening up of the sector, Indian insurers sold risk products using agents or agency forces which had limited their reach. Now, insurers are of the opinion that the day is not far when a customer will just have to walk into a supermarket, a bank, a post office, an ATM, an internet kiosk or a departmental store to pick up an insurance product virtually off the shelf. Today, bank branches and corporate agents selling life insurance products are ubiquitous testaments to how the channels have grown in terms of not only selling, but also increasing awareness about life insurance. Building a distribution network is expensive and time-consuming. That is why private insurers have largely followed a strategy similar to that of foreign banks by targeting the affluent segment and gradually building up the distribution network to reach out to the urban middle class. Needless to say, the effectiveness and the cost of different distribution strategies of players are likely to be crucial in ensuring them success in the insurance business, particularly in the retail segment. The low level of differentiation among retail insurance products suggests the criticality of distribution reach and efficiency for success in this business. The most attractive segment for private insurance players in the life insurance segment will be the Indian middle class. Life insurance products in India have so far been distributed through an elaborate network of agents. The limiting factor for prospective insurers will be the extensive and costly distribution structure required for reaching this segment. New entrants cannot expect to replicate the extensive distribution network of nationalised insurance companies. In general insurance, the segment that is most lucrative as well as readily available, are corporates who are mandatorily required to insure their sizeable assets. That may be the

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reason why in spite of such tough competition, public sector and private sector insurers have been able to secure these accounts. Obviously, new business opportunities for insurers will emerge from untapped markets, including retail and personal insurances, for which private sector general insurance companies have to develop proper distribution channels and PSU insurers have to make use of their nationwide marketing network, which has not happened as yet. The marketing of insurance products, aimed at corporate customers, would continue to involve a fair amount of direct customer interface. And, insurance companies are expected to develop customised product packages and other allied risk management services as a differentiation strategy. The private sector companies are expected to leverage on the existing distribution franchise of their Indian promoters to access the potentially-large retail insurance market. With a network of 66,700 branches, for commercial banks, it is a win-win deal as it boosts their fee-based income. The Indian Banks Association anticipates a fee income from the sale of insurance products of scheduled commercial banks to be anywhere in the region of Rs 5,000-7000 crore during the initial five years. While a large part of the general insurance business consists of business-to-business transactions, life insurance is sold globally through agents who earn high commissions. As a rule, banks enjoy excellent access to crucial information about their clients financial needs and are aware of their personal needs. Now, insurers are bracing up to tap micro-insurance possibilities by launching products for the rural masses. Trade unions can leverage employees, especially in the unorganised sector, while co-operatives are excellent platforms to sell products to farmers and farm labourers. The market today is not supplier-led, but customer-led. This demands a customer centric approach. Hence, the future distribution would call for micro-market distribution strategy over a macro-market policy, based on a clearly designed segmentation approach

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CHAPTER-3 RESEARCH METHODOLOGY

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RESEARCH METHODOLOGYa) Title:Marketing Strategies and Brand Evaluation of Bharti AXA Life Insurance i. Title Justification Keeping in mind the above considerations, the purpose of this project report is to enable the marketer to understand customers needs and maximise wealth generation taking Bharti AXA Life Insurance as a special case. Insurance is a financial tool surrounded with many misconceptions and hence a marketer has to create awareness. The thesis would highlight the problems within the industry.

b. Objective:Objective One: To assess the nature of joint venture, investment pattern, entry strategies and product of various insurance companies; Objective Two: To analyze the comparative marketing strategies of various life insurance companies.

c. Scope of the Study:Insurance industry is growing at a very fast pace. In this cut throat competitive era it is important for the marketers to design and deliver their services efficiently. Marketer has to understand the needs of the untapped customers. This thesis will help to understand the industry with respect to the needs, demands, preferences of the customer and the products that the company offers to cater to those needs.

d. Significance of the Study:India is a huge, diverse and complex market of which, the insurance sector was opened for private competition in 2000. Thus, insurers endeavored to segment the market carefully. Distribution was seen to be the key of success. Regulators were made to formulate strong and fair guidelines. Private insurers were perceived to have served best by a middle-market

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approach, targeting customer segments that were currently untapped. Multinational insurers were observed to be keenly interested in emerging insurance markets. It was believed that Private insurers would learn and unlearn simultaneously. New entrants with small share of a large and growing market would be profitable. The new entrants would be best served by micro-level two pronged strategies. First, by introducing innovative products; offering a right mix of flexibility/risk/return and secondly, by targeting specific markets. In a scenario where buyers look for the low prices, Brand loyalty would be at high risk. Therefore, strong marketing strategies would be needed. Bharti AXA, being an old player, had huge opportunities awaiting it. Through the devising of various effective strategies it has made a place for itself in the insurance industry. New schemes and distribution channels have strengthened its resolve to be able to better serve its customers and contribute to the industry.

e. Research Design:Data has been collected through one to one interaction and discussion with various people who are involved in the business of insurance as Sales manager, Life Advisors, Marketing Manager Customers and others. Newspapers, Internet, Magazines and Journals would provide ample material about latest trends and practices in insurance industry. Bharti AXA organizes various outdoor activities to boost its business and brand. Interaction with customers during such outdoor activities would enable to understand the success ratio of such kind of outdoor activities. Various products of the company would be discussed with respect to their benefits and advantages. Various insurance players would be compared with respect to their market share and products that they offer. Primary Data has been collected through discussions and observation of various people involved in the business whereas Secondary Data through annual reports of the company, newspaper, magazines, journals and internet.

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f. Sampling Methodology:i. Chosen for comparison of financial strategy of other Insurance

company ii. iii. iv. Sampling chosen with the Random method Sampling Area would be Delhi and NCR Sample Size: 100

g. Limitation:Limitation 1 Only Delhi & NCR region covered for this report because of not availability of time and resource. Limitation 2 Also for financial disclosure company are not sharing more internal information either on internet or ready to give.

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CHAPTER-4 FACTS AND FINDINGS

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FACTS AND FINDINGS1. Please mention the type of insurance policy you are covered under a) Individual b) Corporate

Option Individual Corporate

No. of People 60 40

In Percentage% 60% 40%

Here are one more clue that will reach BHARTI AXA plan to launch insurance BHARTI AXA services in India 60% people responded that they have individual insurance policy while 40% people still with corporate side. Recommendation for BHARTI AXA that that 60% people want more and more service from the insurance company and in coming days people want hazel free life if somebody tell him pay for that they are ready to pay reasonable amount for the better and effective service. With the same product portfolio will increase the penetration of the insurance company

2.

Do you have any life insurance policy? If yes than how many policies do you have?

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a) Yes Option Yes No

b) NO No. of People 72 28 In Percentage% 72% 28%

The question tell about the how many people has a health insurance policy in Indian scenario, out of our sample size 72% are agree that they has a health care policy to cover any uncertainty in their life. While 28% people are suggested they dont have any life cover or as such policy.

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3.

What is the policy type? a) Endowment b) Money Back c) Team Cover

Option Endowment Money Back Team Cover

No. of People 56 42 2

In Percentage% 56% 42% 2%

Endowment policy is the most popular policy followed by Money Back policy. Also result suggested that 56 % people like to have Endowment plan while 42% people have Money back policy.

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4.

For how many years do you have insurance policy. a) < 5 Years c) 10-15 Years Option