i ACKNOWLEDGEMENTS I would like to express my sincere thanks to Religare Insurance Broking Ltd. , Delhi for giving me the opportunity to carry out the Summer Internship Program in their organization. The whole period spent with the organization has been of immense learning experience about the Indian Insurance Market. Preparing a project of such a kind is not an easy task in itself and I am sincerely thankful to all those people who help me lot, in preparing and completing this project. I am grateful to Religare Insurance Broking Ltd. ho has given me this opportunity to carry out the project “Understanding the functioning of an Insurance Broker” . I sincerely thank to Mr. Gaurav Gupta (ABVP, Religare Insurance Broking Ltd. , Delhi) for providing me this valuable learning opportunity. Finally I would like to thank Mr Sumit Verma my project supervisor without his help and guidance the completion of this project would have become difficult task. An overview about Insurance Everyone is exposed to various risks. Future is very uncertain, but there is way to protect one’s family and make one’s children’s future safe.
Life Insurance companies help us to ensure that our family’s future is not just secure but also prosperous. Life Insurance is particularly important if you are the sole breadwinner for your family. The loss of you and your income could devastate your family. Life insurance will ensure that if anything happens to you, your loved ones will be able to manage financially. This study titled “Study of Consumers Perception about Life Insurance Policies” enables the Life Insurance Companies to understand how consumer’s perception differs from person to person.
How a consumer selects, organizes and interprets the service quality and the product quality of different Life Insurance Policies, offered by various Life Insurance Companies. Insurance is a tool by which fatalities of a small number are compensated out of funds (premium payment) collected from plenteous. Insurance companies pay back for financial losses arising out of occurrence of insured events e. g. in personal accident policy death due to accident, in fire policy the insured events are fire and other allied perils like riot and strike, explosion etc. hence insurance safeguard against uncertainties.
It provides financial recompense for losses suffered due to incident of unanticipated events, insured with in policy of insurance. Moreover, through a number of acts of parliament, specific types of insurance are legally enforced in our country e. g. third party insurance under motor vehicles Act, public liability insurance for handlers of hazardous substances under environment protection Act. Etc. WHAT IS INSURANCE It is a commonly acknowledged phenomenon that there are countless risks in every sphere of life . for property, there are fire risk; for shipment of goods.
There are perils of sea; for human life there are risk of death or disability; and so on . the chances of occurrences of the events causing losses are quite uncertain because these may or may not take place. Therefore, with this view in mind, people facing common risks come together and make their small contribution to the common fund. While it may not be possible to tell in advance, which person will suffer the losses, it is possible to work out how many persons on an average out of the group, may suffer losses. When risk occurs, the loss is made good out of the common fund . in this way each and every one shares the risk . n fact they share the loss by payment of premium, which is calculated on the likelihood of loss . in olden time, the contribution make the above-stated notion of insurance DEFINITION OF INSURANCE Insurance has been defined to be that in, which a sum of money as a premium is paid by the insured in consideration of the insurer’s bearings the risk of paying a large sum upon a given contingency. The insurance thus is a contract whereby: a. Certain sum, termed as premium, is charged in consideration, b. Against the said consideration, a large amount is guaranteed to be paid by the insurer who received the premium, c.
The compensation will be made in certain definite sum, i. e. , the loss or the policy amount which ever may be, and d. The payment is made only upon a contingency More specifically, insurance may be defined as a contact between two parties, wherein one party (the insurer) agrees to pay to the other party (the insured) or the beneficiary, a certain sum upon a given contingency (the risk) against which insurance is required. TYPES OF INSURANCE Insurance occupies an important place in the modern world because of the risk, which can be insured, in number and extent owing to the growing complexity of present day economic system.
The different type of insurance have come about by practice within insurance companies, and by the influence of legislation controlling the transacting of insurance business, broadly, insurance may be classified into the following categories: 1. Classification from business point of view a) Life insurance b) General insurance 2. Classification on the basis of nature of insurance a) Life insurance b) Fire insurance c) Marine insurance d) Social insurance e) Miscellaneous insurance 3. Classification from risk point of view a) Personal insurance b) Property insurance c) Liability insurance d) Fidelity general insurance
THE IMPORTANCE OF INSURANCE Insurance benefits society by allowing individuals to share the risks faced by many people. But it also serves many other important economic and societal functions. Because insurance is available and affordable, banks can make loans with the assurance that the loan’s collateral (property that can be taken as payment if a loan goes unpaid) is covered against damage. This increased availability of credit helps people buy homes and cars. Insurance also provides the capital that communities need to quickly rebuild and recover economically from natural disasters, such as tornadoes or hurricanes.
Insurance itself has become a significant economic force in most industrialized countries. Employers buy insurance to cover their employees against work-related injuries and health problems. Businesses also insure their property, including technology used in production, against damage and theft. Because it makes business operations safer, insurance encourages businesses to make economic transactions, which benefits the economies of countries. In addition, millions of people work for insurance companies and related businesses. In 1996 more than 2. 4 million people worked in the insurance industry in the United States and Canada.
Insurance as an investment that offers a lot more in terms of returns, risk cover & as also that tax concessions & added bonuses Not all effects of insurance are positive ones. The possibility of earning insurance payments motivates some people to attempt to cause damage or losses. Without the possibility of collecting insurance benefits, for instance, no one would think of arson, the willful destruction of property by fire, as a potential source of money. THE INSURANCE INDUSTRY TODAY Since the 1970s, the insurance business has grown dramatically and undergone tremendous changes.
As a result of the deregulation of financial services businesses— including insurance, banking, and securities trading—the roles, products, and services of these formerly distinct businesses have become blurred. For instance, citizens in the U. S. state of California voted in 1988 to allow banks to sell insurance in that state. In Canada, banks may also soon be allowed to sell insurance. Advances in communications technology have also allowed traditionally distinct financial businesses to keep instantaneous track of developments in other businesses and compete for some of the same customers.
Some insurance companies now offer deposit accounts and mortgages. In the United States, life insurance companies now sell more pension plans and other asset management services than they do conventional life insurance. Developments in computer technology that have given insurance providers the ability to quickly access and process information have allowed them to custom-design policies to fit the needs of individual customers. But the increasing complexity of policies has also made some aspects of buying and selling insurance more difficult.
In addition, improvements in geological and meteorological technology have the potential to change the way property insurers calculate risks of damage. For example, as scientists improve their abilities to predict severe weather patterns, such as hurricanes, and geological disturbances, such as earthquakes, insurers may change how they provide protection against losses from such events EVOLUTION OF INSURANCE IN INDIA The marine insurance is the oldest form of insurance. If we trace Indian history there are evidence that marine insurance was practiced here about three thousand years ago.
The code of Manu indicates that there was the practice of marine insurance carried out by the traders in India with those of Sri Lanka; Egypt and Greece . it is wonderful to see that Indians had even anticipated the doctrine of average and contribution. Fright was fixed according to season and was then very much at the mercy of the wind and other elements. Travelers by sea and land were very much exposed to the risk of losing their vessels and merchandise because of piracy on open seas and highway robbery of caravans was very common.
The practice of insurance was very common during the rule of Akbar to Aurangzeb, but the nature and coverage of the insurance in this period is not well known. It was the British insurer who introduced general insurance in India in the modern form. The British opened general insurance in India around the year 1700 . the first company known as the sun insurance office was set up in Calcutta in the year 1710. This was followed by several insurance companies like London assurance and royal exchange assurance (1720), Phoenix Assurance Company (1782). Etc.
General insurance business in the country was nationalized with effect from 1st January 1973 by the General Insurance Business (Nationalization) Act, 1972. More than 100 non-life insurance companies including branches of foreign companies operating within the country were amalgamated and grouped into four companies, viz. , the National Insurance Company Ltd. , the New India Assurance Company Ltd. , the Oriental Insurance Company Ltd. , and the United India Insurance Company Ltd. with head offices at Calcutta, Bombay, New Delhi and Madras, respectively.
Life insurance in the current form came in India from united kingdom with the establishment of a British firm, oriental life assurance company in 1818 followed by Bombay life assurance company in 1823, the madras equitable life insurance society in 1829 and oriental life assurance company in 1874. prior to 1871, Indian lives were treated as sub standard and charged an extra premium of 15% to 20%. Bombay mutual life assurance society, an Indian insurer that came in to existence in 1871, was the first to cover Indian lives at normal rates.
The Indian insurance company Act 1923 was enacted inter alia, to enable the government to collect statistical information about life and nonlife insurance business transacted in India by Indian and foreign insurer, including the provident insurance societies. The first half of the 20th century marked by two world war, the adverse affects of the World War I and World War II on the economy of India, and in between them the period of world wide economic crises triggered by the Great depression. The first half of the 20th century was also marked by struggles for India’s independence.
The aggregate effect of these events led to a high rate of bankruptcies and liquidation of life insurance companies in India. This had adversely affected the faith of the general public in the utility of obtaining life cover In this background, the Parliament of India passed the Life Insurance of India Act on 19th June 1956, and the Life Insurance Corporation of India was created on 1st September, 1956, by consolidating the life insurance business of 245 private life insurers and other entities offering life insurance services.
Since 1972, the insurance sector has been totally under the control of government of India through LIC and GIC and its subsidiaries. As a result, revenue of both of them increased in the last years . the amount of savings pooled by LIC increased from Rs. 2704 crores in 1974 to Rs . 57670 in 1994 with an annual growth rate of 16. 53% . similarly premium underwritten by GIC rose from 280 crores in 193 to 7647 crores in 1998 showing an annual growth rate of 25. 18%. Despite increase in premium collected by both LIC and GIC their were inefficiency and red tapeisum creeped in to the insurance sector.
Apart from that a major policy shift by the Narasimha Rau government during 1990’s. the Indian economy opened for foreign competition . In this background The government of India in 1993 had set-up a high powered committee by R. N Malhothra ,former governor reserve bank of India, to examine the structure of Indian insurance sector and recommended changes to make it more efficient and competitive keeping in view structural changes in other part of the financial system of the country.
Insurance sector has been opened up for competition from Indian private insurance companies with the enactment of Insurance Regulatory and Development Authority Act, 1999 (IRDA Act). As per the provisions of IRDA Act, 1999, Insurance Regulatory and Development Authority (IRDA) was established on 19th April 2000 to protect the interests of holder of insurance policy and to regulate, promote and ensure orderly growth of the insurance industry. IRDA Act 1999 paved the way for the entry of private players into the insurance market, which was hitherto the exclusive privilege of public sector insurance companies/ corporations.
EVOLUTION OF INSURANCE ORGANIZATION With a view to serve the society, the insurance organizations have been developed in different forms with innovation of insurance practice for social welfare and development; some of these forms are outlined here. a) Self-insurance The arrangement in which an individual or concern sets up a private fund to meet the future risk. If some losses happened in the future the firm meets the loss out of the fund. While it may be called ‘self insurance’ it is not a single matter of fact, insurance at all because there is no hedge, no shifting, or distributing the burden of risk among larger Persons.
It is merely a provision to meeting the unforeseen event. Here the insured become the insurer for the particular risk. But it can be effectively worked only when there is wide distribution of risks subjected the same hazard. b) Partnership A partnership firm may also carry on the insurance business for the sake of profit. Since it is not an entity distinct from the persons comprising it, the personal liability of partners in respect to the partnership debts is unlimited. In case of huge loss the partners may have to pay from their own personal funds and it will not be profitable to them to starts insurance business . n the early period before the advent of joint stock companies many insurance undertakings were partnership firms or unincorporated companies c) Joint stock companies The joint stock companies are those, which are organized by the shareholders who subscribe the necessary capital to start the business. These are formed for earning profits for the stockholders who are the real owners of the companies. The management of a company is entrusted to a board of directors who is elected by the shareholders from amongst themselves.
The company can operate insurance business and policyholders have nothing to do with the management of the concern. But in life insurance it is the practice to share certain portion of profit among the certain policyholders. d) Mutual fund companies The mutual fund companies are co- operative association formed for the purpose of effecting insurance on the property of its members. The policyholders are themselves the shareholders of the companies each member is insured as well as insured. They have power to participate in management and in the profit sharing to the full extent.
Whenever the income is more than the expenses and claims, it is accumulated I the form of saving and is entitled in reducing the rate of premium. Since the insured are insurers also, they always try to reduce the management expenses and to keep the business at sound level. e) Co-operative insurance organizations Cooperative insurance organizations are those concerns, which are incorporated and registered under Indian cooperative societies Act. The concerns are also called ‘co operative insurance societies’ these societies like mutual fund companies are non profit organization . he aim is to provide insurance protection to its members at the lowest reasonable net cost . the Indian insurance Act. 1938, has provided special provisions for the co-operative insurance societies, but after nationalization the societies have ceased to exist. f) Lloyd’s Association Lloyd’s association is one of the greatest insurance institutions in the world. Taking its name from the coffee house Lloyd where underwriters assembled to transact business and pick-up news. The organization traces its origins to the latter part of the seventeenth century . o it is the oldest insurance organization in existing form in the world. In 1871,Lloyds Act was passed incorporating the members of the association into a single corporate body with perpetual succession and a corporate seal . the powers of Lloyds corporation were extended from the business of marine insurance to the other insurance and guarantee business. The Lloyds Association also publishes, Lloyds list and register of shipping for the information of insuring public and the insurers g) State Insurance The government of a nation, some times, owns the insurance and runs the business for the benefit of the public.
The sate insurance is defined as that insurance which is under public sector. In Brazil, Japan and Mexico, the insurance are largely nationalized. Previously, the state undertook only those insurances, which were regarded as vital for the national interest. INSURANCE SECTOR REFORMS Having looked at the insurance sector, the efforts made by the government to make the industry more dynamic and customer friendly. To begin with, the Malhotra committee was set up with the objective of suggesting changes that would achieve the much required dynamism.
The Malhotra Committee Report 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. In 1994, the committee submitted the report and gave the following recommendations: 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
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 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 stat 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) 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). 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.
Overall, the committee strongly felt that in order to improve the customer services and increase the coverage of the insurance industry should be opened up to competition. But at the same time, the committee felt the need to exercise caution as any failure on the part of new players could ruin the public confidence in the industry. Function of an insurance broker An insurance broker is basically a “middle man” (or woman! ) who will find insurance for you. The thing to keep in mind with any broker is that he or she will only be working with certain insurance companies — usually those who will give them the best commission.
Therefore, they don’t work with all the available insurance companies, but only a select few. So, if you want the best deal, you may have to work with more than one broker, or even do some legwork yourself. The web makes that easy; you can get quotes online directly. As far as insurance goes, it is “risk management” for you. You are paying for a service that both you and the insurer are hoping you’ll never need! In some cases, you are required to have insurance by law. Your car insurance is an example of this. In other cases, you are required to have insurance as a condition of a loan, like your mortgage.
In all cases where you have insurance, you are protecting an asset, although in some cases that is more obvious than others. With life insurance, you are protecting your family or inheritors from the loss of you and your income. With health insurance, you are protecting your income from the cost of healthcare. With disability insurance, you are protecting your ability to generate income. This is even true with health, life and disability insurance. With life insurance, you are protecting your income and your family or dependants. Market analysis A detailed study was preformed on the market composition of Religare Insurance Broking Ltd.
The following findings were obtained. • A large chunk of the premium comes from GMC which makes up a chunk of 66% of the total premium • With quite a few companies we have brokered a variety of insurance product genres but none of them have that high a premium rate • Other genres like Fire and motor are large in the number of policies sold, but do not have that high a rate of premium. • There are many genres we have not tapped into.. For e. g. 1. SFSP 2. EDLI 3. Marine policies 4. B&P Even though we have provided these genres.. Their percentage intake is only 6%.. Which is very little.
These genres can be approached to increase business intake. [pic] About Religare Insurance Broking Ltd Parent Company Religare Name – Religare is a Latin word that translates as ‘to bind together’. This name has been chosen to reflect the integrated nature of the financial services the company offers. Symbol – The Religare name is paired with the symbol of a four-leaf clover. Traditionally, it is considered good fortune to find a four-leaf clover as there is only one four-leaf clover for every 10,000 three-leaf clovers found. For us, each leaf of the clover has a special meaning. It is a symbol of Hope. Trust.
Care. Good Fortune. Vision – To build Religare as a globally trusted brand in the financial services domain and present it as the ‘Investment Gateway of India’. Mission – Providing complete financial care driven by the core values of diligence and transparency. Brand Essence – Core brand essence is Diligence and Religare is driven by ethical and dynamic processes for wealth creation. Religare Insurance Broking Limited. Religare Insurance Broking Limited (RIBL), a 100% subsidiary of Religare Enterprises Limited is one of India’s leading insurance broking firms, with a strong retail network in the country.
The company holds a composite broker’s license operating in the Life, General and Reinsurance domains An insurance portfolio is designed from a choice of more than 3000 life and general insurance products & plans from more than 30 companies. This is one easy window for any brand of insurance, any kind of cover, offers tailor made insurance solutions with not just the right kind of cover but also the right mix of cover. RIBL not only provides customized solutions to individual clients, but also to some of the leading corporate houses and institutions across the country.
Our team across the country is driven by the core philosophy of creating and delivering value to its customers. Our strengths are a team of passionate professionals, a robust IT infrastructure and strong risk analysis teams adept at identifying & analyzing your risks and providing you with tailor made solutions. Vision and Mission Vision “To be India’s most trusted insurance partner” Mission “To create and institutionalize an ethical, process driven, advisory led approach, backed by the right expertise & sharp insights, benchmarked against global best practices”
Religare as an Insurance Broker Religare Insurance Broking Limited, a wholly owned subsidiary of Religare Enterprises Limited is one of India’s leading insurance broking firms, with a strong retail network in the country. The company holds a composite broker’s license for operating in the Life, General and Reinsurance domains. As an Insurance Broker, Religare offers you a single window for everything you need to insure. Our domain knowledge, backed by our expertise and multi-brand multi-product business model, ensures you get tailor-made insurance solutions.
We design your insurance portfolio from diversified life and general insurance products and plans from over 30 companies. So you get both the right kind and the right mix of cover. All under one roof • Freedom of choice to the customer • Represents clients to insurance companies • Gets the best deals to the clients – Cost, Coverage & Service • Technical and functional expertise • Proactive assistance and claims management • Professional and unbiased approach • Services the client at zero cost Our Client Interface Corporate Spectrum Developing customized insurance solutions for local & multinational corporate clients. Risk Management • onsite/offsite Assessments • Claims Management • Centralized servicing • Underwriter Due Diligence • Industry specific experts • Specialty Risk Coverage • Reinsurance • National and International Retail Network Offering complete range of personal insurance products through the Nationwide Network • Life Insurance • Pure Insurance Solutions • Investment Linked Plans • Guaranteed Saving Plans • General Insurance • Motor Insurance • Health Insurance Program • Travel Protection Schemes • Package Policies for SMEs • Financial Wellness • Child Plans • Protection Plans Retirement Plans Risk Placement Process [pic] Our Value Proposition Strong Domain Expertise Rich domain knowledge and Industry experts Comprehensive Risk Portfolio Management Expertise to meet all your Insurance needs Flexibility Market understanding, proactive and customer centric Infrastructure Human, technical, physical presence, CRM Quality Best business practices and highest quality service Strategic Partnerships Alliance with global and national players to get you the best deals Why Religare [pic] Composite Insurance Broker IRDA approved licensor working since November 2006.
Dealing in General & Life Insurance for both commercial and retail sectors. [pic] Worksites Dedicated Insurance helpdesks to cater client related problems both before and after sales. [pic] Corporate Insurance Services Technical and functional expertise to manage corporate business in all major locations. Mandated broker for a number of large corporate clients. [pic] Diversification RIBL represents a diversed bouquet of services spread across corporate, retail and institutional spectrum. [pic] Comprehensive risk management portfolio We have expertise to meet all your insurance needs and handle your insurance portfolio effeciently. pic] Strategic Partnership We have alliances with global and national players to get you the best deals at any given point of time. [pic] Customer – centric company Our focus is to provide the best in the market services which does not build a hole in your pocket. Corporate Clients Life Insurance ICICI Prudential Life Insurance Co. Ltd. Birla Sun Life Insurance Co. Ltd. Kotak Mahindra Old Mutual Life Insurance Ltd. Bajaj Allianz Life Insurance Co. Ltd. Life Insurance Corporation of India Aviva Life Insurance Co. India Pvt. Ltd. Met Life India Insurance Co. Pvt. Ltd. HDFC Standard Life Insurance Co.
Ltd. SBI Life Insurance Co. Ltd. ING Vysya Life Insurance Co. Ltd. Tata AIG Life Insurance Co. Ltd. Reliance Life Insurance Co. Ltd. General Insurance ICICI Lombard General Insurance Co. Ltd. Royal Sundaram Alliance Insurance Co. Ltd. Cholamandalam MS General Insurance Co. Ltd. Bajaj Allianz General Insurance Co. Ltd. Tata AIG General Insurance Co. Ltd. IFFCO Tokio General Insurance Co. Ltd. Star Health & Allied Insurance Co. Ltd. HDFC General Insurance Co. Ltd. Reliance General Insurance Co. Ltd. National Insurance Co. Ltd. New India Assurance Co. Ltd. United India Insurance Co. Ltd.
Oriental Insurance Co. Ltd. References Throughout the span of creating this report, I have taken the help of various sources. Some of these sources were used for literary ways, others simply for support and knowledge enrichment. Either ways, I am sincerely grateful. 1. Www. Wikipedia . com 2. Www. Google. com 3. Www. NHPC. Com 4. Www. Religare. com. in 5. Www. Insurancefordummies . com 6. Www. Ask. com 7. Www. Cluemein. com Thank you… ———————– Jaspreet Kaur Sethi (4843) Shaheed Sukhdev College of Business Studies Delhi University 2010 Religare Insurance Broking Ltd. Internship Project