HDFC Project

MARKETING AND SALES STRATEGIES OF HDFC SLIC

1. INTRODUCTION

"The victory o£ success is half won when one gains the habit

of work."

- Sarah Knowles Bolton

When it says role of any life insurance company then one can define it in a

very simple way that a company is selling promise to a person and trying to take

the persons worries by taking less but by paying more. So, in this project I will

highlight all the major facts which have come across in Indian Life Insurance

Industry since its birth.

1.1 INSURANCE:

Insurance is a system by which a person, business or organization

transfers a risk to an insurance company, which reimburses the insured for

covered losses and provides for sharing the costs of losses among all insurers.

The major benefit of insurance is the indemnification of insurers for

covered losses. To indemnify is to restore the party that has had a loss to the

same financial position as before the loss occurred. Through indemnification,

insurance allows individuals, businesses and organizations to maintain their

economic position and not suffer financial setbacks causing a burden to society

or to other individuals. In addition, insurance indemnifies the injured persons.

When a family’s house is destroyed by fire and the loss is covered by

insurance, the family is less likely to be dependent on relatives or public

assistance for lodging. Likewise, when a business is covered for a large liability

loss that would have otherwise driven the firm into bankruptcy, insurance

contributes to society because the firm continues to provide jobs for its workers,

products for its customers and business for its suppliers.

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1.1.1 LIFE INSURANCE

Life Insurance can be defined as a policy that will pay a specified sum to

beneficiaries upon the death of the insured. It is an agreement that guarantees

the payment of a stated amount of monetary benefits upon the death of the

insured. Life Insurance could be said as protection against the death of the

insured in the form of payment to a designated beneficiary, typically a family

member or business.

The primary purpose of life insurance is therefore protection of the family

in the event of death. Today, insurance is also seen as a tool to plan effectively

for your future years, your retirement, and for your children's future needs.

Today, the market offers insurance plans that not just cover your life and but at

the same time grow your wealth too.

1.1.2 BENEFITS OF LIFE INSURANCE

1. Superior to Any Other Savings Plan:

Unlike any other saving plan, a life insurance policy affords full protection

against risk of death. In the event of death of a policyholder, the insurance

company makes available the full sum assured to the policyholder’s near and

dear ones. In comparison, any other saving plan would amount to the total saving

accumulated till date. If the death occurs prematurely, such savings can be much

lesser than the sum assured. Evidently, the potential financial loss to the family of

the policyholder is sizable.

2. Encourages and Forces Thrift:

A savings deposit can be easily withdrawn. The payment of life insurance

premiums, however, is considered sacrosanct and is viewed with the same

seriousness as the payment of interest on a mortgage. Thus, a life insurance

policy in effect brings about compulsory savings.

3. Easy Settlement and Protection against Creditors:

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A life insurance policy is the only financial instrument the proceeds of

which can be protected against the claims of a creditor of the assured by

effecting a valid assignment of the policy.

4. Administering the Legacy for Beneficiaries:

Speculative or unwise expenses quickly cause the proceeds to be

squandered. Several policies have foreseen this possibility and provide for

payments over a period of years or in a combination of installments and lump

sum amounts.

5. Ready Marketability and Suitability for Quick Borrowing:

A life insurance policy can, after a certain time period (generally three

years), be surrender for a cash value. The policy is also acceptable as a security

for a commercial loan, for example, a student loan. It is particularly advisable for

housing loans when an acceptable LIC policy may also cause the lending

institution to give loan at lower interest rates.

6. Disability Benefits:

Death is only the hazard that is insured; many policies also include

disability benefits. Typically, these provide for waiver of future premiums and

payments of monthly installments spread over certain time period.

7. Accidental Death Benefits:

Many policies can also provide for an extra sum to be paid (typically equal

to the sum assured) if death occurs as a result of accident.

8. Tax Relief:

Under the Indian Income Tax Act, the following tax relief is available:

a) 20% of the premium paid can be deducted from your total income tax

liability.

b) 100% of the premium paid is deductible from your total taxable income.

When these benefits are factored in, it is found that most policies offer

returns that are comparable/or even better than other saving modes

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such as PPF, NSC etc. Moreover, the cost of insurance is a very

negligible.

1.1.3 LIFE INDUSTRY IN INDIA

Origin of Insurance in India:

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

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

Company in Calcutta. 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.

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.

1999: After the amendment to the relevant laws in 1999, the LIC did not have

the exclusive privilege of doing life insurance business in India. By 31st march

2002, eleven new insurance companies had been registered and began to

transact life insurance business in India. These private companies have

approved license from IRDA with a clause that an Indian company has to hold

majority stake i.e.74% and the foreign player can have a minority stake of

26%. As a license fee every company has to deposit Rs.100 crore with IRDA

to start its business in India.

2000: In February insurance bill are presented in budget session and in

October private insurance were back.

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1.1.4 INDIAN INSURANCE MARKET (FACTS AND FIGURES)

Indian insurance industry is one of the fastest growing with annual growth

rate of more than 40% after liberalization of insurance sector.

Indian insurance industry is US$25 billion industry with US$I4 billion

accounting for the first year premium.

Only 20% of the insurable population of India is insured showing a large

untapped market with immense opportunity for different companies.

First year premium contribution is only1.26 %of GDP.

Growth rate of average increase in premium in India is 8.2% compared to

global average of 3%.Per capita premium is only $5 compared to $3236

in Japan $1079 in USA,$14 in Mexico.

LIC's survey reveals that more than 40 percent of insurance-buyers look at

insurance products as a means of savings. Risk coverage is only a

secondary objective for them and nearly 26 percent of the insurance

policies sold are on considerations of old age security. Only 18 percent of

insurance policies are sold on death risk considerations.

More than 80% of the premium collected during last 5 years was from

ULIP.

Among total insured population only 14 % are female.

1.2 LIFE INSURANCE CORPORATION OF INDIA

Life Insurance Corporation of India (LIC) was formed in September, 1956 by

an Act of Parliament, viz., Life Insurance Corporation Act, 1956, with capital

contribution from the Government of India. The then Finance Minister, Shri C.D.

Deshmukh, while piloting the bill, outlined the objectives of LIC:

To conduct the business with the utmost economy, in a spirit of

trusteeship to charge premium no higher than warranted by strict actuarial

considerations.

To invest the funds for obtaining maximum yield for the policy holders

consistent with safety of the capital.

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To render prompt and efficient service to policy holders, thereby making

insurance widely popular.

Since nationalization, LIC has built up a vast network of 2,048 branches, 100

divisions and 7 zonal offices spread over the country. The Life Insurance

Corporation of India also transacts business abroad and has offices in Fiji,

Mauritius and United Kingdom. LIC is associated with joint ventures abroad in the

field of insurance, namely, Ken-India Assurance Company Limited, Nairobi,

United Oriental Assurance Company Limited, Kuala Lumpur and Life Insurance

Corporation (International) E.C. Bahrain. The Corporation has registered a joint

venture company in 26th December, 2000 in Kathmandu, Nepal by the name of

Life Insurance Corporation (Nepal) Limited in collaboration with Vishal Group

Limited, a local industrial Group.

Followings are some of the points that describe LIC:

Monopoly of four decade: before 1999 LIC was the only insurance company

allowed to do life insurance business in India. Therefore it had monopoly of

over four decades. Despite being a monopoly, it has some 60-70 million

policyholders. Given that the Indian middle-class is around 250-300 million,

the LIC has managed to capture some 30 odd percent of it.

Large distribution network: LIC has maximum number of branches (2048

computerized branches) and largest number of tied agents (819000) .Most of

its business comes from these agents but LIC has worked very little towards

giving training to these agents.

Strong Brand Image: With over fifty years of business LIC has made a

strong brand image which gives it a competitive advantage over other

companies. Most of the people in India associate life insurance with LIC.

People in India have immense faith on LIC than private players despite of its

poor customer service.

First mover advantage: LIC is the company that has shown India the need

of insurance. Therefore it has tie ups with the various big corporate and HNI

clients, which gives it good business premiums.

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Largest life fund: With a business of more than 50 years LIC has maximum

amount of life fund (More than US$40 billion). Despite of it LIC‘s premium is

not the cheapest in the industry and also it does not give the highest returns

to its policyholders.

High clerical costs: In this modern era where everything is automated the

need for clerical staffs has reduced significantly. LIC has the maximum

numbers of employee in this clerical category which incurs LIC a large

amount of fixed costs.

1.2.1 REFORMS IN THE INSURANCE SECTOR

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

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

industry and recommend its future direction. The Malhotra committee was set up

with the objective of complementing the reforms initiated in the financial sector.

The reforms were aimed at “creating a more efficient and competitive

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

the structural changes currently underway and recognizing that insurance is an

important part of the overall financial system where it was necessary to address

the need for similar reforms…” In 1999, the committee submitted the report and

some of the key recommendations included:

I. 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.

II. Competition

Private Companies with a minimum paid up capital of Rs.1bn should be

allowed to enter the industry.

No Company should deal in both Life and General Insurance through a single

entity.

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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.

III. 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.

IV. Investments

Mandatory Investments of LIC Life Fund in government securities to be

reduced from 75% to 50%.

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).

V. 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.

Computerization of operations and updating of technology to be carried out in

the insurance industry.

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1.3 ORIGIN AND DEVELOPMENT OF THE INDUSTRY

Development of Insurance in India

A thriving insurance sector is of vital importance to every modern

economy. First because it encourages the savings habit, second because it

provides a safety net to rural and urban enterprises and productive individuals.

And perhaps most importantly it generates long-term investible funds for

infrastructure building. The nature of the insurance business is such that the cash

inflow of insurance companies is constant while the payout is deferred and

contingency related.

This characteristic of their business makes insurance companies the

biggest investors in long-gestation infrastructure development projects in all

developed and aspiring nations. This is the most compelling reason why private

sector (and foreign) companies which will spread the insurance habit in the

societal and consumer interest are urgently required in this vital sector of the

economy.

With the nation's infrastructure in a state of imminent collapse, India

couldn't have afforded to be lumbered with sub-optimally performing monopoly

insurance companies and therefore the passage of the Insurance Regulatory &

Development Authority Bill on December 2, 1999 heralds an era of cautious

optimism where stakes are high for all parties concerned. For the Govt. of India,

Foreign Direct Investment (FDI) must pour in as anticipated; for foreign insurers,

investments must start yielding returns and for the domestic insurance industry -

their market penetration should remain intact. On the fringe, the customer is

pondering whether all the hype created on liberalization will actually benefit him.

The IRDA Bill provides for the establishment of an authority to protect the

interests of the holders of insurance policies, to regulate, promote and insure

orderly growth of the insurance industry and amend the Insurance Act, 1938, the

Life Insurance Act, 1956 and the General Insurance Business (Nationalization)

Act, 1972. The bill allows foreign equity stake in domestic private insurance

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companies to a maximum of 26 per cent of the total paid-up capital and seeks to

provide statutory status to the insurance regulator. Before privatization, insurance

business in India was pegged at $ 6.6 Billion whereas industry leaders expected

at that time that privatization will increase it to $ 40 Billion within next 3-5 years.

1.3.1 INSURANCE REGULATION & DEVELOPMENT BILL

On October 21st, 1999 the government finally offered IRDA bill for the

consideration of the new parliament. The new bill called insurance Regulatory

Authority Bill 1999. Bills to provide for establishment of an authority to protect the

interest of holders of insurance policies and to regulate promote and insure

orderly growth of the industry.

IRDA

As per the section 4 of IRDA Act' 1999, Insurance Regulatory and

Development Authority (IRDA, which was constituted by an act of parliament)

specify the composition of Authority.

The Authority is a ten-member team consisting of:

a) A Chairman;

b) five whole-time members;

c) four part-time members, (all appointed by the Government of India)

Duties, Powers and Functions of IRDA

Section 14 of IRDA Act, 1999 lays down the duties, powers and functions of

IRDA.

(1) Subject to the provisions of this Act and any other law for the time being in

force, the Authority shall have the duty to regulate, promote and ensure

orderly growth of the insurance business and re-insurance business.

(2) Without prejudice to the generality of the provisions contained in sub-section.

I. The powers and functions of the Authority shall include, -

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a) Issue to the applicant a certificate of registration, renew, modify,

withdraw, suspend or cancel such registration;

b) Protection of the interests of the policy holders in matters

concerning assigning of policy, nomination by policy holders,

insurable interest, settlement of insurance claim, surrender value of

policy and other terms and conditions of contracts of insurance;

c) Specifying requisite qualifications, code of conduct and practical

training for intermediary or insurance intermediaries and agents;

d) Specifying the code of conduct for surveyors and loss assessors;

e) Promoting efficiency in the conduct of insurance business;

f) Promoting and regulating professional organizations connected

with the insurance and re-insurance business;

g) Levying fees and other charges for carrying out the purposes of

Act;

h) Calling for information from, undertaking inspection of, conducting

enquiries and investigations including audit of the insurers,

intermediaries, insurance intermediaries and other organizations

connected with the insurance business;

i) Control and regulation of the rates, advantages, terms and

conditions that may be offered by insurers in respect of general

insurance business not so controlled and regulated by the Tariff

Advisory Committee under section 64U of the Insurance Act, 1938

(4 of 1938);

j) Specifying the form and manner in which books of account shall be

maintained and statement of accounts shall be rendered by

insurers and other insurance intermediaries;

k) Regulating investment of funds by insurance companies;

l) Regulating maintenance of margin of solvency;

m) Adjudication of disputes between insurers and intermediaries or

insurance intermediaries;

n) Supervising the functioning of the Tariff Advisory Committee;

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o) Specifying the percentage of premium income of the insurer to

finance schemes for promoting and regulating professional

organizations referred to in clause (f);

p) Specifying the percentage of life insurance business and general

insurance business to be undertaken by the insurer in the rural or

social sector; and

q) Exercising such other powers as may be prescribed.

1.3.2 GROWTH AND PRESENT STATUS OF INDUSTRY:

The life insurance industry in India grew by an impressive 47.38%, with

premium income at Rs. 1560.41 billion during the fiscal year 2006-2007. Though

the total volume of LIC's business increased in the last fiscal year (2006-2007)

compared to the previous one, its market share came down from 85.75% to

81.91%. Total life insurance premium in India is projected to grow Rs 1,230,000

Crores by 2010-11.

The 17 private insurers increased their market share from about 15% to

about 19% in a year's time. The figures for the first two months of the fiscal year

2007-08 also speak of the growing share of the private insurers. The share of LIC

for this period has further come down to 75 percent, while the private players

have grabbed over 24 percent.

With the opening up of the insurance industry in India many foreign

players have entered the market. The restriction on these companies is that they

are not allowed to have more than a 26% stake in a company’s ownership.

Since the opening up of the insurance sector in 1999, foreign investments

of Rs. 8.7 billion have poured into the Indian market and 19 private life insurance

companies have been granted licenses.

Innovative products, smart marketing, and aggressive distribution have

enabled fledgling private insurance companies to sign up Indian customers faster

than anyone expected. Indians, who had always seen life insurance as a tax

saving device, are now suddenly turning to the private sector and snapping up

the new innovative products as an offer. Some of these products include

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investment plans with insurance and good returns (unit linked plans), multi-

purpose insurance plans, pension plans, child plans and money back plans.

Future of Industry:

We live in the information age. Most of the people are becoming more

aware of the importance of insurance in their life.

Today, natural disasters on a large scale occur regularly and even

terrorism is increasing day by day. Specialized software’s are used in actuarial

science to predict accurately life expectancy and mortality. But natural disasters

are difficult to predict.

This shows that insurance is a basic and fundamental need for the safety

and security of the person and his family. Only a larger insurance cover can

guarantee a better future. However insurance claims for natural disasters are

very low. This is because insurance coverage was too low, and those who really

needed insurance had not taken it. There is the need to push insurance as a

social responsibility for those who really need it.

Therefore future of insurance industry is very bright and growth oriented.

REASONS FOR LIBERALIZATION OF INSURANCE SECTOR

Indian economy was growing at a very high rate after liberalization .Due to

development in the services sectors increase in literacy and per capita income,

demand for various financial instruments including insurance increased. Among

the emerging economy India was the least insured country. And it was found that

after liberalization of insurance sectors Korean and Taiwan economy increased

at a very high pace (almost 3-4 times more than GDP growth).It was very difficult

for LIC to cover whole population of India. Further it was necessary to open

insurance to foster competition, innovation and variety of products. And also it

was necessary to generate greater awareness on the need of buying insurance

as a service not merely as a tax exemption.

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1.4 BRIEF DESCRIPTION ABOUT THE COMPANY

“HDFC STANDARD LIFE”

ORIGIN OF THE ORGANIZATION

HOUSING DEVELOPMENT FINANCE CORPORATION LTD.

Founded in 1977, HDFC is today the market leader in housing finance in

India and has extended financial assistance to more than 15 lacks homes. HDFC

has more than 110 offices in Dubai and 3 more services associates’ insurance

Kuwait, Qatar and Sultanate of Oman. HDFC’s assets base amount to over

15,000 crores. Its financial strength is reflected in highest safety rating of “FAAA”

and “MAAA” awarded by CRISIL and ICRA- two of India’s leading credit rating

agency respectively, for the last 6 years consecutively, it has a depositor base of

over 11 lacks customer and a deposit agents force of over 46,000 of the total

deposit, 73% are sourced from individual and trust depositories, which

demonstrates the tremendous confidence that retail investors have insurance the

company.

HDFC- Promoted companies have emerged to meet the investors and

customers needs; HDFC bank for commercial banking, HDFC mutual fund for

products, to be followed very shortly by HDFC Standard Life Insurance Company

for the life insurance and pension products.

Being an institution that is strongly committed to the highest of quality and

excellence, HDFC has won several accolades in the past few years. One such

award is the ‘Ramakrishna Bajaj National Quality Award” for the year 1999. This

award was instituted to Award Recognition to Indian Companies for business

excellence and quality achievement. HDFC is the only company so far to receive

this award in the service category.

The road to success is a tough and challenging journey in the dark where

only obstacles light the path. However, success on a terrain like this is not

without a solution.

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As we found out nearly three decades ago, in 1977, the solution for

success is customer satisfaction. All you need is the courage to innovate, the skill

to understand your clientele and the desire to give them your best 32

Today, nearly three million satisfied customers whose dream we helped

realize, stand testimony to our success.

Our objective, from the beginning, has been to enhance residential

housing stock and promote home ownership.

Now, our offerings range from hassle-free home loans and deposit

products, to property related services and a training facility.

We also offer specialized financial services to our customer base through

partnerships with some of the best financial institutions worldwide.

Objectives & Background

Housing Finance SectorAgainst the milieu of rapid urbanization and a changing socio-economic

scenario, the demand for housing has grown explosively. The importance of the

housing sector in the economy can be illustrated by a few key statistics.

According to the National Building Organization (NBO), the total demand for

housing is estimated at 2 million units per year and the total housing shortfall is

estimated to be 19.4 million units, of which 12.76 million units is from rural areas

and 6.64 million units from urban areas. The housing industry is the second

largest employment generator in the country. It is estimated that the budgeted 2

million units would lead to the creation of an additional 10 million man-years of

direct employment and another 15 million man-years of indirect employment.

Having identified housing as a priority area in the Ninth Five Year Plan

(1997-2002), the National Housing Policy has envisaged an investment target of

Rs. 1,500 billion for this sector. In order to achieve this investment target, the

Government needs to make low cost funds easily available and enforce legal and

regulatory reforms.

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BackgroundHDFC was incorporated in 1977 with the primary objective of meeting a

social need – that of promoting home ownership by providing long-term finance

to households for their housing needs. HDFC was promoted with an initial share

capital of Rs. 100 million.

Business ObjectivesThe primary objective of HDFC is to enhance residential housing stock in

the country through the provision of housing finance in a systematic and

professional manner, and to promote home ownership. Another objective is to

increase the flow of resources to the housing sector by integrating the housing

finance sector with the overall domestic financial markets...

Organizational GoalsHDFC’s main goals are to

a) Develop close relationships with individual households.

b) Maintain its position as the premier housing finance institution in the

country.

c) Transform ideas into viable and creative solutions.

d) Provide consistently high returns to shareholders, and

e) To grow through diversification by leveraging off the existing client base.

Organization and ManagementHDFC is a professionally managed organization with a board of directors

consisting of eminent persons who represent various fields including finance,

taxation, construction and urban policy & development. The board primarily

focuses on strategy formulation, policy and control, designed to deliver

increasing value to shareholders.

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Board of Directors:Mr. Deepak S. Parekh - Chairman

Sir Alexander M. Crombie - Group CEO

Mr. Keki M. Misty - MD

Ms. Marcia D. Campbell - Group operation Director

Ms. Renu S. Karnad - Executive Director

Mr. Norman K. Skeoch - Chief Executive

Mr. Gautam R. Divan - CA

Mr. Ranjan Pant - Global Management Consultant

HDFC has a staff strength, which includes professionals from the fields of

finance, law, accountancy, engineering and marketing.

STANDARD LIFE INSURANCE COMPANY (SLIC)

The Standard Life Assurance Company ("Standard Life") was established

in 1825 and the first Standard Life Assurance Company Act was passed by

Parliament in 1832. Standard Life was reincorporated as a mutual assurance

company in 1925.

The Standard Life group originally operated only through branches or

agencies of the mutual company in the United Kingdom and certain other

countries.

Its Canadian branch was founded in 1833 and its Irish operations in 1838.

This largely remained the structure of the group until 1996, when it opened a

branch in Frankfurt, Germany with the aim of exporting its UK life assurance and

pensions operating model to capitalize on the opportunities presented by EC

Directive 92/96/EEC (the “Third Life Directive”) and offer a product range in that

market with features which local providers were unable to offer.

In the 1990s, the group also sought to diversify its operations into areas

which complemented its core life assurance and pensions business, with the

intention of positioning itself as a broad range financial services provider.

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Banking, Healthcare & Investments

The group set up Standard Life Bank, its UK mortgage and retail savings

banking subsidiary, in 1998 and Standard Life Investments, which had previously

been the in-house investment management unit of the group’s life assurance and

pensions business, was separated into a distinct legal entity in the same year,

with the aim of establishing it as an independent investment management

business providing services to both the group and third party retail and

institutional clients. The group acquired Prime Health Limited (subsequently

renamed Standard Life Healthcare) in the United Kingdom in 2000. Standard Life

Healthcare expanded in March 2006 with the acquisition of the PMI business of

First Assist.

Standard Life Asia Limited/Joint ventures –

The group’s Hong Kong subsidiary, Standard Life Asia Limited (“SL Asia”),

was incorporated in 1999 as a joint venture and became a wholly-owned

subsidiary of Standard Life in 2002. The group’s operations in Hong Kong were

established to give the group a presence in the Far East from which it could

expand into China. The group’s joint ventures in India with Housing Development

Finance Corporation Limited (“HDFC”) were incorporated in 2000 (in relation to

the life assurance and pension’s joint venture) and 2003 (in relation to the

investment management joint venture). The group’s joint venture in China with

Tianjin Economic Development Area General Company (“TEDA”) became

operational in 2003.

Standard Life International Limited

The group also incorporated Standard Life International Limited (“SLIL”) in

2005 for the purposes of providing the group with an offshore vehicle, based in

Ireland, through which it could sell tax-efficient investment products into the

United Kingdom. Sales of these products commenced in 2006.

Service Company

Following the group’s strategic review in 2004, the group established a

service company structure for the provision of central corporate services to the

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group’s business units. Standard Life Employee Services Limited (“SLESL”)

supplies a wide range of central services to the rest of the group, including IT,

facilities, legal and human resources services, and employs staff working in the

group’s UK and Irish operations (other than SLI, SLB and SLH, which employ

their staff directly). This service company structure was created to enable

Standard Life to comply with regulatory restrictions on the provision of non-

insurance services and to exploit group-wide synergies.

Standard Life plc structureUnderneath Standard Life plc are Standard Life Healthcare Limited,

Standard Life Investments (Holdings) Limited (and underneath it, Standard Life

Investments Limited), Standard Life Oversea Holdings Limited, Standard Life

Employee Services Limited, Standard Life Assurance Limited and Standard Life's

Joint Venture interest in China

Underneath Standard Life Oversea Holdings are Standard Life Asia

Limited and Standard Life Financial Inc (and underneath it, The Standard Life

Assurance Company of Canada).

Underneath Standard Life Assurance Limited are Standard Life Direct

Limited, Standard Life Savings Limited, Standard Life Direct Limited, Standard

Life Trustee Company Limited, Standard Life Bank Limited, Standard Life

Pensions Funds Limited, Standard Life International Limited and The Standard

Life Assurance Company 2006, which currently holds Standard Life's Joint

Venture interests in India.

The Partnerships

HDFC and Standard Life commenced discussions about possible joint

venture, to enter the life insurance market, in Jan. 1995. It was clear from the

outset that both companies shared similar values and benefits and a strong

relationship quickly formed. In Oct.1995 the companies signed a 3 year joint

venture agreement.

Around this time Standard Life purchased a 5% stake in HDFC, further

strengthening the relationship.

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A small project term was set up in UK and India and set about preparatory

work. Among other things, the team conducted market research, looked at

possible information technology, documented high level business process maps

and set about preparing the first project plan.

The next three years were filled uncertainty, due to change in insurance

Govt. and both ongoing delays in getting the insurance bill passed in parliament.

Despite this both companies remained firmly committed to venture.

In Oct.1998, the joint venture agreement was removed and additional

resources made available. Around this time Standard Life purchased 2%

Infrastructure Development Finance Company Ltd. (IDFC). Standard Life also

started to use the services of the HDFC Treasury Department to advise them

upon their investment insurance India.

One of many success stories over the last few years has been the

actuarial student program. The program was designed to identify high caliber

individuals who would be sponsored by Standard Life to study for their actuarial

qualification in the UK.

The new company has 1 Indian actuary and 5 actuarial students in the

team. With a further 2 students undergoing training in the UK, Both parent

companies strongly believe the program will benefit the new company. Towards

the end of 1999, the opening of the market looked very promising and both

companies agreed the time was right to move the operation to the next level.

Therefore, in Jan.2000 and expect team form the UK joined a handpicked team

from HDFC to form the core project term based in Mumbai.

Around this time Standard Life purchased a further 5% stake in HDFC

bank. The Assets Management Company promoted by HDFC to enter the mutual

fund market. The mutual fund market was launched on 20th July 2000 and on 10th

Nov.2000 assets under the management reached Rs. 1,063 crores. The

company was incorporated on 14th Aug. 2000 under the name of HDFC

Standard Life Insurance Company Limited. The ambition of the company from

as far as back as Oct. 1995 was first to be private company to re-enter in the life

insurance market in India. On 23rd of Oct.2000, this ambition was realized when

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HDFC Standard Life Insurance Company Limited were only life company to be

granted a certificate of registration.

HDFC are main shareholders in HDFC Standard Life Insurance Company

Limited with 81.4% while Standard Life own 18.6% given Standard Life’s existing

investment in the HDFC Group. This is maximum investment allowed under

current regulations.

HDFC Standard Life Insurance Company Ltd.

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

private insurance companies, which offers a range of individual and group

insurance solutions. It is a joint venture between Housing Development Finance

Corporation Limited (HDFC Ltd.), India's leading housing finance institution and a

Group Company of the Standard Life, UK. HDFC as on March 31, 2007 holds

81.9 per cent of equity in the joint venture.

Growth and Development of Company:

Highlights of Financial Year 2008-09 in comparison of FY 2007-08

Total Premium Income is up by 15% at Rs. 5564.69 crores as against Rs.

4858.56 crores in FY2007-08.

Renewal premium collected increased to Rs. 2913.58 crores from Rs.

2173.19 crores in the previous year, registering a growth of 34%.

A well balanced product portfolio with pension comprising over 40% children

plans around 25% and the remaining constituting protection and savings

plans.

Total assets under management increased to Rs. 10,595 crores, registering a

growth of 24% over FY2007-08.

Assets under management for the Group business have increased to Rs.

1075 crores, registering a growth of 12% over FY2007-08.

Strength of Financial Consultants reported year-on-year growth of 43% to

over 2, 07,000 in FY2008-09 compared to 1, 45,000 last financial years.

The sum assured in-force for 2008-09 was Rs. 57,158 crores as compared to

Rs. 45,743 crores for the previous year.

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Number of working financial agents is 1,657,042 in 2007-08 than 970,774 in

2006-07.

As on February 28, 2009 HDFC Ltd. holds 72.43% and Standard Life

(Mauritius Holding) 2006, Ltd. holds 26.00% of equity in the joint venture,

while the rest is held by others.

HDFC Standard Life believes that establishing a strong and ethical foundation

is an essential prerequisite for long-term sustainable growth. To ensure this, we

have concentrated our focus on expansion of branch network, organizing an

efficient and well trained sales force, and setting up appropriate systems and

processes with optimum use of technology. As all these areas form the basic

infrastructure for establishing the highest possible customer service standards.

Our core values are drilled down to all levels of employees, as these are

inviolable. We continue to promote high integrity in business practices and shun

short cuts and unethical practices, as we wish to be perceived as an institution

with high moral standing. Since our inception in 2000, when the Indian insurance

space was opened for private participation, we have consistently focused on

setting benchmarks in all aspect on insurance business. Being the first private

player to be registered with the IRDA and the first to issue a policy on December

12, 2000, our differentiators are:

Present Status of the Company:

Highlights of Financial Year 2008-09 ending March 31, 2009:

Total Premium Income is up by 15% at Rs. 5564.69 crores as against Rs.

4858.56 crores in FY2007-08.

Renewal premium collected increased to Rs. 2913.58 crores from Rs.

2173.19 crores in the previous year, registering a growth of 34%.

Effective Premium Income (EPI) in respect of retail business increased by

5%, growing from Rs 2,425 crores in 2007-08 to 2,552 crores in 2008-09.

Alternate Channels, including banc assurance, contributed about 45% to

the Effective Premium Income (EPI).

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A well balanced product portfolio with pension comprising over 40%

children plans around 25% and the remaining constituting protection and

savings plans.

Total assets under management increased to Rs. 10,595 crores,

registering a growth of 24% over FY2007-08.

Assets under management for the Group business have increased to Rs.

1075 crores, registering a growth of 12% over FY2007-08.

Company products and services are now available through a network of

595 offices serving over 700 cities and towns across the country. This is

further complemented by corporate agency relationships with public,

private and cooperative banks.

Strength of Financial Consultants reported year-on-year growth of 43% to

over 2, 07,000 in FY2008-09 compared to 1, 45,000 last financial years.

The sum assured in-force for 2008-09 was Rs. 57,158 crores as

compared to Rs. 45,743 crores for the previous year.

The company has received accreditation from the Insurance Regulatory

and Development Authority (IRDA) for 149 training centers housed in its

branches.

To meet the demands arising from the company’s rapid growth, the

promoters contributed an additional Rs. 525 crores of equity to take the

paid-up share capital as on March 2009 to Rs. 1796 crores.

Vision & Values:

Vision:

“The most successful and admired life insurance company, which mean

that we are the most trusted company, the easiest to deal with, offer the best

value for money, and set the standards in the industry.”

“The most obvious choice for all”

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Values:

Values that we observe while we work:

Integrity

Innovation

Customer centric

People Care “One for all and all for one”

Team work

Joy and Simplicity

Awards & Accolades:

Awards received in 2008:

Received 2008 CIO Bold 100 and CIO Security Awards in Sept, 2008.

Received PCQuest Best IT Implementation Award 2008 in May, 2008.

Silver Abby at Goafest 2008 in March, 2008.

Unit Linked Savings Plan Tops Mint Best TV Ads Survey in March, 2008.

Deepak M Satwalekar Awarded QIMPRO Gold Standard Award 2007 in

Feb, 2008.

Sar Utha Ke Jiyo Among India’s 60 Glorious Advertising Moments in Jan,

2008.

Other rewards and honors:

“Best New Insurer” Award from Outlook Money – 2003.

“Most Respected Private Insurance Company” Award from Business

World – 2004.

“Best New Insurer” Award from Outlook Money – 2006.

First Private Life Insurance Co. to get license from IRDA.

Associate Companies:

HDFC Limited

HDFC Bank

HDFC Mutual Fund

HDFC Sales

HDFC Realty

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Other Companies:

HDFC Trustee Company Ltd.

GRUH Finance Ltd.

HDFC Developers Ltd.

HDFC Property Ventures Ltd.

HDFC Ventures Trustee Company Ltd.

HDFC Investments Ltd.

HDFC Holdings Ltd.

Credit Information Bureau (India) Ltd

HDFC Securities

Brief Introduction to associate companies:

HDFC Limited:

HDFC is abbreviation of Housing Development Finance Corporation Ltd.

It is a unique example of a housing finance company.

It is viewed as an innovative institution and a market leader in the housing

finance sector in India.

HDFC’s executives have undertaken consultancy assignments related to

housing finance and urban development on behalf of multilateral agencies all

over the world.

At the national level, HDFC executives have played a key role in formulating

national housing policies and strategies.

HDFC Bank: HDFC Bank was incorporated in August 1994, and, currently has a

nationwide network of 1412 Branches and 3295 ATM's in 528 Indian towns and

cities.

Its single-minded focus on product quality and service excellence

Business declared the ‘Best Bank 2008’.

The bank won the ‘Nasscom CNBC TV 18 IT User Award 2008’ in banking

sector.

HDFC Bank chosen as one of the Asia Pacific’s best 50 companies by

Forrbes magazines.

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HDFC Mutual Fund:

HDFC Asset Management Company Limited (AMC):

HDFC Asset Management Company Ltd (AMC) was incorporated under

the Companies Act, 1956, on December 10, 1999, and was approved to act as

an Asset Management Company for the HDFC Mutual Fund by SEBI vide its

letter dated July 3,2000.

The registered office of the AMC is situated at Ramon House, 3rd Floor,

H.T. Parekh Marg, 169, Backbay Reclamation, Churchgate, Mumbai 400020.

In terms of the Investment Management Agreement, the Trustee has

appointed the HDFC Asset Management Company Limited to manage the

Mutual Fund. The paid up capital of the AMC is Rs. 25.161 crore.

The AMC is managing 24 open-ended schemes of the Mutual Fund like

HDFC Growth Fund (HGF), HDFC Balanced Fund (HBF), HDFC Income

Fund (HIF), HDFC Liquid Fund (HLF), HDFC Long Term Advantage etc.

The AMC is also managing 13 closed ended Schemes of the HDFC Mutual

Fund viz. HDFC Long Term Equity Fund, HDFC Mid-Cap Opportunities

Fund, HDFC Infrastructure Fund etc.

Lipper Fund Awards 2008 :

HDFC Equity Fund - Growth has been awarded the 'Best Fund over Ten

Years' in the 'Equity India Category' at the Lipper Fund Awards 2008 (form

amongst 23 schemes). It was awarded the Best Fund over ten years in 2006 and

2007 as well. 2008 makes it three in a row.

ICRA Mutual Fund Awards – 2008 :

HDFC MF Monthly Income Plan - Long Term Plan - Ranked a Seven Star

Fund and has been awarded the Gold Award for "Best Performance" in the

category of "Open Ended Marginal Equity" for the three year period ending

December 31, 2007 (from amongst 27 schemes).

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HDFC Sales:

HDFC Sales is a wholly owned subsidiary of HDFC Ltd. The company has

been floated as a distribution arm of HDFC with an objective of offering

doorstep service to prospective clients of HDFC group.

HDFC Sales offers financial management solutions to individuals

encompassing among other products Home Loans, Life Insurance, Mutual

Funds, Fixed Deposits and property Solutions.

Home Loans: HDFC Sales is present in over 100 locations across the

country with 55 offices and over 1750 employees.

Financial Management: HDFC Sales offers financial management solutions

in 9 cities and is continuously expanding its reach. HDFC Sales employs

sales persons across all spectrums of financial management enabling them

to meet a range of financial needs.

HDFC Realty:

HDFC Realty is a wholly owned subsidiary of HDFC. It assisted individuals in

acquiring homes valued at 5000 million rupees.

HDFC is a pioneer housing finance institution in India and with over 30 years

in operations has provided finance to over a million families in India.

It is a team of real estate professionals facilitating Buying, Selling or Leasing

of Residential / Commercial property.

HDFC Realty provides personalized attention to the individuals and corporate

in their process of identifying properties. From understanding the requirement

to organizing the site visits to completion of transaction, the company makes

every effort to make the process of acquiring a property, hassle free and

convenient.

Presently its services are available in Mumbai, Navi Mumbai, Pune,

Bangalore, Delhi / NCR, Kolkata, Kochi & Hyderabad.

HDFC ERGO General Insurance:

HDFC ERGO General Insurance Company Limited is a 74:26 joint venture

between HDFC Limited, India’s premier Housing Finance Institution & ERGO

International AG, the primary insurance entity of Munich Re Group

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HDFC ERGO focuses on providing the “Right Insurance Solution” for all.

It offers its customers complete range of general insurance products ranging

from Motor, Health, Travel, Home and Personal Accident in the retail space

and customized products like Property, Marine and Liability Insurance in the

corporate space.

It has been expanding its presence across the country and is today present

across 46 cities with 52 branch offices with an employee base of over 650

professionals.

1.5 FUNCTIONAL DEPARTMENTS OF THE ORGANIZATION:

1. Human resource department:

The HR department performs the role of recruiting the efficient employees

and financial consultants for the company. It also takes care of their appraisal to

track their performance and contribution to the company. It gets the resume of

applicants and processes it to check for its eligibility criteria, after that put that

resume for the further processing of selection.

2. Marketing department:

Marketing department takes care of the marketing of all the products of

the company. It helps in the increase of the business. It plays the major role in

making the people aware of their product. It concentrates on making the

strategies of how to increase the sales of the products. How they can segment

the market to tap out its maximum potential profits. It also works on sales

promotion to increase the sales of company.

3. Sales department:

Controlling the sales force that brings the business to the company.

Maintain the regular flow of information about the product. These are sales

manager only who see after the acquiring and maintaining their agents.

The sales manager goes to different places and acquires the sales agents who

are IRDA certified.

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4. Finance department:

This department keeps the proper track record of all the transactions

taking place. It maintains the record of all the insurance policies being issued and

their premium payments.

Organization structure:

CDM – Channel Development Manager BDM – Business Development Manager

SDM – Sales Development Manager

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Chairman

MD

Retail Marketing MMMarkeMMarke

Alternative Channel Operation Channel Human Resource

Regional Manager

Zonal Manager

Territory Manager

Branch Manager

Asst. B.M.

BDM

SDM

Territory Manager

Branch Manager

CDM

Team Manager

Operation Manager

HR Manager

Recruitment Consultant

Financial Consultant

Project Trainee


Company structure:

Structure of the my company HDFC standard life Insurance, BTM Branch

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Branch Manager CDM

Recruitment Consultant

Project TraineeBDM

SDM

Financial Consultant

Area Manager


Different Products of HDFC standard life:

S. No.

Plans/ Products HDFC SLIC

1 Children Plans HDFC Children's Plan HDFC Unit Linked Young Star II HDFC Unit Linked Young Star Plus II HDFC Unit Linked Young Star Champion

2 Health Plans HDFC Critical Care Plan HDFC Surgi Care Plan

3 Retirement/ Pension Plans

HDFC Personal Pension Plan HDFC Unit Linked Pension II HDFC Unit Linked Pension Maximiser II HDFC Immediate Annuity

4 Savings & Investment Plans

HDFC Unit Linked Endowment Plus II HDFC SimpliLife HDFC Unit Linked Endowment II HDFC Unit Linked Enhanced Life

Protection II HDFC Unit Linked Wealth Maximiser Plus HDFC Unit Linked Wealth Multiplier HDFC Unit Linked Endowment Winner HDFC Endowment Assurance Plan HDFC Money Back Plan HDFC Single Premium Whole of Life

Insurance Plan HDFC Assurance Plan HDFC Savings Assurance Plan

5 Rural Products HDFC Gramin Bima Mitra Yojana HDFC Bima Bachat Yojana

6 Social Products HDFC Development Insurance Plan

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http://hdfcinsurance.com/Products/ChildrensPlans/ChildrensPlans.aspx

http://hdfcinsurance.com/Products/Social/Dev.aspx

http://hdfcinsurance.com/Products/Rural/BimaBachat.aspx

http://hdfcinsurance.com/Products/Rural/GaraminBima.aspx

http://hdfcinsurance.com/Products/SavingsPlans/SavingsAssurance.aspx

http://hdfcinsurance.com/Products/SavingsPlans/Assurance.aspx

http://hdfcinsurance.com/Products/SavingsPlans/WholeLife.aspx

http://hdfcinsurance.com/Products/SavingsPlans/WholeLife.aspx

http://hdfcinsurance.com/Products/SavingsPlans/MoneyBack.aspx

http://hdfcinsurance.com/Products/SavingsPlans/EndowmentAssurance.aspx

http://hdfcinsurance.com/Products/SavingsPlans/EndowmentWinner.aspx

http://hdfcinsurance.com/Products/SavingsPlans/WealthMultipler.aspx

http://hdfcinsurance.com/Products/SavingsPlans/WealthMaximizer.aspx

http://hdfcinsurance.com/Products/SavingsPlans/UnitLinkedEnhancedLifeProtectionII.aspx

http://hdfcinsurance.com/Products/SavingsPlans/UnitLinkedEnhancedLifeProtectionII.aspx

http://hdfcinsurance.com/Products/SavingsPlans/UnitLinkedEndowmentII.aspx

http://hdfcinsurance.com/Products/SavingsPlans/SimpleLife.aspx

http://hdfcinsurance.com/Products/SavingsPlans/UnitLinkedEndowmentPlusII.aspx

http://hdfcinsurance.com/Products/PensionPlans/Annuity.aspx

http://hdfcinsurance.com/Products/PensionPlans/PensionMaximiser.aspx

http://hdfcinsurance.com/Products/PensionPlans/Pension2.aspx

http://hdfcinsurance.com/Products/PensionPlans/Pension.aspx

http://hdfcinsurance.com/Products/HealthPlans/SurgiCare.aspx

http://hdfcinsurance.com/Products/HealthPlans/CriticalCare.aspx

http://hdfcinsurance.com/Products/ChildrensPlans/YoungstarChampion.aspx

http://hdfcinsurance.com/Products/ChildrensPlans/youngstar2Plus.aspx

http://hdfcinsurance.com/Products/ChildrensPlans/youngstar2.aspx


2. WORK SCHEDULE Work in our project was mainly divided into four phases

2.1 PHASE A: In this phase we were told to generate leads from our natural market. I collected names, phone number of most prospective clients. Then I divided these data into different parts based on the age of the client. This helped me doing need analysis of the client .I also collected some references from those clients .Then I created database in which I recorded all the relevant information about the clients.

2.2 PHASE B: TRAINING

IRDA TRAINING: There was a compulsory 50 hours training at HDFC SLIC

(BTM 1st Stage). In this training we were taught the following topics:

Basics of insurance

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Premiums and bonuses

Life insurance products

Underwriting, insurance document, policy conditions, claims

Linked life insurance products

PRODUCT TRAINING: A product training of 3 days was given at HDFC

Standard Life Jayanagar branch following topics were discussed:

About HDFC Standard Life

Other investments instrument

Selling skills

Stock market

Various insurance products offered by HDFC Standard Life.

2.3 PHASE C: SELLING OF INSURANCE PRODUCT HDFC

STANDARD LIFE

“Success is focusing the full power of all you are on what you have a burning desire to achieve”.

- Wilfred A. Peterson

“Patient, Perseverance, Persistent, Professional”

These are the 4Ps which acts as the key words in unlocking any sales figure

Life Insurance selling is unique because of the following 3 star contradictions:

Everybody knows that he/she will die

Nobody feels that he/she will die

Everybody needs life insurance

Nobody wants life insurance

Life Insurance is generally sold

Life insurance is seldom bought.

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Flow chart: sales process

DATA BASE COLLECTION

CALLING CUSTOMER

APPOINTMENT

CUSTOMER PROFILING

NEED ANALYSIS

ASSIGNING BEST PRODUCTS

FOLLOW UP

CLOSING THE DEAL

DOCUMENTATION

ACTUAL SALES

REFERALS

AFTER SALE FOLLOW UP

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Database in my case comprised of mainly:

References from my own natural market

Secondary references

Due to the shortage of time I preferred not to use cold calling as an option, since

the conversion ratio is known to be extremely low.

Customer profiling helped me in exploring the need & requirement of each

individual by having 100 forms as customer database. While profiling the

customers we emphasize on the following parameters:

Age

Occupation

Annual income

Marital status

Property (Whether owned or rented)

The Process that I followed in the company for pitching the product to the

customer is as follows:

The questions which I would normally ask are:

1. Do you make an investment?

2. Are you looking for investment i.e. related to tax benefit as well as

giving high returns?

3. If yes, then could we fix an appointment so that we could make you

aware of the various products that HDFC Standard Life has to offer?

After fixing an appointment we would visit the prospective customers and explain

them about the product which would suite their requirements. Apart from this

while pitching a Unit Linked Insurance Plan we would show them a chart for the

comparison of various products which is as follows:

WE ARE HERE TO HELP YOU OUT

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Three Most Important Questions:

Where Do I Invest?

Will My Money Grow?

Will I Get Tax Benefit?

Investment Options Safety Growth Liquidity Tax Benefits

RBI Bonds High Low Low Yes

Fixed Deposits High Low Moderate No

NSC High Low Moderate Yes *

Post Office Savings High Moderate Moderate No

Mutual Fund Moderate High Moderate Yes

Share Market Low High High No

Other ULIPs’ Moderate High Moderate YesHDFC SL’s ULIP High # High $ Moderate @ Yes^

* Investment is exempted u/s 80C. Accrued interest is taxable.

# Your Capital is guaranteed.

$ Annualized return till date is 30%

@ 3 year Lock-in period for getting Tax-benefits

^ Investment is exempted u/s 80C. Maturity is exempted u/s 10 (10D).

Need analysis During need analysis we found as we move through different

stages in life, our financial priorities changes. For example, when we are young

we wish to invest more into investment products. As we grow older and as

responsibilities increases, we want to set aside more amount for insurance, to

protect our family against uncertainties. Therefore, it is very important to

understand the need of different group of customers and provide them with an

appropriate solution. In this phase we are trying to explore the needs of the

customer & match them with the best suitable product. For the need analysis

portion we had been given the Need Analyzer form by the company through

which we could actually get the various needs of the customer. Depending upon

the need we approached the customer with the specific product.

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People say that insurance selling is the most difficult in terms of selling

products. This phase is most important because it will decide the company’s

profitability & also the best way of testing the skills of a sales person.

Selling consists of three sub-phases in it. These are:

Information about the product

Convincing the customer

Finally closing the deal.

During my internship at HDFC SLIC I met around 100 people for selling in

which I converted four client and 2 are in process of documentation the company

in the month of November.

2.4 LEARNING

LEARNINGS FROM TRAININGS

From IRDA Training as well as product training I taught a lot about

insurance, insurance industry, different types of product s its features and

benefits, different distribution channels.

LESSONS & LEARNING’S FROM THE SELLING EXPERIENCE

Be patient : In insurance industry conversion ratio is very low .if you meet

100 people there may be a chance that you may not be able to convert even

a single customer .but by meeting 100 people you will face100 different

situation which will enhance your skill of selling as well as need analysis.

Lastly, remember those 100 people can give you 1000 references.

Don’t sell like you buy: It is a faulty assumption that your prospects respond

similarly to the type of sales approach that works for you...

Treat Your Customers like Royalty to Gain Loyalty: Remember the rule

20% of the loyal customer gives you 80% of your total business.

Understand the difference between features and benefits of the product

Good sales people create and demonstrate strong value propositions

for why their clients will want to engage their services.

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The best way to improve your win ratio is to stop bidding on stuff you

can’t win

Maintain ethics, service, and hard work towards the customer to build a

long lasting relationship to generate repeat sales.

Driving demand and building a solid, predictable sales pipeline is at the

very core of every sales effort.

The most successful sales professionals win more business by working

smart and carefully assessing the viability of each opportunity at the

beginning of the sales campaign.

Value — perceived or real, personal or business — is the only thing that

separates one product or alternative from another

Sales are a numbers game, but in insurance sector the quality of client

from whom the sales is being generated do matter.

LESSIONS FROM DATA COLLECTION AND DATA ANALYSIS

For data collection we went to various people which helped us to get different

views of them about insurance industry.

Data analysis helped us to gain confidence as this was our first project based on

primary data.

Data analysis helped us to know which techniques to be used.

MY ACHIEVEMENT: I sold two policies during October, November and four

policies are in the Process.

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3. PURPOSE OF THE PROJECT

3.1 INTRODUCTION

3.2 AIM

To study the marketing and sales strategies of HDFC SLIC

3.3 OBJECTIVE OF THE PROJECT

The new marketing strategies to be taken to get closer to its customer.

To know about sales strategies of HDFC SLIC.

To create positive feelings in the minds of consumer.

To increase awareness of the range of the product and services.

To have a direct feedback from its customers.

To know how people perceive HDFC SLIC as a brand.

To make a Comparative analysis of major players.

To know how to reach the unexplored market.

To sell insurance policies and generate revenue for the company.

3.4 SCOPE OF THE PROJECT

To know various new selling techniques of insurance.

To study various other financial products.

To know various marketing strategies of life insurance products.

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To make strategy in a competitive environment.

3.5 LIMITATIONS Our studies are mainly confined to Bangalore only so there may be

irregularity in survey of consumer behavior due to geographical factor.

Since our data consist of primary data and some people are reluctant to

give actual information so there may be some error in data analysis.

Our sample consists of 100 people only so there may be error in data

analysis.

Time constraint due to a wide geographical area that I had to travel to

customer’s premise where he wanted to meet at a given time.

We have collected secondary data mainly through internet, newspaper,

magazines etc. So we are assuming those a data to be authentic as

those data may not be authentic.

Introducing me as a financial consultant and explaining them need of

taking a life insurance is difficult many a times.

It was very difficult to know all the required information related to our

project as executives and agents did not have that much time.

There could be some errors in sample size, data collection and data

interpretation.

Historical secondary data.

3.6 METHODOLOGY

SAMPLING DESIGN

Due to time and cost limitations we took sample of 100 people only. As it was

convenient to collect data through questionnaire\in small sample.

QUESTIONNAIRE DESIGN

The final questionnaire evolved after many stages of reformulating and

restructuring. A pilot test was conducted with a sample of 30 respondents

prior to conducting the actual interviews. This was done to mainly to test the

language of the questionnaire and know whether the respondents interpreted

the question as intended. Errors and Confusing words were modified and

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certain explanations were added. More questions were added to get the

responses about the required variables.

DATA COLLECTION

Primary Data

Taking informal interview of agents: We took information from the agents

of various companies to know their views about the company. We took this

interview because we think that agents play very important role.

Data related to analysis were collected by questionnaire.

Secondary Data

Secondary data where mainly collected from internet, journals etc.

DATA TABULATION: After data collection data were tabulated in SPSS.

DATA ANALYSIS: Data analysis were mainly done through three statistical

techniques.

1. Factor Analysis2. Regression Analysis3. Cluster Analysis

LITERATURE SURVEY

IC – 33

This book is issued by the IRDA (Insurance Regulatory and Development

Authority of India). It contains all the minute details about insurance, its parties,

contract and various types of product.

Insurance Rules & Regulation

An in depth study of an insurance contract and parties to the contract. It also

speaks in detail about the rules and regulations of the contract and the

procedures that are to be undertaken at the time of death, maturity and claims.

Journals by IRDA, ICMR.

Books On Services Marketing

3.7 ANALYSIS

Analysis of Graphs as per Questionnaire:

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AGE GROUP

Among the responses we took 11% were of age group 18-25, 31% of age 26-

33,34% of age 34-45,20% of age 46-60 ,4% of age 60 and above.

PREFERRED INSURANCE COMPANY

Among all the responses we took 62% preferred pvt .insurance Company

and 38%prefered LIC.

REASON FOR INVESTING MONEY IN INSURANCE

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Among the responses we took 39% of the people spend for tax purpose,

21%for life risk cover, 23% for future security, and 17% for pension. It

implies that tax is the major factor for investing in insurance; life risk is the

secondary objective.

COMPARISON OF LIC AND PVT INSURANCE COMPANIES ON GIVEN

PARAMETERS

IMPORTANT FACTORS WHILE INVESTING

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Parameters Strongly

agree

Agree Neutral Disagree strongly

disagree

Brand 46 31 11 12 0

Trust 16 66 18 0 0

Safety 62 38 0 0 0

Service 51 32 17 0 0

Liquidity 21 68 11 0 0

Based on survey we found that 62 people strongly agree that safety of

money is the important factor while investing, 46 people strongly agree

that brand is the important factor while investing.

SATISFACTION WITH PRIVATE INSURANCE COMPANIES

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Based on survey we found that 10% strongly agree, 67% agree, 14 % are

neutral, 9% disagree, and 0% strongly disagree with the service of the

company.

AWARENESS OF HDFC STANDARD LIFE INSURANCE

Based on the survey we found that 15 %strongly agree, 35 %agree, 26 %

are neutral, 19%disagree, and 5% strongly disagree about the awareness

of the HDFC Standard Life insurance.

Satisfied with Electronic clearing system offered by HDFC Standard Life Insurance:

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Level No. of Respondents Percentage

Yes 73 73%

No 27 27%

Total 100 100%

The above graph shows that 73% of people are satisfied with ECS facility

while only 27% are not satisfied

Respondents for clarify any query to whom you consult first

Services No. of Respondents Percentage

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Adviser 39 39%

company website 16 16%

customer care 28 28%

branch manager 17 17%

Total 100 100%

The above graph shows that 39% people believes in Adviser, 28% of

people believes Customer care while company website and branch

Manager People clarify any query first respectively 16% and 17%.

SOME STATISTICS OF FY2009

MARKET SHARE (ASSET UNDER MANAGEMENT)

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From the figure we can see that LIC is market leader in market share (asset

under management) with 63.64%, followed by ICICI Prudential, Bajaj Allianz

but still there is large difference between first and second. LIC has approx

8 times market share than ICICI Prudential. HDFC Standard Life market

share fell to 2.88% from 4 %last year.

LIC policy sold fell down by 1.6%.

There was a growth of 23.31% (92,988 crores) in new premium

collected with LIC 59,182 crores and others by 33,806 crores.

Bharati axa showed a phenomenal growth of 1355.7% (premium

collected). It is due to base effect.

Birla Sun Life showed a growth 122.61% (premium collected).

HDFC Standard Life grew by 63% (premium collected).

ICICI Prudential grew by 68% (premium collected).

Key Changes – Regulations

FY 2008-09

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Changes in unit linked product guidelines – premium reduction capped at 25%.

Investment norms tightened (Process and risk management related). Reduction in solvency norms. Change in service tax from 12% to 10%. Insurers instructed to separate out assets backing the required Solvency. Margin, from the other shareholder assets and hold it in a separate

account. New requirement to disclose payouts to non individual distributors.

FY 2009-10 PFRDA launches pension solutions for unorganized sector. Committee set up for review of multi-ties for banking companies. Corporate governance framework in process. Changes in investment and accounting regulations likely. Disclosure & EV framework. Circular for cap on ULIP charges.

3.8 MARKETING STRATEGIES OF HDFC SLIC

Strategy of private insurance players can be divided into two main parts:

1) Target marketing strategy

2) Marketing strategy according to 7 P’s (Marketing mix of services

marketing)

3.8.1 TARGET MARKETING STRATEGY:

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Since every life has a value so insurance is required for every person from a

child to an old person. Therefore insurance companies have divided the markets

according to following divisions:

I. Stage of life cycle

II. Regions

III. Occupation

IV. Gender

V. Psychographic

STAGES OF LIFE CYCLE: Insurance companies have divided the market into

various segments:

Old people: As most of the families in India are becoming nuclear family

therefore the old people are becoming insecure about their future. To solve

this problem insurance companies are targeting old people by providing

pension plans and by various promotion tools. HDFC standard life has a

punch line” RESPECT YOURSELF” and “SAR UTHA KE JIO” .This gives a

feeling of respect and confidence to old people. People invest in pension

plans to make their future secure and can lead a respectful life. Private

companies have more market share in pension plans than LIC.ICICI

PRUDENTIAL is the top seller of pension plans in India. Products offered by

HDFC standard life for old people are Unit Linked Pension Plan (+, +2),

Pension Plan (Traditional).

Young people: young people have now become very selective .therefore all

the insurance companies are providing sufficient choices. Companies provide

different products which cater the needs of insurance as well as security.

Companies are also providing various fund options according to risk taking

behavior. Like in ULIP for High risk taking people they have growth fund

option and for risk adverse people they have balanced fund where one can

choose ratio of debt and equity. Products offered by HDFC Standard Life for

young people are endowment plans (traditional, unit linked), money back

plans etc.

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Children: For children below 18 years all the companies are having policies

that help in securing child’s future. Every company has policies that have

many benefits that help in saving money for a child’s education, marriage,

health etc.

REGIONS: In these companies has divided India into three divisions:

Urban: Now as in urban areas lifestyles of people are changing very rapidly,

companies are coming with various policies which suits their needs and

wants. Companies are also trying to give best of their services .all the private

companies started their operation from urban areas only. Urban areas helps

in getting high premium per person .this helps in increase in per capita

premium.

Rural areas: Rural areas are the most untapped market in India. As 70% of

the whole population live in rural areas, therefore every company is trying to

tap this market by offering low premiums and other additional benefits. Many

companies have special policies designed for rural areas only.

Semi urban areas: As urban market is leading towards maturity therefore

semi urban areas are next destination for these insurance companies. Semi

urban areas are becoming industrial hub of country .As in these areas

competition is not tough therefore it is very easy for private companies to tap

these markets.

OCCUPATION: In this segment companies has divided it into various divisions:

Businessman/self employed professionals: Companies target this

segment by offering them pension plans, term plans .As these people don’t

have any fixed income and they more prone to risks therefore companies

are offering these products to make them secure for their present as well as

future.

Service: These people have fixed income and therefore they want to save

their money for their future as well as better returns. Many ULIP plans are

provided which provide both returns as well investments. Private Service

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people also don’t have any pension therefore pension plans are offered to

them.

Gender: In this there are two divisions

Source (IRDA)

Female: As among insured people only 14% of the females are insured

therefore there are large potential in this segments. As more number of

females are becoming working women .Therefore insurance is must for

them .companies are taking emotional route through various advertising

techniques to attract these segments. Some companies are coming with

various kinds of policies which are specially designed for these segments.

Males: These segments accounts for more than 80% of working classes. As

they are more than 90% contributor of premium .Therefore these classes are

targeted the most by the companies .Still 80% of the male population in India

is uninsured ,therefore there immense opportunity in this segment.

PSHYCHOGRAPHIC COMPONENT: People in India have different opinion

about the insurance .Based on these opinion they have divided it into mainly two

segments:

Security: Those people who see insurance as a security (basic need) for

them companies are having traditional policies such as term plan,

endowment plan, pension plans etc.

Investment :As in India most of the people see insurance as a product of

investment rather than security .Companies have come with ULIPS which

give high returns to customer .In this customers are free to choose the

allocations of money in debt and equity. Risk adverse people can keep

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their more money in debt based fund. Risk loving people can keep their

more money in equity based fund.

3.8.2 MARKETING STRATEGIES ACCORDING TO 7 P’s OF SERVICES

MARKETING

PRODUCTS

Innovative products: After liberalization every companies are coming with

innovative products .these products are designed according to needs of the

customers to facilitate need based selling. These policies have different features

like transparency, flexibility, freedom to choose fund option, switching between

funds etc.

The different products type offered by various insurance companies are-

Unit Linked Insurance Plans:

This is a plan which runs on market and here the risk is high but at the same time

return is also high. There is a perception in the minds of investing public that the

return from the traditional Life insurance products is not attractive and therefore a

demand arose for unit linked policies. Life Insurance companies therefore design

unit linked policies. A small part of the contribution is utilised for providing life

cover and the balance is invested in units (shares).

*Source –Outlook Money (March 2009)

Term Plan:

Term Plan is a pure risk product that aims to cover your life at a nominal cost.

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You may want to take this plan to cover your outstanding debts like a mortgage, a

home loan etc. Since this is a pure risk cover product, there are no maturity

benefits payables on survival. This is a non-participating plan.

Endowment Plan:

Endowment Plan is a protection plan that covers your life and at the same time

ensures that your money does not lie idle. It invests a portion of your premium in

financial instruments and ensures a considerable growth in savings. This is a

participating plan (with profits).

Money Back Plan:

Money Back Plan not only covers your life, it also assures you a certain percent

of the sum assured as cash payment at regular intervals of time. It is a savings

plan with the added advantage of life cover and regular cash inflow. This plan is

ideal for planning special moments like a wedding, your child's education or

purchase of an asset etc. This is a participating plan (with profits).

Retirement Plan:

Income Plan is a savings plan designed to meet your post-retirement needs. It is

a plan that gives you the choice to remain independent even after retirement.

PRICE

The main factor that affects the price of the products is the cost that they incur in

providing their best services to the customers. All the companies are trying to cut

the cost by adapting new technology etc. All the companies are trying to cut the

cost and transfer this benefit to the customer .As all the private insurance

companies are in the introduction stage .Therefore their cost of promotion is high

in this stage as they have to make awareness about their products and build

strong brand image. Despite of that some private companies charge fewer

premiums than LIC. The companies which are charging higher premium are

justifying it by giving better services. Companies have various pricing strategy

based on the factors such as age, sex, occupation, family history, health,

habits, hobby, riders etc.

Annual premium for 5 years (TERM PLAN) for sum assured 1,000,000

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Source: money outlook

If we will look at the graph we can easily see that premium charged by HDFC is

minimum in all the cases except for age 25 and 30.hdfcslic keeps its premium for

higher age group(>30) because they are the segment that require the term plan

most.

PLACE: This mainly deals with various distribution channels .private companies

now adapting mainly four ways of distribution

Traditional agencies: This is the oldest form of distribution. Private companies

get most of the business through this channel .HDFC SLIC has 145000 certified

agents, ICICI Prudential has 291000 agents. This is most effective channel in

India because by this a customer can get more information about any product,

features .This channel is more important in rural areas where there is no banks

etc.

Bancassurance: The Bancassurance is the distribution of insurance products

through the bank's distribution channels. It is a phenomenon where in insurance

products are offered through the distribution channels of the banking services

along with a complete range of banking & investment products & services. In

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simple term we can say Bancassurance tries to exploit synergies between both

the insurance companies & banks. This is one of the most effective distribution

channels where one company uses the distribution channels of banks to

distribute policies. This is beneficial for all the three parties, customers, banks

and insurance company. HDFC standard life has HDFC, HDFC Bank, Union

Bank of India as Bancassurance partners.

Brokers: These are broking firms which sells all the financial products in India. In

broker firms one can find policy of different companies under one roof. Some of

the broker firms in India are India Infoline, Kotak Securities, Anand Rathi,

Religare, India Bulls etc.

Direct Marketing: This is the most recent distribution channel that all the private

companies have adapted .This is best way of selling those policies which have

very few features .Direct selling is mainly done through call centre .Now

companies are also adapting online direct selling through internet. This method

of selling is very useful for selling those product in which there is very low

features .It helps in preventing mis –selling as customer get all the information

directly from the company .

From the figure above we can see that tied agents source the maximum amount

of business, followed by corporate agents and bancassurance.After two or three

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years this ratio is going to change as bancaassurance and direct marketing are

becoming popular.

PROMOTION

As all the insurance companies are trying to build awareness as well as brand

image .therefore all companies are spending heavily on advertising.

From the figure we can see that around 80% of the total expenditure in insurance

industry comes from life insurance industry.

From the above figure we can see that advertising index has increased 138%

from 2004.yhat means private companies are spending heavily on advertising.

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Among private and public companies 78% expenditure on advertising is done by

private companies.Companies are taking various mode of distribution such as

print media ,telivision ,radio,internet ,banner etc.

PEOPLE

As insurance is a service industry so people are the most important asset .All the

private companies are working in this segment in the following manner:

Employment: Insurance industry is one of the largest employment

providers in India .Private companies are providing jobs to a large number

of people .These jobs are from top managerial to clerk jobs. It is also

helping in eliminating employment in India.

Training :All the private companies give training to employees .This

training helps in development of skills such as selling ,product knowledge .

It also helps in confidence development.

Awards and recognition: All the private companies give awards and

recognition to top performer .these awards includes cash awards, medals,

tours, gifts etc.

Incentives and commission: Incentives and commission given by private

companies are highest in any industry in India.

Despite of the above reason working in Insurance industry is not preferred by

people in India. 68% of the people do not prefer to work in Insurance industry.

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PHYSICAL EVIDENCE: This include following elements:

Physical location: All the private companies are opening their offices all

over India .Companies are also opening their offices in rural areas. These

offices are generally present those places where more customer can

come. HDFC Standard Life has 726 offices in India.

Services lay out and ambience: All the private companies have better

service layout, ambience than LIC. Maintenance of services and

cleanliness are very critical factors to attract customers.

Name tags of key service employee: All the key employee service

employees are being provided with name tags .So it is easy to recognize

them.

All private companies have a formal way of greeting customers.

There is prompt telephone handling.

There are signages within the service location, so that customer can

know which counter approach.

Comfortable waiting areas are provided for customers.

PROCESS

These are the flow of activities through which the insurance company provide

services to their customer .Every company has standardized process of providing

services .These process are simple .Employees are trained to deal with various

situation that might arise while delivering services .Companies are using various

new technology to develop very good customer relationship management .

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3.8.3 SPECIAL MARKETING STRATEGIES OF HDFC Standard life

Very Tough Underwriting Procedure: HDFC Standard life has very

tough underwriting procedure to avoid delay during claim settlement.

Transparency: HDFC Standard life is very transparent in disclosing

various charges to the customer.

Advertising: HDFC Standard life give best advertising by targeting two

segments simultaneously (old and women) .This award was awarded best

awards in insurance sector.

Lowest fund management charges and maximum switches facility :

HDFC Standard life charges lowest fund management charges and has

maximum switching option (24 switches)

Fastest claim settlement: HDFC Standard life was the first company to

give claims to people who died in Hyderabad explosion and Jaipur Bomb

Blast.

HDFC Standard life gives high focus on training.

HDFC Standard life has all ranges of products and maximum fund

option available.

Premium charged by HDFC Standard life is lowest in the industry.

CONCLUSION

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Private insurance industry in India has changed the scenario of insurance

industry in India by offering different products, new technology, better customer

services etc. This fact is justified by decreasing market share of LIC, and market

growth rate of insurance industry in India. Market penetration of insurance has

also increased significantly. Companies have reached rural areas to offer

insurance as well micro insurance. This will help in availing insurance to

everybody. Growth in insurance industry will also help in creating employment

and growth in GDP. Insurance companies should take various steps to create

awareness among the people of India. Because ignorance about the insurance is

the biggest challenge that the companies are facing today.

RECOMMENDATIONS

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Focus on Rural Areas: As rural areas are the large untapped market in India,

there is a huge market potential, private insurance companies have very small

presence in the rural market .Companies should open more offices in rural areas.

Company should also recruit financial consultant from rural areas to have large

penetration.

Avoid mis-selling: After arrival of ULIPS mis-selling has increased significantly.

Now most of the agents say to deposit money for first three years because three

years is the locking period and in the first three years agents get the more

commission.

Focus on human resources: In services industry human is the most important

asset .So, companies should focus more on HR activities like recruitment,

training etc .Because most of the mis-selling occur due to lack of knowledge.

Balance between ULIPS and Traditional Policies: All the companies should

maintain balance between ULIPS and traditional policies .As ULIPS give high

returns on bullish market but very low return in bearish market .As main objective

of insurance is security so company should avoid adverse situation.

Lowest premium should be reduced: In ULIPS lowest premium charged by

HDFC Standard Life is Rs 12000(annual) .This amount should be reduced to

make it affordable for all.

Special Policies for a particular segment such as woman, rural areas

should be designed to gain competitive advantage over others.

HDFC Standard Life should use infrastructure, distribution channel of

HDFC, HDFC Bank .This is justified by SBI Life Insurance which was the

fastest company to cross its break even by using infrastructure,

distribution channel of SBI.

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HDFC Project

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