Manu Shukla Reporticici Prudential Life Insurance Ltd[1].

7/27/2019 Manu Shukla Reporticici Prudential Life Insurance Ltd[1].

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TABLE OF CONTENTS

AcknowledgementsList of TablesSummary

INDUSTRY PROFILEInsurance industry – An Overview……………………………….. 2

Insurance Industry in India……………………………………….. 3

New Look of Insurance Industry………………………………….. 4

COMPANY PROFILE

Introduction………………………………………………………. 6

Vision……………………………………………………………... 6Core Values………………………………………………………. 7

Distribution……………………………………………………….. 8

Sub division of ICICI Group……………………………………… 8Organization Structure……………………………………………. 11

Board of Directors………………………………………………… 12

Organizational Chart………………………………………………. 13

PRODUCTS & SERVICES

Group Solutions…………………………………………………….. 16Group Term Assurance……………………………………………... 18

Gratuity and Superannuation……………………………………….. 23EDLI………………………………………………………………… 35

FINANCIAL ANALYSIS……………………………………………………………37

COMPETITIVE ANALYSIS……………………………………………………….. 41

INTRODUCTION……………………………………………………………………45

Need of the study………………………………………………... 45Objectives……………………………………………………….. 45

Methodology…………………………………………………….. 46

Problems Encountered……………………………………………47Limitations ……………………………………………………….48

FINDINGS……………………………………………………………………………50

SWOT…………………………………………………………………………………52



CONCLUSION………………………………………………………………………55

INDUSTRY PROFILE

2



INSURANCE INDUSTRY AN OVERVIEW

Insurance may be described as a social device to reduce or eliminate risk of

life and property. Under the plan of insurance, a large number of people

associate themselves by sharing risk, attached to individual. The risk, which

can be insured against include fire, the peril of sea, death, incident, &

burglary. Any risk contingent upon these may be insured against at a

premium commensurate with the risk involved.Insurance is actually a contract between 2 parties whereby one party called

insurer undertakes in exchange for a fixed sum called premium to pay the

other party happening of a certain event.

Insurance is a contract whereby, in return for the payment of premium by the

insured, the insurers pay the financial losses suffered by the insured as a

result of the occurrence of unforeseen events. With the help of insurance,

large number of people exposed to a similar risk makes contributions to a

common fund out of which the losses suffered by the unfortunate few, due toaccidental events, are made good.

This is the current scenario of the global Insurance Industry and now, let us

looks at the basic functions of insurance. While conceding that insurance is a

risk-transfer tool, corporate should be made to understand that it does not

suffice merely to transfer the risk but they have to participate in the effort of

loss prevention. New but they have to participate in the effort of loss

prevention. New techniques and technology have to be adopted from time to

time in order to improve performance and this has special significance to theorder to improve performance and this has special significance to the Indian

Insurance Industry. The Indian insurance industry has always suffered from

drawbacks like lack of proper understanding of the purpose of insurance,

lopsided growth etc. With the opening up of the industry, it is hoped that the

new entrants with their better channels would spread the real message of

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insurance, leading to a dynamic growth. Emphasis should be on finding new

technological avenues, although it has been observed world over that for

selling insurance, an eye-to-eye contact is essential. Internet can be used for

better servicing which would eventually, lead to business development. With

the entry of foreign companies into the insurance arena, a fresh life has been

inducted and there is a great deal of optimism in the air that the market

would automatically create a vibrant competition leading to the customer

being the ultimate winner.

INSURANCE INDUSTRY IN INDIA

The insurance sector in India has come a full circle from being an open

competitive. Market to nationalization and back to a liberalized market again.

Tracing the Developments in the Indian insurance sector reveals the 360

degree turn witnessed over period of almost two centuries.

Insurance was nationalized. First, the life insurance companies were

nationalized in 1956, and then the general insurance business was

nationalized in 1972. Only in 1999 private insurance companies have been

allowed back into the business of insurance with a maximum of 26% of

foreign holding. In what follows, we describe how and why of regulation and

deregulation. The entry of the State Bank of India with its proposal of banc

assurance brings a new dynamics in the game. We study the collective

experience of the other countries in Asia already deregulated their markets

and have allowed foreign companies to participate. If the experience of the

other countries is any guide, the dominance of the Life Insurance Corporation

is not going to disappear any time soon.

The Indian insurance market, with a population of over one billion, offers

tremendous opportunities and can easily sustain 100 insurers. The

development of the insurance sector will result in higher domestic savings

and investments, significant expansion of the capital market, enhanced

infrastructure financing and increased foreign capital inflow and employment.

The opening up of the Indian insurance sector has been hailed as a

groundbreaking move towards further liberalization of the Indian economy.

4



The size of the existing insurance market is growing at a rate of ten per cent

per year. The estimated potential of the Indian insurance market in terms of

premium was around Rs3, 44,000 crores (US$86 billion) in 1999. The Indian

players have tapped only ten per cent of the market share and the remaining

90 per cent of the market remains untapped.

The Indian Government has recently enacted the Insurance Regulatory

Development Authority Act 1999, which amends existing insurance laws

dating from 1938. The Act establishes an authority called the Insurance

Regulatory Development Authority, designed to regulate the insurance

sector.

THE INSURANCE INDUSTRY - WITH A NEW LOOK

Competition has well and truly set in the fast-growing insurance sector,

barely a year after the doors were opened for the re-entry of private players.

The new face of the Indian insurance industry is craving for attention.

Hoardings and billboards of the new joint venture private companies gaze at

you from everywhere. Advertisements in newspapers and on television,

insurance agents and direct mailers form part of the campaign vehicle. The

dozen-odd life and non-life companies in the private sector are fighting a

quiet but intense battle to make their presence felt to the Indian consumer.

Not to be undone, the public sector companies are trying to match the moves

of the private companies. They are shedding their old ways and donning a

sprightlier and market-friendly exterior to make sure that they do not lose the

advantage of a head start.

5



COMPANY PROFILE

6



Introduction

ICICI Prudential Life Insurance Company is a joint venture between ICICI

Bank, a premier financial powerhouse and prudential plc, a leading

international financial services group headquartered in the United Kingdom.

ICICI Prudential was amongst the first private sector insurance companies to

begin operations in December 2000 after receiving approval from Insurance

Regulatory Development Authority (IRDA).

ICICI Prudential's equity base stands at Rs. 9.25 billion with ICICI Bank and

Prudential plc holding 74% and 26% stake respectively. In the period April-

December 2004, the company garnered Rs 8.6 billion of new business

premium for a total sum assured of over Rs 73.6 billion and wrote nearly

345,000 policies. The company has a network of over 50,000 advisors; as

well as 7 bank assurance tie-ups. Today, ICICI Prudential has emerged as the

No. 1 private life insurer in the country, with a wide range of flexible products

that meet the needs of the Indian customer at every step in life.

Vision

To make ICICI Prudential the dominant Life and Pensions player built on trust

by world-class people and service. This we hope to achieve by:

Understanding the needs of customers and offering them superior products

and service

Leveraging technology to service customers quickly, efficiently and

conveniently

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Developing and implementing superior risk management and investment

strategies to offer sustainable and stable returns to our policyholders

Providing an enabling environment to foster growth and learning for our

employees

And above all, building transparency in all our dealings.

The success of the company will be founded in its unflinching commitment to

5 core values -- Integrity, Customer First, Boundary less, Ownership and

Passion. Each of the values describes what the company stands for, the

qualities of our people and the way we work. They do believe that they are on

the threshold of an exciting new opportunity, where we can play a significant

role in redefining and reshaping the sector.

CORE VALUES

The success of the company will be founded in its unflinching commitment to

5 core values –

Integrity

Customer First

Boundary less

Ownership

Passion.

Each of the values describe what the company stands for, the qualities of our

people and the way we work. We do believe that we are on the threshold of

an exciting new opportunity, where we can play a significant role in

redefining and reshaping the sector. Given the quality of our parentage and

the commitment of our team, there are no limits to our growth.

DISTRIBUTION

ICICI Prudential has one of the largest distribution networks amongst private

life insurers in India, having commenced operations in 74 cities and towns in

India. The company has seven banc assurance tie-ups, having agreements

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with ICICI Bank, Federal Bank, South Indian Bank, Bank of India, Lord Krishna

Bank and some co-operative banks, as well as over 150 corporate agents and

brokers. It has also tied up with NGOs, MFIs and corporate for the distribution

of rural policies and organizations like Dhan for distribution of Salaam

Zindagi, a policy for the socially and economically underprivileged sections of

society.

ICICI Prudential has recruited and trained over 60,000 insurance advisors to

interface with and advice customers. Further, it leverages its state-of-the-art

IT infrastructure to provide superior quality of service to customers.

SUBDIVISION of ICICI GROUP

BASIS OF SUBDIVISION

ICICI LOMBARD

9

ICICI BANK ICICI

PRUDENTIAL

MUTAL FUND

ICICI

PRUDENTIAL LIFE

INSURANCE



The subdivisions are made on the basis of services provided to the customers

on basis of there financial and securities needs. The details of the

subdivisions are given below

ICICI BANK

History

ICICI Bank was originally promoted in 1994 by ICICI Limited, an Indian

financial institution, and was its wholly-owned subsidiary. ICICI was formed in

1955 at the initiative of the World Bank, the Government of India and

representatives of Indian industry. The principal objective was to create a

development financial institution for providing medium-term and long-term

project financing to Indian businesses. In the 1990s, ICICI transformed its

business from a development financial institution offering only project finance

to a diversified financial services group offering a wide variety of products

and services, both directly and through a number of subsidiaries and affiliates

like ICICI Bank. 1999, ICICI become the first Indian company and the first

bank or financial institution from non-Japan Asia to be listed on the NYSE.

ICICI BANK in India

ICICI Bank is India's second-largest bank with total assets of about Rs.

2,513.89 bn (US$ 56.3 bn) at March 31, 2006 and profit after tax of Rs. 25.40

bn (US$ 569 mn) for the year ended March 31, 2006 (Rs. 20.05 bn (US$ 449

mn) for the year ended March 31, 2005). ICICI Bank has a network of 741

branches (including 48 extension counters) and over 3300 ATMs in India and

presence in 30 International locations. ICICI Bank offers a wide range of

banking products and financial services to corporate and retail customers

through a variety of delivery channels and through its specialized subsidiaries

and affiliates in the areas of investment banking, life and non-life insurance,

venture capital and asset management. ICICI Bank set up its international

banking group in fiscal 2002 to cater to the cross border needs of clients and

leverage on its domestic banking strengths to offer products internationally.

10



ICICI Bank currently has subsidiaries in the United Kingdom, Russia and

Canada, branches in Singapore, Bahrain, Hong Kong, Sri Lanka and Dubai

International Finance Centre and representative offices in the United States,

United Arab Emirates, China, South Africa and Bangladesh. Our UK subsidiary

has established a branch in Belgium. ICICI Bank is the most valuable bank in

India in terms of market capitalization.

ICICI PRUDENTIAL Life Insurance

ICICI and Prudential came together in 1993 to form Prudential ICICI Asset

Management Company, which has today emerged as one of the leading

mutual funds in India. The two companies bring together two of the strongest

financial service brands in Asia, known for their professionalism, excellent

quality of service and long term commitment. Riding on the success of this

relationship, the two companies joined hands once more in 2000, to form

ICICI Prudential Life Insurance, with a commitment to provide leading edge

life insurance solutions.

ICICI Bank has 74% stake in the company, and prudential plc has 26%.

ICICI Lombard

ICICI Lombard General Insurance Company Limited is a 74:26 joint venture

between ICICI Bank Limited and the Canada based $ 26 billion Fairfax

Financial Holdings Limited. ICICI Bank is India's second largest bank, while

Fairfax Financial Holdings is a diversified financial corporate engaged in

general insurance, reinsurance, insurance claims management and

investment management. ICICI Lombard is India’s largest non private firm

which provide general insurance.

ICICI PRUDETIAL MUTAL FUND

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ICICI PRUDENTIAL asset management company enjoys the strong parentage

of Prudential plc, one of the UK’s largest players in the insurance and fund

management

Sectors and ICICI bank, a well known and trusted name in financial services

in India.

ICICI prudential asset Management Company, in a span of just over eight

years. has forged a position of pre-eminence in Indian mutual fund industry

as one of the largest asset management companies in country with asset

under management of Rs. 37,906.24 crores (as of march 31st , 2007). The

company manages a comprehensive range of schemes to meet the varying

investment needs of its investors spreads across

68 cities in the country.

Organization Design and Structure

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Chairman

Board of Directors

Managing Director

CFO

CMOSales Channel

Heads

Acturial Head

Underwriting

Head

HR Head

Service &

Operations

Bank Assurance

Tide Agencies

Group & RuralHeads

RGSM

GSM

Key AccountManager

Account

Manager

13



BOARD OF DIRECTORS

The ICICI Prudential Life Insurance Company Limited Board comprises

reputed people from the finance industry both from India and abroad.

Mr. K.V. Kamath, Chairman

Mr. Barry Stowe

Mrs. Kalpana Morparia

Mrs. Chanda Kochhar

Mr. HT Phong

Mr. M.P. Modi

Mr. R Narayanan

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Mr. Keki Dadiseth

Ms. Shikha Sharma, Managing Director

Mr. N. S. Kannan, Executive Director

Mr. Bhargav Dasgupta, Executive Director

MANAGEMENT TEAM

Ms. Shikha Sharma, Managing Director

Mr. Sandeep Batra, Chief Financial Officer & Company Secretary

Mr. Shubhro J. Mitra, Chief - Human Resources

Mr. Puneet Nanda, Head - Investments

Ms. Anita Pai, Chief - Customer Service and Operations

Mr. V. Rajagopalan, Appointed Actuary

Mr. Dipan Bhattacharya - Chief Information Technology

ORGANIZATIONAL CHART

15



The ICICI group is divided in four parts on the basis of the services provided. The first arm is ICICI Bank which includes Personal Banking, NRI Banking andCorporate Banking.

ICICI GROUP

ICICI BANK ICICI LOMBARD GENERAL

INSURANCE

ICICI PRUDENTIAL LIFEINSURANCE

ICICI PRUDENTIAL MUTALFUND

PERSONAL BANKING HEALTH INSURANCE

NRI BANKING

CORPORATEBANKING

HOME INSURANCE

MOTOR INSURANCE

OVERSEAS TRAVEL INSURANCE

STUDENT MEDICAL INSURANCE

LIFE

RETIREMENT

HEALTH

PORTFOLIO MANAGEMENT SERVICE

16



The second branch is the ICICI Lombard general Insurance under whichcomes Health Insurance, Home Insurance, Motor Insurance, Overseas travelInsurance, Student medical Insurance.

The next branch is ICICI Prudential Life Insurance which includes Life,Retirement and Health.

The last branch is ICICI Prudential mutual fund which includes PortfolioManagement Service.

17



PRODUCT AND SERVICES

GROUP SOLUTION

In an era of competitive parity, the only asset that makes a decisive

difference between corporate success and failure is the quality of human

capital. Employee benefits have proven to be an excellent tool to optimize

the retention of talent and improve an organization’s bottom line. The quality

18



of an organization’s employee benefits establishes and maintains a

company’s image as a caring employer. Optimum care of employees is a

long-term investment that results in a sustained competitive advantage for

an organization in the times to come.

ICICI Prudential Group Solutions Advantage

• An integrated basket of employee benefit solutions that offer

incomparable flexible benefits.

• Sound investment management that focuses on safety, stability and

profitability of the portfolio.

• Personalized financial planning for your employee that takes care of

his/her changing financial needs at every stage of life.

• Quality service initiatives and transparency across all operations,

promising superlative operational efficiency.

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20



GROUP TERM ASSURANCE

The cover could be uniform or based on designation/rank or a multiple of

salary, and can be extended to all employees between the ages of 18 and 65

years. The benefit under the policy is paid on the event of the member’s

death to the beneficiary nominated by the member. It is a one-year

renewable policy where one master policy covers all proposed employees

comprising the group, with a minimum group size of 25 persons. New

members can join the group and outgoing members can leave the group at

any point during the policy term.

FEATURES

• Greater convenience for the employees with relaxed underwriting

and medical requirements.

• “Free Cover Limits” with simplified underwriting depending upon

the number of employees in the group and the level of cover chosen.

• Guaranteed benefit: On death during the term of the contract (while

in service), the sum assured will be paid to the beneficiary of the

employee.

• Choice of additional coverage in form an Accident and Disability

Benefit Rider and Critical Illness Cover

• Premium is viewed as a business expense in the year of payment.

ICICI PRUDENTIAL offer a flexible Group Term solution that provides benefits

to your employees by covering their lives against unfortunate incidents like

death, disability or disease. You can also provide cover to the extent of their

liabilities such as housing loans.

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ELIGIBILITY

Group term plan covers:

• Group size of minimum 25

• from the minimum age of 18 till the maximum age of 65 or normal

retirement age of the employee, whichever is earlier excluding employees

who have taken leave on medical grounds for more than 7 days in the last

one year.

EMPLOYER BENEFITS

Attract and retain employees

Provide welfare benefits to the employees and their families

Have simple administration procedures

Take optional riders at nominal cost

Enjoy tax benefits

EMPLOYEE BENEFITS

Have insurance protection at a relatively low cost

Require no medical test (as per Free Cover Limit)

Get covered 24 hours a day, 7 days a week, any where in the world.

Enjoy conversation option to an individual policy

Enjoy tax benefits.

BENEFITS PAYABLE

The benefit (life cover) under the policy is payable on the death of the

employee to the beneficiary nominated by him.

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LIFE COVER DETAILS

The basic term cover can be chosen

As a multiple of salary

As a flat cover

As a grade wise cover

As a cover against outstanding loan amount

The minimum cover to be taken is Rs 100000 per employee.

ADDITIONAL COVERS

As riders to the basic plan for a nominal additional premium 3 additional

covers are offered against accident, disabilities and critical illnesses.

ACCIDENT AND DISABILITY BENEFIT RIDER (ADBR)

On death due to accident caused by violent, external and visible

means, the sum assured under the rider will be paid. The maximum

benefit that can be availed of is equal to the basic sum assured to a

maximum limit of Rs 10 lakhs.

In case of a death in a mass surface public transport, double the

benefit will be payable.

ACCIDENTAL BENEFIT RIDER

On total and permanent disability due to accident, the sum assured

under the rider will be payable in ten annual installments, each equal

to one tenth of the amount of accidental cover. On death of such a

member before the last such installment, then the installments

remaining unpaid shall become payable immediately.

CRITICAL ILLNESS RIDER

In the event of the life assured contracting a critical illness, an

additional payment equivalent of the sum assured under the rider

would be made. The 9 major illness covered are:

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Cancer, Coronary Artery By- Pass Graft Surgery (CABGS), Heart Attack,

Major Organ Transplant, Stroke, Paralysis, Aorta- Surgery, Heart Valve

Replacement/Surgery, Kidney Failure.

when employees join or leave the scheme?

• All new employees become a part of the group, if they meet the eligibility

criteria. The cover starts from the date of joining the company.

• The particulars of the new joinees are to be submitted by the Employer on a

monthly basis along with the proportionate premium.

• In case of an individual leaving service or the group, life cover will cease

immediately.

• The proportionate premium will be refunded for the employees leaving the

scheme.

24



25



ICICI PRUDENTIAL GROUP RETIREMENT BENEFITSOLUTIONS

26



GRATUITY - THE LOYALTY REWARD

Gratuity is a statutory benefit paid to the employees under the Payment Of

Gratuity Act, 1972 who have rendered continuous service for at least five

years. The employee is eligible for 15 days pay for each completed year of

service. The employer can also structure a gratuity that is higher than

statutory requirements. It is payable on cessation of employment

(resignation/death/retirement/termination) by taking the last drawn basic

salary as the basis for calculation.

Gratuity payment liability tends to increase as the salaries and tenure of

employment increase annually. If the employer pays the gratuity from its

current revenue, it becomes difficult to meet the liability. It is therefore

beneficial that a gratuity fund is set up for prudent financial planning.

ICICI GROUP GRATUITY PLAN

ICICI Pru Life Insurance offers a market linked group gratuity plan that helps

the insured company to fund the statutory gratuity obligation in a scientific

manner and also avail of the tax benefits as applicable to approved gratuity

funds.

FEATURES:

• Wider choice of investments with Market Linked Plans - to meet

the diverse financial goals. We offer 4 investment options (short-term

debt, debt and balanced and capital guarantee plan) where

investments will be made in accordance with the fund objectives.

• Transparency through Daily disclosure of Unit Value and regular

disclosure of the portfolio of each of the investment option

• Flexibility through switching and contribution redirection option to

enable reshuffling of portfolio.

27



• Bundled Life Cover greater value to the employee by packaging life

insurance cover with the gratuity, with minimal amount of

underwriting.

• Actuarial services to provide a scientific estimation of the gratuity

liability.

• Low explicit charge structure with the conditions for exit specified

upfront.

• Enhanced service levels through faster claim settlement, easier

access to information and regular statements.

• Complete end to end solution in the legal and regulatory

approval process for scheme set up or transfer.

ELIGIBILITY

Group Gratuity Plan covers

• employer- employee groups.

• group size of 25 and above

• employees (members) between the age of 18 and retirement age of the

company

Employer Benefits:

• Annual contribution up to 8.33% of salary bill in a financial year is

allowed a deduction for the purpose of computation of profits and

gains of business.

• Contribution towards past service liability is allowed as deduction as

per the Income Tax rules.

Employee Benefits:

• The contribution made by the employer is not included in the value of

taxable perquisites in the hands of the employee.

• Gratuity received up to Rs 350000 is exempt from Income tax under

Sec 10(10).

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BUNDLED LIFE COVER

ICICI Prudential Gratuity Plan offers greater value to the employees by

packaging gratuity with life insurance. It can be taken:

As a flat cover which can be a minimum of Rs 1000 per employee, or

On the basis of anticipated gratuity which is the amount paid over and

above the accrued gratuity of an employee in the event of his

premature death before retirement age, for the balance years of his

service.

The premiums for the bundled life cover are payable annually in

advance.

CONTRIBUTIONS

The contributions made towards the Gratuity liability will depend on the Actuarial

Valuation. You can estimate your gratuity liability based on an actuarial valuation

provided by a qualified actuary. As part of our value added services, we provide an AS-

15 Certification for the same. The Past Service Gratuity Liability payment can be made

over a period of five years. The annual contributions can be made in annually/

quarterly/monthly installments.

29



PRODUCT OFFER

ICICI Prudential offers a market linked plan that offers a higher flexibility and

transparency than any other traditional or self-administered fund. It offers 4

fund options under the Group Gratuity Plan to meet the employee’s diverse

financial goals. The investments are made in accordance with the fund

objectives.

FUNDOPTION

ASSET ALLOCATIONOBJECTIVE

Short Term

Debt Plan

100% Money Market,

Debt Instruments

Protect capital deployed, as well

as provide suitable returns

through low risk investments debt

and money market instrumentsDebt Plan Max 100% Debt

Instruments; Max 25%

Money Market

Generate a steady accumulation

of income through instrument in

fixed income securities.Balanced Plan Min 80% debt and debt

related instruments;Max 20% Equity

Generate a good mix of long-term

capital appreciation along withcurrent income through

investment in equity and fixed

income instruments.Capital

Guarantee

Plan

100% Money Market,

Debt Instruments.

Provide suitable returns through

low risk investments in debt and

money market instruments while

protecting contributions invested

in this plan.

VALUE ADDED SERVICES

Dedicated account manager.

Settle claims and payouts within specified turn around times.

30



Assistance in setting up of a new trust and transfer of existing

schemes.

Legal and taxation help desk for gratuity fund.

Financial planning for employees.

when employees join or leave the scheme?

• All new employees become a part of the group, if they meet the eligibility

criteria. The life cover starts from the date of joining the company.

• The particulars of the new employees may be submitted by the Employer

on a monthly basis. The term premiums are payable annually in advance (on

a pro-rata basis) and the annual contribution can be paid in the specified

instalments.

• In case of an individual leaving service or the group, life cover will cease

immediately.

• The proportionate premium will be refunded for the employees leaving the

scheme, except in case of death. The gratuity accrued will be paid to the

employee if eligible.

• For all death claims the life cover along with the accrued gratuity will be

payable to the employee’s beneficiary.

31



32



RETIREMENT PLANNING WITH GROUP

SUPERANNUATION

After a valuable professional career with an organization, employees require

the security of a regular income flow when they retire. Organizations help

33



employees secure there golden years by offering various kinds of retirement

benefits that allow an employee to enjoy the same quality of life post

retirement. Group Superannuation is one such efficient way to plan for

retirement.

ICICI Prudential GROUP SUPERANNUATION PLAN

ICICI Prudential offers a market linked defined contribution Superannuation

scheme that provides substantial benefits to both employers and their

employees. The employer can avail of tax benefits applicable to an approved

Superannuation trust. The scheme will provide for a retirement fund of each

member. A member would be able to choose from various pension options or

opt for partial commutations of the pension at the time of retirement.

FEATURES

• Wider choice of investments with Market Linked Plans - to meet

the diverse financial goals. We offer 5 investment options (short-term

debt, debt, balanced, growth and capital guarantee plan) where

investments will be made in accordance with the fund objectives.

• Control - Each member/employer can exercise greater control over

investments by choosing one or more of the investment options.

• Multiple Annuity Options - 5 annuity options and open market

option.

• Transparency - Transparency through Daily disclosure of Unit Value

and regular disclosure of the portfolio of each of the investment option.

•Flexibility - Flexibility through switching and contribution redirectionoption to enable reshuffling of portfolio.

• Low explicit charge structure with conditions for exit specified

upfront.

34



• Enhanced service levels through faster claim settlement, easier

access to information and regular statements.

• Complete end-to-end solution in the legal and regulatory approval

process for scheme set up or transfer.

ELIGIBILITY

ICICI Prudential‘s Group Superannuation Plan covers

• Employer- employee groups.

• Group size of 25 and above

• Employees (members) between the age of 18 and retirement age of the

company .

EMPLOYER BENEFITS

• Annual contribution are treated as deductible business expenses u/s

36(1)(iv)

• Maximum contribution that an employer can make is 27% (provident

fund+ superannuation) of employee’s annual salary –rule 87

• Interest income on the fund is tax-free 10(25)(3)

EMPLOYEE BENEFITS

• Contributions by the employer are not treated as perquisites u/s 17(2)

• Interest on the fund is exempt from tax u/s 10(25)(iii)

• Commuted value (1/3rd )on retirement is tax-free u/s 10(13)

• Benefits payables on death are exempt from tax u/s 10(13)

• Employee’s contribution, if any, qualifies for tax exemption u/s 88

Superannuation Benefits payable:

On Retirement

On retirement the trustees/individual member would be able to choose from different

annuity options then available. A portion of the accumulated amount may be commuted

35



for payment of lump sum on retirement etc., subject to the provisions of the scheme rules

and the provisions of Income Tax rules.

On Death

In the event of death of the employee, the accumulated amount will be used for payment

of benefits to the beneficiary as per the rules of the scheme.

On Withdrawal

In the event of leaving service of an employer, the employee has the option

to either transfer the money to an approved superannuation fund of the new

employer or opt for a deferred pension plan. All these will be subject to the

provisions of the rules of the scheme, approval of the Income Tax authorities

and appropriate deduction of tax at source, wherever applicable.

BENEFITS PAYABLE

Superannuation benefits are payable on retirement, death and resignation. In

either case, the accumulated amount is used for making payments to the

member or beneficiary (in case of death), subject to the provisions of the

scheme rules and the provisions of income tax rules.

CONTRIBUTIONS

Contributions can be made by employers only or by both employer and

employee

Contribution is defined as a % of salary of the employees (e.g. 15% basic for

defined contribution schemes. For defined benefit schemes it is dependent on the

funding requirement as per the actuarial valuation conducted)

36



PRODUCT OFFERING

ICICI Prudential offers a market linked plan to meet the diverse financial goals

of the

employer and the employees. The plan offers 5 fund options under the

scheme.

FUND OPTIONS ASSET ALLOCTATION OBJECTIVE

Short term debt

plan

100% money market, debt

instruments.

Provide suitable returns

through low risk

investments debt and

money market instruments

while attempting to protect

the capital deployed in the

fund.Debt Plan Max 100% Debt

Instruments; Max 25%

Money Market

Generate a steady

accumulation of income

through instrument in fixed

income securities.Balanced Plan Min 80% debt and debt

related instruments; Max

20% Equity

Generate a good mix of

long-term capital

appreciation along with

current income through

37



investment in equity and

fixed income instruments.Growth Plan Min 40% debt and debt

related instruments; max

20% equity

Provide long term capital

appriciation through

investments primarily inequity and related

instruments.Capital Guarantee

Plan

Min 80% debt and debt

related instruments ; max

20% equity

Generate a good mix of

long-term capital

appriciation along with

current income through

investment in equity and

fixed income instruments

while protecting the

contributions invested in

the plan.

VALUE ADDED SERVICES

Dedicated account manager.

Settle claims and payouts within specified turn around times.

Assistance in setting up of a new trust and transfer of existing

schemes.

Legal and taxation help desk for gratuity fund

Financial planning for employees.

38



EDLI

39



EMPLOYEE DEPOSIT LINKED INSURANCE

SCHEME (EDLI)

All employees to whom the Employee’s Provident Fund and Miscellaneous

Provision Act, 1952 applies, have a statutory liability to subscribe to

Employee’s Deposit Linked Insurance Scheme, 1976 to provide for the benefit

of life insurance to all their employees.

Under this scheme the insurance benefit is equal to the average balance to

the credit of the deceased employee in the provident fund during the last 12

months, provided that where such balance exceeds Rs 35000, insurance

cover would be Rs 35000 plus 25% of the amount in excess of Rs 35000

subject to a maximum of Rs 60000. Thus if the length of service is not

adequate and/or the salary is low, the average balance may be substantially

less and such that the benefit to the employee’s family is either inadequate

or non-existent.

ROLE OF ICICI PRUDENTIAL

Under section 17(2A) of the act, the employer may be exempted from

consulting to this scheme, if he/she has provided for better insurance benefit

through alternative scheme. ICICI Prudential Group Insurance Scheme in lieu

of EDLI has been accepted as one such better alternative.

EMPLOYER BENEFITS

Premium payable is usually less than the total contribution being paid

to Regional Provident Contribution; particularly when the salary level is

high and average age of the group is low.

Settlement of claim is quicker; ICICI Pru has a simplified claim

settlement process.

Premium paid is treated as normal business expense under sec 37 of IT

Act, 1962 for income tax purpose.

40



EMPLOYEE BENEFITS

Each employee is covered for a sum assured ranging between 65000

to 100000 depending upon the current salary and service put in from

day one irrespective of the actual balance in the PF. Alternatively,

every employee can be covered for a uniform sum assured of Rs

65000.

Claim amount paid under the scheme will be completely tax exempted

under section 10(10)(d) of IT Act, 1962.

ADDITONAL COVER

In addition to the basic life cover ICICI Pru product offers additional cover for

accidental death as riders to the basic plan for an additional premium

ACCIDENT AND DISBILITY BENEFIT RIDER

On death due to accident caused by violent, external and visible

means, the sum assured under the rider will be paid. In case of a death

in a mass surface public transport, double the benefit will be payable.

If the employee is totally and permanently disabled as a result of an

accident, an additional benefit of 10% of the sum assured is paid every

year for 10 years commencing from the first anniversary of the

disability date.

ACCIDENTAL BENEFIT RIDER

Under this rider an amount equal to sum assured under the rider is

payable in the event of death of the life assured due to accident.

41



FINANCIAL ANALYSIS

42



BALANCE SHEET OF ICICI BANK

Sources of funds

Owner's fundEquity share capital 889.83 736.75 616.40 612.66 220.36Share application money - 0.02 - - 742.67

Preference share capital 350.00 350.00 350.00 350.00 -

Reserves & surplus 21,316.16 11,813.20 7,394.16 6,320.65 5,635.54Loan funds

Secured loans - - - - -

Unsecured loans1,65,083.1

799,818.78

68,108.58

48,169.31

32,085.11

Total1,87,639.1

6

1,12,718.7

5

76,469.1

4

55,452.6

238,683.69

Uses of fundsFixed assets

Gross block 5,968.57 5,525.65 5,090.20 4,812.98 4,494.29

Less : revaluation reserve - - - - -Less : accumulated depreciation 1,987.85 1,487.61 1,033.79 752.26 254.94

Net block 3,980.71 4,038.04 4,056.41 4,060.73 4,239.34

Capital work-in-progress 147.94 96.30 93.99 156.21 -

Investments 71,547.39 50,487.3542,742.8

6

35,462.3

035,891.08

Net current assetsCurrent assets, loans & advances 15,642.79 11,115.99 9,107.61 8,169.24 4,988.86

Less : current liabilities & provisions 25,227.88 21,396.16 18,019.49 17,056.93 16,207.58

Total net current assets -9,585.09 -10,280.17 -8,911.89 -8,887.68-

11,218.72

Miscellaneous expenses not written - - - - -

Total 66,090.96 44,341.5237,981.3

8

30,791.5

628,911.71

Contingent liabilities1,34,920.9

9

1,07,311.4

6

82,116.1

3

46,339.0

140,770.00

Number of equity

sharesoutstanding (Lacs)8898.24 7367.16 6130.21 6130.31 2203.59

43



Key Ratios

Ratios(Rs crore)

Mar ' 06Mar ' 05Mar ' 04Mar ' 03Mar ' 02

Per share ratios

Dividend per share 8.50 8.50 7.50 7.50 2.00

Operating profit per share (Rs) 36.75 36.37 34.06 14.40 27.31

Net operating income per share (Rs) 196.87 160.69 187.90 190.10 122.99

Profitability ratiosOperating margin (%) 18.66 22.63 18.12 7.57 22.20

Gross profit margin (%) 15.10 17.64 13.44 3.23 19.84

Net profit margin (%) 14.12 16.32 13.67 9.86 9.47Leverage ratios

Long term debt / Equity 0.01 0.02 0.04 0.05 -

Total debt/equity 7.45 7.98 8.55 7.00 5.48Fixed assets turnover ratio 2.94 2.14 2.26 2.42 0.60

Liquidity ratios

Current ratio 0.62 0.51 0.50 0.47 0.30Quick ratio 6.64 4.98 4.18 3.84 3.27

Inventory turnover ratio - - - - -Component ratiosExports as percent of total sales - - - - -

44



COMPETITORS

45



Market share

79%

5%

2%

2%

12%

LIC

ICICI Prudential

Tata-AIG Life

Birla Sun Life

Others

Source:www.irda.com

The above pie chart depicts the existing Market share of the major

Insurance players in the Indian Insurance Industry. As it can be

seen clearly, 79% of the Insurance market is captured by LIC. There

are two basic reasons for this. First, it has been a psychological

mindset of the people that LIC is the safest and money is secured

with it because of the inherent government guarantee. This fact not

only acts as a hindrance for the private life insurers to penetrate

into the market but makes it equally difficult to make the

prospective client companies change their attitude.

Second, the 2% penalty charged by LIC for moving out to other

Insurance companies makes it all the more difficult for the Clients

to switch to other options.

When we look at other private players, ICICI Prudential grabs the

second place by capturing 5% of the market share. The attractive

46



schemes and aggressive work policies of the company gives it an

edge over other private players in the market.

Birla Sunlife and TATA AIG are the two other private players having

a market share of 2% each. Other companies account for 12% of

the market share which include Bajaj Allianze, Kotak Mahindra and

HDFC etc.

COMPARITIVE ANALYSIS OF THE PRODUCT OFFERING

AND SERVICES BETWEEN ‘LIFE INSURANCE OF INDIA’

AND ‘ICICI PRUDENTIAL’

PARAMETER ICICI PRUDENTIAL LIC ADVANTAGEINVESTMENT

OPTIONS

Offers 5 fund

options -

Short Term Debt

Debt

Balanced

Growth

Capital Guarantee

No such options

provided.

Assets are to be

invested in min

50% govt.

securities and 15%

in infrastructuresector

Power to choose

fund to suit

client’s risk

appetite.

FUND MGMT

CONTROLS

No cross

subsidization

Marked to market

Investment in AA

and above rated

bonds

Risk adjustedreturns

Cross

subsidization is

present

Pooled fund –

lesser control

Investment in

high risk stategovt. securities

A strong

investment

policy and

control ensure a

quality portfolio

and steady

returns.

ACCESS TO

INFORMATION

Quarterly portfolio

declaration

NAVs declared

daily

No portfolio

disclosure

Limited access to

information

Transparency

gives control

over funds and

helps tracking

47



Annual stmnts

summarizing year’s

transactions

the

performance.

SWITCHING

OPTIONS

No restriction on

no. of switches

Unlimited free

switches per year

No such option is

applicable

Flexibility to

reshuffleportfolio

With changing

market and

financial

condition

ACTUARIAL

VALUATION

Tied up with an

external qualifiedactuary to provide

gratuity valuation

& AS-15

certification

Option to use

actuary of own

choice

It offers

insurer’sstatement

No AS-15

certification is

provided

Bundled

actuarial

valuation from a

certified

professional

along with AS-15

certification as

part of best

accounting

practices.BUNDLED LIFE

COVER

Offers 2 options –

Anticipated cover

Group Term Cover

Provides only

anticipated

cover

Choice of life

cover benefit as

per

requirement /

salary / gradeCHARGE

STRUCTURE

No entry load if

fund size is over

25 lakhs

Administration

charges depend

on type of fund

No transparency

in charge

structure;

charged

implicitly

No exit

mechanism in

place – known to

vary between 1

Charges

specified upfront

& explicitly

which provides

transparency in

dealings

48



to 10% TRUST

FORMATION

Assistance in

setting up trust or

migration of funds

& gettingapproval from CIT

Only filing is

done by LIC.

Follow up for CIT

approval iscompany’s

responsibility

Assistance in

documentation

& trust

formation oncompany’s

behalf for CIT

approval

ensures less

admin hassles

for the company

INTRODUCTION

49



NEED OF THE STUDY

Life expectancy has been rising rapidly and today, one can now expect to live

much longer than the earlier generations. For people, this increase will mean

a longer retirement life, stretching into a couple of decades. So, it is more

critical then ever to plan adequately and wisely for those incremental

retirement years, keeping in mind that ones expenses will spiral upward, the

cost of living will increase and inflation will be ever present. Therefore one

needs a plan to ensure safety, risk cover, income security and regular returns

for the post retirement years.

Apart from the government, organizations play a significant role in this

regard by contributing towards their employees’ sunset years. This study of

the employee group retirement benefits provided by corporate and also

gauges the penetration levels of various insurance players across the state.

OBJECTIVES

To give an insight into the ‘Employee Retirement Benefits’ – its genesis

and objectives.

50



To study the level of market penetration by various life insurance

players in Bangalore.

To study the distribution of various ‘Employee Group Retirement

Benefit Solutions’ across different sectors in the industry.

To study the employee strength wise distribution of various ‘Employee

Group Retirement Benefit Solutions’ in the industry.

Compilation of data base and client interaction.

METHODOLOGY The objectives of the present study were accomplished by conducting a

systematic market research. Market research is the systematic design,

collection, analysis and reporting of data and findings that are relevant to

different marketing situations facing the company. The marketing research

process adopted in the present study consisted of the following stages: -

DEFINING THE PROBLEM AND THE RESEARCH OBJECTIVE

The research objective states what information is needed to solve the

problem. The objective of the research was to study about the Employee

Group Retirement Benefit Solutions, provided by various companies across

the state and gauge the penetration levels of the insurance players in the

market.

DEVELOPING THE RESEARCH PLAN

Once the problem is identified, the next step is to prepare a plan for gettingthe information needed for the research. The present study adopted the

exploratory approach wherein there was a need to gather large amount of

information before making a conclusion.

COLLECTION AND SOURCES OF DATA

51



Market research requires two kinds of data, i.e., primary data and secondary

data. Being a firm in the insurance industry, data gathering involved the

usage of both primary and secondary data though there was an extensive

usage of primary data. A well-structured and crisp questionnaire was

prepared, keeping in mind the calculated time corporate managers /

executives could devote towards answering the survey. Cold calls were made

to the corporate and it was enquired from the Finance / HR managers /

executives about the Group Retirement Benefits, the company provides to its

employees. Secondary data was collected from various journals, books and

web sites.

Sample size:

Cold calls were made to 2000 corporate out of which only 379 responded.

ANALYZE THE COLLECTED INFORMATION

This involved converting raw data into useful information. It involved

tabulation of data and using statistical measures on them for developing

frequency distributions and calculating the averages and dispersions.

REPORT RESEARCH FINDINGS

This phase marked the culmination of the marketing research effort. This

report with the research findings is a formal written document. The research

finding was used to propose the recommendations.

PROBLEMS ENCOUNTERED

The psychological mindset of people that the traditional monopoly,

LIC is the safest and money is secured with it because of the

inherent government guarantee. This fact not only acts as a

hindrance for the private life insurers to penetrate into the market

52



but makes it equally difficult to make the prospective client

companies change their attitude.

The heavy exit penalty of 2% levied by the LIC acts as a restraint

for the companies to shift their funds to any other private life

insurance company. If the size of the corpus (fund) is high the

penalty will accordingly be high.

Lack of awareness about ‘Group Retirement Benefit Solutions’

among the prospective client companies.

The information required by the insurer from the prospective

company before presenting the product proposal, comes from the

latter’s confidential domains. Hence, not many are willing to share

this information database.

Reluctance on the part of employers to insure their employees. The

concept of providing the employees with retirement benefits has

not percolated as that of a long term liability which can even help in

retaining the employees in some cases and give them a secured

feeling of social and economic security for their golden years.

Many companies have discontinued with their Group

Superannuation Scheme after the announcement of 30% Fringe

Benefit Tax (FBT) in the budget 2004-05, being imposed over the

employers contribution.

‘Group Term Assurance Scheme’ is more of a rate war than

anything else. ICICI Prudential, respecting the company philosophy,

does not believe in giving in to lower rates, with a pragmatic

foresight.

LIMITATIONS

The allotted time period of 6 weeks for the study was relatively

insufficient, keeping in mind the long duration it can take at times, to

close a particular corporate deal.

The study might not produce absolutely accurate results as it was

based on a sample taken from the population.

53



It was difficult getting time and access to senior level Finance/HR

managers (who had to be talked to, to get required information) due to

their busy schedules and prior commitments.

A few of the managers refrained from giving the required information

as he considered I to be from their confidential domains.

Mode of database collection was limited only to cold calling the

corporate.

54



FINDINGS & SUGGESTIONS

55



• Only 66% companies in the state provide ‘Gratuity’, which is a statutory provision to

be provided to employees as per the Gratuity Act, 1952. Out of them, only 49% fund

this liability to an insurance company while the remaining pay it to their employees

on their retirement / cessation of service / death.

Many of the corporate houses have withdrawn the ‘Superannuation’ benefit after the

announcement of the ‘Fringe Benefit Tax’ (FBT) on the employer’s contribution

towards the Superannuation fund, in this year’s Finance Budget. Employers say they

would rather give the contribution amount directly to their employees, who can

manage their tax liabilities accordingly rather than subject the contribution to dual

taxation.

Only 19% of the companies surveyed continue providing this benefit to their

employees, out of which 73% fund it to private life insurers while the remaining

either pay it on retirement / cessation of service / death of the employee or manage it

by self managed trusts.

More than half the companies have their funds with the ‘LIC’.

Laws of ‘Corporate Governance’ are not very strong in the ‘Newspaper’ industry, as

they do not believe in maintaining separate funds for an employee’s retirement. They

are content with paying the liability on employee’s retirement / cessation of service /

death (Pay – As – You – Go).

56

Insurer V /s Self-Managed

73%

27%

insurer managed

self managed



1. Companies provide Actuarial Services more than the normal service.

2. ICICI Prudential has shifted its focus from private companies to

Government companies.

3. It takes care of the legal formalities of forming the trust fund which

relaxes the client company’s pressures.

SUGGESTIONS:

1. The work pressure on any insurance company can be stressful.

Employer should take care of this fact.

2. Due to expansion of the market, there is a rising need for human

resources.

3. Stress relieving exercises can be conducted to relax the pressure.

57



SWOT ANALYSIS

STRENGTHS

• ICICI Prudential Life Insurance Company is a joint venture between

ICICI Bank, a premier financial powerhouse, and Prudential plc, a

leading international financial services group headquartered in the

United Kingdom.

• Today the company is the No.1 private life insurer in the country and

was amongst the first private sector insurance companies to begin

operations.

• ICICI Prudential’s equity base stands at Rs. 925 crore with ICICI Bank

and Prudential plc holding 74% and 26% stake respectively.

• The company garnered Rs 860 crore of new business premium for a

total sum assured of over Rs 7,360 crore and wrote nearly 345,000

policies.

• ICICI Prudential has one of the largest distribution networks amongst

private life insurers in India, having commenced operations in 69 cities

and towns in India.

• The company has seven bancassurance tie-ups, having agreements

with ICICI Bank, Federal Bank, South Indian Bank, Bank of India, Lord

Krishna Bank and some co-operative banks, as well as over 160

corporate agents and brokers.

• It has also tied up with organisations like Dhan for distribution of

Salaam Zindagi, a policy for the socially and economically

underprivileged sections of society.

58



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

centric products that meet the needs of customers at every life stage.

Its 20 products can be enhanced with up to 6 riders, to create a

customized solution for each policyholder.

• ICICI Bank is India's second-largest bank with total assets of about

Rs.112,024 crore and a network of about 450 branches and offices and

about 1750 ATMs.

WEAKNESSES

• Cost Focus only in major cities of India.

• structures tend to be high• Lot of 3rd party agents

• Backend process still need to be updated

• Service not up to the mark as per the expectations.

OPPRTUNITIES

• ICICI Prudential can leverage upon setting up Global branches as lot of

Indian going abroad

• Booming financial sector

• Still large chunk of the markets is to be tapped

• Catering to niche market with customized solutions

• Growth in back-office automation and consulting

• Focus on professional services segment

THREATS

• With more Financial muscle large companies may saturate the market

making newer companies difficult to survive and penetrate

• Companies with larger workforce

• Crowding-out effect with many companies setting up their units India

• Political Overhang from Outsourcing

59



• Highly Fragmented Industry

CONCLUSION

60



‘ Retirement Benefits’ in India in one form or the other are currently available

to only about 11% of the working population, including government

employees. This brings 89% of the working population in the

unorganized sector uncovered by any formal pension provision.

Also, in a recent survey conducted amongst the VRS population in

the government sector, only 12% of the respondents have replied in

affirmative on their ability to sustain on the income earned from

their pension. Hence, it can be potentially assumed from the above

facts that a large chunk of retirees in the country are either

uncovered or under covered.

The top most priority now in the area of pension reforms should be to widen

the net of pension receivers. With 11% coverage, the country will

see a far-reaching socio economic crisis threatening the balance of an economically rich young generation and deprived aged strata in

the next two decades. The dependence of 89% of non-pensioners on

the young independent generation will lead to a social crisis with

conflicting interests and priorities. Measures towards fiscal prudence

are important, but will leave this priority unanswered. In India, there

were 76 million people of an age greater than 60 in 2001 and

according to UN projection this is said to explode to over 142 million

by 2021. The longer retired people live, the greater is this strain onany pension system.

To address this impending disaster the government needs to think

beyond the immediate fiscal crisis. The corporate should also redraft

remuneration packages. It may result in a lower monthly take home,

but in the long run, it is wise to sacrifice immediate benefits for a

61



more fulfilling, respectful and deserving life style in the golden

years.

BIBLOGRAPHY

62



Bibliography

24 Apr. 2007 <http://iciciprulife.com>.

24 Apr. 2007 <http://insuranceindustry.com>.

25 Apr. 2007 <http://irdaindia.org>.

Business and Economy.

The Business Line 26 Apr. 2007.

"Employee Benifit Schemes." The Economic Times 22 Apr. 2007.

Employee Group Retirement Benifit Solutions.

The Outlook Money.

Manu Shukla Reporticici Prudential Life Insurance Ltd[1].

Documents

Transcript of Manu Shukla Reporticici Prudential Life Insurance Ltd[1].