Bajaj Allianz Project on Marketing
Content
Bajaj Allianz Life Insurance Co. Ltd.
INTRODUCTION
Life insurance or life assurance is a contract between the policy owner and the insurer, where the insurer agrees to pay a sum of money upon the occurrence of the policy owner's death. In return, the policy owner (or policy payer) agrees to pay a stipulated amount called a premium at regular intervals. As with most insurance polices, life assurance is a contract between the insurer and the policy owner (policyholder) whereby a benefit is paid to the designated Beneficiary (or Beneficiaries) if an insured event occurs which is covered by the policy. To be a life policy the insured event must be based upon life (or lives) of the people named in the policy. Insured events that may be covered include:
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death, accidental death
Life policies are legal contracts and the terms of the contract describe the limitations of the insured events. Specific exclusions are often written into the contract to limit the liability of the insurer; for example claims relating to suicide, fraud, war, riot and civil commotion. Life based contracts tend to fall into two major categories:
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Protection policies - designed to provide a benefit in the event of specified event, typically a lump sum payment. Investment policies - where the main objective is to facilitate the growth of capital by regular or single premiums.
Parties to contract
There is a difference between the insured and the policy owner (policy holder), although the owner and the insured are often the same person. For example, if Joe buys a policy on his own life, he is both the owner and the insured. But if Jane, his wife, buys a policy on Joe's life, she is the owner and he is the insured. The policy owner is the grantee and he or she will be the person who will pay for the policy. The insured is a participant in the contract, but not necessarily a party to it. The beneficiary receives policy proceeds upon the insured's death. The owner designates the beneficiary, but the beneficiary is not a party to the SIT PGDMS&R-Tumkur. 1
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policy. The owner may change the beneficiary unless the policy has an irrevocable beneficiary designation. With an irrevocable beneficiary, that beneficiary must agree to any beneficiary changes, policy assignments, or cash value borrowing. In cases where the policy owner is not the insured (also referred to as the cestui qui vit or CQV), insurance companies have sought to limit policy purchases to those with an "insurable interest" in the CQV. For life insurance policies, close family members and business partners will usually be found to have an insurable interest. The "insurable interest" requirement usually demonstrates that the purchaser will actually suffer some kind of loss if the CQV dies. Such a requirement prevents people from benefiting from the purchase of purely speculative policies on people they expect to die. With no insurable interest requirement, the risk that a purchaser would murder the CQV for insurance proceeds would be great. In at least one case, an insurance company which sold a policy to a purchaser with no insurable interest (who later murdered the CQV for the proceeds), was found liable in court for contributing to the wrongful death of the victim (Liberty National Life v. Weldon, 267 Ala.171 (1957)).
Contract terms
Special provisions may apply, such as suicide clauses wherein the policy becomes null if the insured commits suicide within a specified time (usually two years after the purchase date; some states provide a statutory oneyear suicide clause). Any misrepresentations by the insured on the application are also grounds for nullification. Most US states specify that the contestability period cannot be longer than two years; only if the insured dies within this period will the insurer have a legal right to contest the claim on the basis of misrepresentation and request additional information before deciding to pay or deny the claim. The face amount on the policy is the initial amount that the policy will pay at the death of the insured or when the policy matures, although the actual death benefit can provide for greater or lesser than the face amount. The policy matures when the insured dies or reaches a specified age (such as 100 years old).
Costs, insurability, and underwriting
The insurer (the life insurance company) calculates the policy prices with an intent to fund claims to be paid and administrative costs, and to make a profit. The cost of insurance is determined using mortality tables calculated by actuaries. Actuaries are professionals who employ actuarial science,
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which is based in mathematics (primarily probability and statistics). Mortality tables are statistically-based tables showing expected annual mortality rates. It is possible to derive life expectancy estimates from these mortality assumptions. Such estimates can be important in taxation regulation. The three main variables in a mortality table have been age, gender, and use of tobacco. More recently in the US, preferred class specific tables were introduced. The mortality tables provide a baseline for the cost of insurance. In practice, these mortality tables are used in conjunction with the health and family history of the individual applying for a policy in order to determine premiums and insurability. Mortality tables currently in use by life insurance companies in the United States are individually modified by each company using pooled industry experience studies as a starting point. In the 1980s and 90's the SOA 197580 Basic Select & Ultimate tables were the typical reference points, while the 2001 VBT and 2001 CSO tables were published more recently. The newer tables include separate mortality tables for smokers and nonsmokers and the CSO tables include separate tables for preferred classes. Recent US select mortality tables predict that roughly 0.35 in 1,000 nonsmoking males aged 25 will die during the first year of coverage after underwriting.Mortality approximately doubles for every extra ten years of age so that the mortality rate in the first year for underwritten non-smoking men is about 2.5 in 1,000 people at age 65.Compare this with the US population male mortality rates of 1.3 per 1,000 at age 25 and 19.3 at age 65 (without regard to health or smoking status). The mortality of underwritten persons raises much more quickly that the general population. At the end of 10 years the mortality of that 25 year-old, non-smoking male is 0.66/1000/year. Consequently, in a group of one thousand 25 year old males with a $100,000 policy, all of average health, a life insurance company would have to collect approximately $50 a year from each of a large group to cover the relatively few expected claims. (0.35 to 0.66 expected deaths in each year x $100,000 payout per death = $35 per policy). Administrative and sales commissions need to be accounted for in order for this to make business sense. A 10 year policy for a 25 year old non-smoking male person with preferred medical history may get offers as low as $90 per year for a $100,000 policy in the competitive US life insurance market. The insurance company receives the premiums from the policy owner and invests them to create a pool of money from which it can pay claims and
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finance the insurance company's operations. Contrary to popular belief, the majority of the money that insurance companies make comes directly from premiums paid, as money gained through investment of premiums can never, in even the most ideal market conditions, vest enough money per year to pay out claims. Rates charged for life insurance increase with the insured's age because, statistically, people are more likely to die as they get older. Given that adverse selection can have a negative impact on the insurer's financial situation, the insurer investigates each proposed insured individual unless the policy is below a company-established minimum amount, beginning with the application process. Group Insurance policies are an exception. This investigation and resulting evaluation of the risk is termed underwriting. Health and lifestyle questions are asked. Certain responses or information received may merit further investigation. Life insurance companies in the United States support the Medical Information Bureau (MIB), which is a clearinghouse of information on persons who have applied for life insurance with participating companies in the last seven years. As part of the application, the insurer receives permission to obtain information from the proposed insured's physicians. Underwriters will determine the purpose of insurance. The most common is to protect the owner's family or financial interests in the event of the insured's demise. Other purposes include estate planning or, in the case of cash-value contracts, investment for retirement planning. Bank loans or buy-sell provisions of business agreements are another acceptable purpose. Life insurance companies are never required by law to underwrite or to provide coverage to anyone, with the exception of Civil Rights Act compliance requirements. Insurance companies alone determine insurability, and some people, for their own health or lifestyle reasons, are deemed uninsurable. The policy can be declined (turned down) or rated. Rating increases the premiums to provide for additional risks relative to the particular insured. Many companies use four general health categories for those evaluated for a life insurance policy. These categories are Preferred Best, Preferred, Standard, and Tobacco. Preferred Best is reserved only for the healthiest individuals in the general population. This means, for instance, that the proposed insured has no adverse medical history, is not under medication
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for any condition, and his family (immediate and extended) has no history of early cancer, diabetes, or other conditions. Preferred means that the proposed insured is currently under medication for a medical condition and have a family history of particular illnesses. Most people are in the Standard category. Profession, travel, and lifestyle factor into whether the proposed insured will be granted a policy and which category the insured falls. For example, a person who would otherwise be classified as Preferred Best may be denied a policy if he or she travels to a high risk country. Underwriting practices can vary from insurer to insurer which provide for more competitive offers in certain circumstances. Life insurance contracts are written on the basis of utmost good faith. That is, the proposer and the insurer both accept that the other is acting in good faith. This means that the proposer can assume the contract offers what it represents without having to fine comb the small print and the insurer assumes the proposer is being honest when providing details to underwriter.
Death proceeds
Upon the insured's death, the insurer requires acceptable proof of death before it pays the claim. The normal minimum proof required is a death certificate and the insurer's claim form completed, signed (and typically notarized). If the insured's death is suspicious and the policy amount is large, the insurer may investigate the circumstances surrounding the death before deciding whether it has an obligation to pay the claim. Proceeds from the policy may be paid as a lump sum or as an annuity, which is paid over time in regular recurring payments for either a specified period or for a beneficiary's lifetime
HISTORY OF INSURANCE
1. The business of insurance started with marine business. Traders, who used to gather in the Lloyd’s coffee house in London, agreed to share the losses to their goods while being carried by ships. The losses used to occur because of pirates who robbed on the high seas or because of bad weather spoiling the goods or sinking the ships. The first insurance policy was issued in 1583 in England. In India, insurance began in 1870 with life insurance being transacted by an English company, the European and the Albert. The first Indian insurance company was the Bombay Mutual
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Assurance Society Limited formed in 1870. This was followed by the Oriental Life insurance co. in 1874, the Bharat in 1896 and the Empire Of India in 1897. 2. Later, the Hindustan cooperative was formed in Calcutta, the United India in Madras, the Bombay Life in Bombay, the National in Calcutta, the New India in Bombay, the Jupiter in Bombay and the Lakshmi in New Delhi. These were all Indian companies, started as a result of the swadeshi movement in the early 1900s. By the year 1956, when the life insurance was nationalized and the Life Insurance Corporation of India (LIC) was formed on first September 1956, there were 170 companies and 75 provident fund societies transacting life insurance business of India. After the amendment to the relevant laws in1999, the L.I.C. did not have the exclusive privilege of doing life insurance business in India. By 31.3.2002, 11 new insurers had been registered and had begun to transact life insurance business in India.
PRE LIBERALIZATION ERA OF INDIA INSURANCE INDUSTRY Insurance business is not new to India. It finds mentions in to writing of Manu, Rishi yagnavalkya and other indicating that it has existed in India of ancient times. It has evolved over times and has drawn heavily from the experience of other countries specially England where insurance companies have a more than 500 years of history. The business of Life insurance: In India in its existing from 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:
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1921: The Indian Life assurance companies Act enacted as the first statute to regulate the life insurance business.
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1928: The Indian insurance companies act enacted to enable the government to collect statistical information about both life and life insurance business.
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1938: Earliest legislation consolidated and amended to by the insurance Act with the objective of protecting the interest of the insuring public.
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1956: 245 Indian and foreign insures and provident societies taken over by the central government and nationalized. LIC formed by an Act of parliament viz LIC Act 196 with capital contribution of Rs.5 corer from the government of India.
Indian insurance industry, as 1.4.2000, comprised mainly two players: the state insurance, Life insurance Corporation of India (LIC). For life insurance and General Insurance Corporation of India (GIC) for general insurance ( with effect from Dec’2000, a National reinsures) GIC had four subsidiary companies, namely (with effect from DEC’2000, these subsidiaries have been de-linked from the parent company and made as independent insurance companies.) 1. The Oriental Insurance Company Limited. 2. The New India Assurance Company Limited. 3. National Insurance Company Limited. 4. United India insurance Company Limited. SIT PGDMS&R-Tumkur. 7
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REFORMS IN INSURANCE SECTOR
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 provision of IRDA Act, 1999 , Insurance Regulatory and Development Authority(IRDA) was established on 19 th 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. Under the new dispensation India insurance companies in private sector were permitted to operate in India with the following conditions. • • Company is formed and registered under Act,1956, The aggregate holding of equity shares by a foreign company, either by itself or through its subsidiary companies or its nominees; do not exceed 26%, paid up equity capital of such Indian insurance company. • • The minimum paid up equity capital for life or general insurance business is Rs.100 corers. The minimum paid up equity capital for carrying on reinsurance business has been prescribed as Rs. 200 corers. The authority has notified 27 Regulation on various issue, which include Registration of insurers, Regulation on insurance agents, Solvency Margin, Re-insurance ,Obligation of insurance to Rural the companies
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and
social
sector,
Investment
and
Accounting
procedure,
protection of policy holders’ interest etc. Applications were invited by the authority with effect from 15 th August 2000 for issue of the certificate of registration of both life and non-life insurers. The authority has its Head Quarter at Hyderabad.
POST LIBERALIZATION ERA OF INDIAN INSURANCE INDUSTRY In 1999 IRDA was founded to regulate the insurance industry (insurance Regulatory Development authority) Mission of IRDA: To protect the interest the policyholders to regulate promote and ensure orderly growth of the insurance industry and for matters connected there with or incidental there to. BACKGROUND: MAJOR MILESTONES IN THE INSURANCE BUSINESS IN INDIA: 1921: 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 life insurance business. 1938: Earliest legislation consolidated and amended to by the insurance Act with the objective of protecting the interest of the insuring public.
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The general insurance business in India, on the other hand can trace its root to the Triton Insurance company Ltd., the first general insurance company established in the year 1850 in Calcutta by British.
COMPANY PROFILE
Bajaj Group
Bajaj Auto Ltd, the flagship company of the Rs. 8000 crore Bajaj group is the largest manufacturer of two-wheelers and threewheelers in India and one of the largest in the world. A household name in India, Bajaj Auto has a strong brand image & brand loyalty synonymous with quality & customer focus.
A STRONG INDIAN BRAND- HAMARA BAJAJ
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One of the largest 2 & 3 wheeler manufacturer in the world 21 million+ vehicles on the roads across the globe Managing funds of over Rs 4000 cr. Bajaj Auto finance one of the largest auto finance cos. in India Rs. 4,744 Cr. Turnover & Profits of 538 Cr. in 2002-03 10
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It has joined hands with Allianz to provide the Indian consumers with a distinct option in terms of life insurance products As a promoter of Bajaj Allianz Life Insurance Co. Ltd., Bajaj Auto has the following to offer Financial strength and stability to support the Insurance Business A strong brand-equity. A good market reputation as a world class organization. An extensive distribution network. Adequate experience of running a large organization
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Allianz AG, Germany
Allianz AG is in the business of General (Property & Casualty) Insurance; Life & Health Insurance and Asset Management and has been in operation for over 110 years. Allianz is one of the largest global composite insurers with operations in over 70 countries. Further, the Group provides Risk Management and Loss Prevention Services. Allianz has insured most of the world's largest infrastructure projects (including Hongkong Airport and Channel Tunnel between UK and France), further Allianz insures the majority of the fortune 500 companies, besides being a large industrial insurer, Allianz has a substantial portfolio in the commercial and personal lines sector, using a wide variety of innovative distribution channels. Allianz AG offers Bajaj Allianz life Insurance Company Ltd. : • • New and improved international products One of the world's leading insurance companies
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Bajaj Allianz Life Insurance Co. Ltd.
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More than 700 subsidiaries and 2 lac employees in over 70 countries worldwide Provides insurance to almost half the Fortune 500 companies Latest Technology
BACKGROUND AND INCEPTION
Bajaj Allianz General Insurance Company Limited Bajaj Allianz General Insurance Company Limited is a joint venture between Bajaj Auto Limited and Allianz AG of Germany. Both enjoy a reputation of expertise, stability and strength. Bajaj Allianz General Insurance received the Insurance Regulatory and Development Authority (IRDA) certificate of Registration (R3) on May 2nd, 2001 to conduct General Insurance business (including Health Insurance business) in India. The Company has an authorized and paid up capital of Rs 147 crores. Bajaj Auto holds 74% and the remaining 26% is held by Allianz, AG, Germany. In its first year of operations, the company has acquired the No. 1 status among the private non-life insurers. As on 31st March 2006 Bajaj Allianz General Insurance maintained its leadership position by garnering the premium income of Rs.1285 crore. Bajaj Allianz has made a profit after tax of Rs.52crores. Bajaj Allianz today has a network presence in over 100 towns spread across the length and breadth of the country. From Surat to Siliguri and Jammu to Thiruvananthapuram, all the offices are interconnected with the Head Office at Pune. In the first half of the current financial year, 2006-07, Bajaj Allianz garnered a premium income of Rs. 842 crores, achieving a growth of 35% and Net profits rose to Rs.27 Crores.
VISION
• To be the first choice insurer for customers • To be the preferred employer for staff in the insurance industry. • To be the number one insurer for creating shareholder value
MISSION
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As a responsible, customer focused market leader, we will strive to understand the insurance needs of the consumers and translate it into affordable products that deliver value for money.
QUALITYPOLICY
Bajaj Allianz General Insurance Company offers technical excellence in all areas of General and Health Insurance as well as Risk Management. This partnership successfully combines Bajaj Auto's in-depth understanding of the local market and extensive distribution network with the global experience and technical expertise of the Allianz Group. As a registered Indian Insurance Company and a capital base of Rs. 147 crores, the company is
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Fully licensed to underwrite all lines of general insurance business including health
Trust
Bajaj Auto Limited is trusted name for over 55 years in the Indian market and Allianz SE has over 110 years of global experience in financial services. Together they are committed to provide you with time tested and trusted financial solutions that provide you all the security you need for your investments. Underwriting Philosophy Our underwriting philosophy focuses on :
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Understanding the customer's needs Underwriting what we understand Meeting the customer's requirements Ensuring optimal coverage at lowest cost
Claims Philosophy The Bajaj Allianz team follows a service that aims at taking the anxiety out of claims processing. They are focused towards providing you a hassle free and speedy claims processing. Their claims philosophy is to:
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Ensure no claim file to be seen by more than 3 people Check processes regularly against the global Allianz OPEX (Operational Excellence) methodology sold over 1 million since inception.
Customer Orientation At Bajaj Allianz, guiding principles are customer service and client satisfaction. All their efforts are directed towards understanding the culture, social environment and individual insurance requirements - so that we can cater to all your varied needs. Experienced and Expert Servicing Team They are driven by a team of experienced people who understand Indian risks and are supported by the necessary international expertise required to analyze and assess them. Service engineers located in every major city Superior Technology
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In order to ensure speedy and accurate processing of your needs, they have established world class technology, with renowned insurance software, which networks all our offices and intermediaries Using the Web, policies can be issued from any office across the country for retail products Unique, user friendly software developed to make the process of issue of policies and claims settlement simpler (e.g. online insurance of marine policy certificate)
Unique Forms of Risk Cover • Special PA cover for Amarnath Yatris • Film insurance • Event management cover • Sports & Entertainment Insurance Package
Risk ManagementTheir service methodology is tried, tested and Proven the world over and involves: • Risk identification: Inspections SIT PGDMS&R-Tumkur. 14
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Risk analysis: Portfolio review and gap analysis Risk retention Risk Transfer: To an insurer as well as reinsurer (as required) Creation of need based products Ongoing dialogue and proactivity Strategy
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Business strategy aligned to clients' needs and trends in Indian and global economy / industry Internationally experienced core team, majority with local background Fast, decentralized decision making Long-term commitment to market and clients.
Why Bajaj Allianz Life Insurance? An Impeccable track record across the globe in providing security and cover for you and your family... We, at Bajaj Allianz, realize that you seek an insurer who you can trust your hard earned money with. Allianz AG with over 110 years of experience in over 70 countries and Bajaj Auto, trusted for over 55 years in the Indian market, together are committed to offering you financial solutions that provide all the security you need for your family and yourself. Bajaj Allianz brings to you several innovative products, the details of which you can browse in this section.
PRODUCTS AND SERVICES PROFILE: INDIVIDUAL PLANS
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TERM CARE
Term plan with return of premium Lifetime care Whole life plan Protector A mortgage reducing term insurance plan Keyman insurance A promising business opportunity New unitgain plus Unit link plan with higher allocation Mahila gain rider The unique plan that takes care of you and your loved ones. Swarna raksha I A plan that provides you with regular income for life Bajaj allianz care first Guaranteed renewals up to age 65 without medicals New unit gain premier SP Upfront allocation of 105% of single premium on day 1 New family gain The only unitlinked insurance plan with ethical equity fund. New unitgain plus SP
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A single premium plan with maxx allocations Choice of 4 investments funds and 3 free switches allowed each year. Capital Unit gain Capital unit gain is a unit linked endowment regular premium plan that is designed to suit all your insurance & investment needs. New risk care “insure your today with us to ensure your family smiles tomorrow.” • A non-participating traditional term assurance plan
Invest gain An endowment plan Child gain Children’s policy Cash gain Money back plan Swarna vishranti Retirement plan Additional riders benefits for unit linked product While the basic life insurance New unit gain easy pension plus A plan that enables you retire with laughter lines….not worry lines
Health care This is a three-year health insurance plan, with life insurance benefit
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Additional benefits for traditional product Redesign your life insurance coverage to suit your needs, providing total protection. New unit gain super High allocation guaranteed life cover Save care economy-SP An investment that provides financial security and liquidity. Samraksha Bajaj allianz samraksha- a rural insurance plan. Unit gain guarantee SP High allocation and full or partial withdrawals are allowed anytime after 3 years.
GROUP PLANS: GROUP CREDIT SHIELD Available for Employer - Employee Groups and Non EmployerEmployee Groups. GROUP TERM LIFE Available for Employer - Employee Groups and Non EmployerEmployee Groups. GROUP TERM LIFE SCHEME In lieu of EDLI (Employees Deposit Linked Insurance). NEW GROUP GRATUITY CARE SCHEME Giving your Employees and their families the heartening reassurance of your care and financial security.
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AREA OF OPERATION
Indian Operations
Growing at a breakneck pace with a strong pan Indian presence Bajaj Allianz has emerged as a strong player in India …. Bajaj Allianz Life Insurance Company Limited is a joint venture between two leading conglomerates Allianz and Bajaj Auto Limited. Characterized by global presence with a local focus and driven by customer orientation to establish high earnings potential and financial strength, Bajaj Allianz Life Insurance Company Limited was incorporated on 12 th March 2001. the company received the Insurnace Regulatory Development Authority (IRDA) certificate of Registration (R3) no. 116 on 3rd August 2001 to conduct Life Insurance business in India. Bajaj Allianz – THE PRESENT • Product tailored to suit your needs • Decentralized organization structure for faster response • Wide reach to serve you better- a nationwide network of 700+branches • Specialized departments for Bancassurance, Corporate Agency and Group Business • Well networked Customer Care Centres (CCCs) with state of art IT systems • Highest standard of customer service & simplified claims process in the industry
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• Website to provide all assistance and information on products and service, online buying and online renewals • Toll-free number to answer all your queries, accessible from anywhere in the country- call now 1800225858 and a strong telemarketing and Direct marketing team • Swift and easy claim settlement process
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COMPETITORS INFORMATION:
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The competitors for Bajaj Allianz life insurance are, 1.Birla Sun Life Insurance Co. Ltd 2.HDFC Standard Life Insurance Co. Ltd 3.ICICI Prudential Life Insurance Co. Ltd 4.ING Vysya Life Insurance Company Ltd. 5.Life Insurance Corporation of India 6.Max New York Life Insurance Co. Ltd 7.Met Life India Insurance Company Pvt. Ltd. 8.Kotak Mahindra Old Mutual Life Insurance Limited 9.SBI Life Insurance Co. Ltd 10.Tata AIG Life Insurance Company Limited 11.Reliance Life Insurance Company Limited. 12.Aviva Life Insurance Co. India Pvt. Ltd.
Products of the competitors L.I.C life insurance: • Basic life insurance plans o o o o o o Whole life insurance Term insurance plans Specific plan for children Pension plans Plans for handicapped dependents Unit linked plans and others
AMP SANMAR life insurance: • • • • • • • Nithya shree plan Shuba shree plan Raksha shree plan Yuva shree plan Dhan shree plan Kanaka shree plan Bhagya shree plan
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DABUR AVIVA Life insurance: • • Life long plan Life saver plan
HDFC life insurance: • • • • • • Flexi bond Endowment Term assurance Children plan Money back plan Loan cover term
ING VYSYA: • • • Fulfilling life Reinsuring life Conquering life
OM KOTAK MAHINDRA: • • • • Capital Multiplier Preferred term Child Advantage Money back policy
ICICI Prudential life insurance; • • • • • Life guard Secure plan Life guard Smart kid Cash back
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State Bank of India: • • Sudarshan Swadhan shield
TATA AIG life insurance: • • Maha life 15 years life line security & growth
Max-New York life insurance; • • • • Whole life Endow age-60 5 Term Renewal Children endowment
ACHIEVEMENTS Achievements in Financial year 2005-06 :
Achievements
• Races past GWP of over Rs. 1001 Cr, with growth of over 357% over previous year’s GWP of Rs. 219 Crores • FYP of Rs 860 cr a 380% growth over last year’s FYP of Rs 179 cr. • Rocketed to No. 2 position as against No 6 at the end of last financial year amongst pvt Life Insurance cos., with a clear lead of Rs 240 cr
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• Fastest growing insurance company with 380% growth • Market share jumps almost 4 times from 0.95 % to 3.39 % amongst all life Insurance cos. • Increased its product portfolio from 7 to 19 simple and flexible products • Launched complete suite of employee benefit solutions (Group products for corporates
Mckinsey’s 7’s framework model:
WHAT IS 7-S FRAMEWORK? The 7-s framework of Mc Kinsey is a management model that describes the seven factors to organize a company in a holistic and effective way. Together these factors determine the way in which a corporation operates. Managers should take into account all seven of these factors, to be sure of successful implementation of a strategy, they are all interdependent, so if you pay proper attention to one of them, this may affect all others as well. On top of that, the relative importance of each factor may vary overtime. The outstanding feature of the 7-s model is that it has been tested extensively by Mc Kinsey consultants in their studies of many companies. At the same time this framework has been used by respected business schools such as Harvard and Standford. Thus theory and practice seem to support each other in the study of management perhaps the most surprising fact about the 7-s model is that it supports and is similar to the framework of the managerial functions planning, organizing, leading and controlling.
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Those are briefly discussed in following manner.
STRUCTURE: Organization structure refers to the way in which organization activities are divided, grouped and coordinated into relationship between managers and employees, managers and managers, employees and employees, organization department can be formally structured in three ways. 1. By Function. 2. By Product/ Services. SIT PGDMS&R-Tumkur. 26
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3. In Matrix Form. The structure of organization is basically a network of authorities’ and responsibilities, which has been assumed by and delegated to employees. It provides basis for managers and non mangers personnel perform the job assigned to them. The structure of organization deliberately designed and planned on the following factors. 1. Objectives and Goals. 2. Technology. 3. Environment. 4. People. STRUCTURE OF BAJAJ LIFE INSURANCE; At Bajaj life insurance the various activities are classified on the basis of job profile. The communication is the both vertical and horizontal in organization. The company is divided based on territory as it is the geographically dispersed. The decision making in Bajaj life insurance is centralized.
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ORGANIZATIONAL STRUCTURE
Executive Committee/Board
Operations Risk evaluation Production Design Underwriting
Marketing Marketing Selling Customer servicing Premium
Finance Fund Management Investments/ portfolio management
Administration Support functions
OPERATION
SALES
REGIONAL HEAD OPERATOR
SALES MGR
ZONAL MGR
ASM
STATE MGR
AGENCYMGR
BRANCH MGR
UNIT MGR
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TEAM LEADER
FINANCIAL ADVISORS
EXECUTIVE
Board of directors: 1. Rahul Bajaj 2. Dr. Werner Zedelius 3. Sanjay Asher 4. Heinz Dollberg 5. Sanjay Bajaj 6. Craig Ellis 7. Ranjit Gupta 8. Suraj Mehta 9. Manu Tandon 10. 11. 12. Bruce Bowers S. H. Khan Dr. P. S. Palande Werner Zedelius) -Director -Director
-Chairman
-Director -Director -Director -Director -Director -Director -Director -Additional Director -(Alternate Director to Dr.
Functions of Various Departments.
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1. Operational Department: • • • • Verification and data entry. Issuing checks for cancelled policy. Issue of receipt. Withdrawals (withdrawal of money form his policy) and top up (Adding and shift from one policy to another)
2. Human Resource department: • • • • Strategic HRM. Recruitment and selection. Performance appraisal. Training and salary administration.
3. Administrative Department. • • • Overall back office operation(which look after at right time of insurance) Look after commission that must be given to the agent. Maintenance of employees’ record.
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4.
Marketing Department: • • • • • Sales promotional activate. Looking after overall sales (Number of policies). Looking after underwriting department. Opening up of new branches. Selection of media for advertisements.
SKILLS: Skill is McKensey’s framework is “Distinctively
Competitiveness”, this dominant skill or the distinctive competence becomes the character of the organization. The strength develops over a period of time due to interaction of numbers of factors such as 1. The style of people in the organization. 2. The management style. 3. The structure. 4. The system. 5. The repetition of work over a period of time. SKILLS IN RELATION TO BAJAJ LIFE INSURANCE : Skills are much needed for employees to carry out the company strategy. Thus the required skills for employees in order to enhance their job efficiently namely; 1. Interpersonal skills. 2. People management skills.
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3. Process knowledge. 4. Good product knowledge. 5. Analytical thinking innovations. STYLE; The style of the organization refers to the pattern of action taken by the top management team over a period of time. The leadership style depends upon the organization culture that is in practice. The decision in the organization is taken by the top management may be in consultation with subordinates or without consultation.
Style consists of two components: 1. Organizational culture: - the dominant value beliefs and norms which develops over a period time and becomes relatively enduring, futures of organization life. 2. Management style: - more matters what managers do, than what they say how a company managers spend their time / what they are focusing on /symbolism. The creation and maintain ace (sometimes deconstruction) is the fundamental responsibility of the managers. Bajaj allianz follows participative and social type of leadership in which all level of managers interact with each other for the achievement towards goal and report to the higher officials. Managers work together as a team to solve problem in a significant manner.
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In the Bajaj allianz some of the decisions may have to be taken with the mutual consultation of top management and middle level management. These decisions are through mutual exchange of knowledge and the experience of the employees. The top management will consult their immediate subordinates of any important decisions is to be taken. Some decisions that are strategic and do not need intervention of middle level management these decisions are taken by top level management only.
STRATEGY: In a dynamic scenario organization can’t move without strategies. Strategy means those actions that company plans in response to or anticipation of change in its external environment. Its customers and its competitor’s strategy ids the way the company aims to improve its position vis-à-vis competition.
Throughout the past decade the corporate world has given close attention to the interplay between strategy and structure. Certainly clear idea about strategy makes the job to a structural and design more rational. Business strategy aligned to clients' needs and trends in Indian and global economy / industry
•
Internationally experienced core team, majority with local background Fast, decentralized decision making
•
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•
Long-term commitment to market and clients.
In relation to Bajaj allianz;
Bajaj allianz strategy is to be number one insurance company of India. Bajaj allianz strategy is to achieve goals are, • • • • • Business strategy aligned to clients' needs and trends in Indian and global economy / industry Internationally experienced core team, majority with local background Fast, decentralized decision making Long-term commitment to market and clients. Regarding pricing of products there are two types. Tariff product. Non tariff product.
SYSTEMS: System consists of all formal and informal procedure that allows organizational functions, including capital budgeting system, accounting and management information system.
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The system in organization the system in organization is well established so as take easy end proper decisions related to particular branch in country. I each branch also the company has maintained the proper system so as to facilitate the proper functioning of organization. The formal rules and regulations of the organization are in accordance with the specification given by IRDA. The IRDA acts as a watch dog in the whole insurance industry. Among many system followed by Bajaj life insurance to meet its day to day objects, the merit rating system in follows; 1. Based on performance (number of policies sold). 2. Based on sales and licensed consultant, performance appraisal will be done. 3. Depending on the less lapsed ratio of the policies, which are sold by particular team, points will be added. 4. Depending on the number of unit meetings conducted by sales manager and outcome of results. 5. Depending on the consistency of sales manger. sales department is as
STAFF: The staff will specify the process by which employees are recruited, deployed and developed. It also specifies the skills that are to be SIT PGDMS&R-Tumkur. 35
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required by the employee. The staff required by a particular branch will be selected by the branch according to their requirement and this will be done with the consultation of head office. : Classification of employees: 1. Permanent: - a permanent employee is an employee who has been employed on a permanent basis against permanent vacancy by an order in writing by an authorized officer of a company. 2. Probationary: Probationer is an employee who has been provisionally employed to fill a permanent vacancy and has not completed the period of probation. 3. Temporary/ Contractual: - A temporary employee is an employee who has been engaged for a specified limited period, for work which is essentially of a temporary nature or who is engaged temporarily as an additional employee in connection with a temporary increases in work of permanent nature.
SHARED VALUES:
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The word ‘super ordinate’ literally means “of higher order”. By
super
ordinate goals , we mean Guiding concepts- a set of values and aspirations, often unwritten that beyond the conventional formal statement cooperate objectives. Super ordinates goals are the fundamental ideas around which a business is built. They are its main values. That they are more as well. They are the board notions of future directions that the top mgt team wants to infuse throughout the organization. They are the way in which the team want to express it self, to leave its own mark. E.g.- would include Theodore vial’s “universal services” objective, which as so dominated AT & T ;the strong to “customer service” which guides IBM marketing. In a sense, super ordinate goals are like basic postulates in a mathematical system they are the starting point on which the system is logical built, in themselves are not logically derived. The ultimate test of their value is not there logic but the usefulness ensures. Every ones seem to know he importance of compelling super ordinate goals. The drive of accomplishments pulls an organization together. They provide stability in what other wise would be a shifting set of organization dynamics. Unlike the other six S’s super ordinate goals don’t seem to be present in all, or even most, organizations. They are, however, evident in most of the superior performers. The value shared by the members of an enterprise is know as the shared values. IN RELATION TO COMPANY Core values: SIT PGDMS&R-Tumkur. 37 of the system that
Bajaj Allianz Life Insurance Co. Ltd.
Trust , relationship, challenge & foster ownership Other values: Concern for employees, customer satisfaction, commitment society, creating shareholders’ wealth. to
SWOT ANALYSIS: STRENGTHS: 1. Brand name. 2. In-house fund management. 3. Product portfolio (diversified). 4. Channel partner (banks). 5. Hardworking and committed employees. WEAKNESS: 1. Lot of procedures. 2. Low awareness of the company in rural sectors: 3. Tough competitors such as LIC playing predominant role.
OPPORTUNITIES: 1. Demography- building network in order to capture rural areas. 2. Untapped market opportunities. SIT PGDMS&R-Tumkur. 38
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3. To penetrate global markets. 4. To gain the upper hand in market share in India. THREATS; 1. Intensive competition due to liberalization. 2. Rules and regulations- IRDA rules and regulations are not stablecompany may find it difficult to plan out its strategies even it is certified by IRDA. 3. The company is innovating more and more products are design regularly.
COMPANY’S LATEST ANNUAL REPORT:
The following is the Bajaj Allianz life insurance company’s annual report,
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(Amount in Rs. ‘000)
PARTICULARS
SOURCES OF FUNDS SHARE HOLDER’S FUNDS Share Capital Reserves & Surplus Credit/(Debit) Fair Value Change Account SUB TOTAL BORROWINGS POLICY HOLDER’S FUNDS Credit/(Debit) Fair Value Change Account Policy Liabilities Participating Individual Assurance Individual Pension Non participating Individual Assurance Individual Annuity Group Assurance Linked Individual Assurance Individual Pension Group Superannuation Group Gratuity Insurance Reserves Provision For Linked Liabilities Linked Liabilities Fair Value Change SUB TOTAL FUNDS FOR FUTURE APPROPRIATIONS Participating Individual Assurance Individual Pension Non participating Individual Assurance
Current year
Current year
1,503,680 5,501,600 85 7,005,365 15,443
5,493,958 211,463 154,036 43,243 198,175 591,016 21,015 48,845,768 3,022,633
6,712,906
51,868,401 58,596,750
585,104 4,383 50,961
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Individual Annuity Group Assurance Linked Individual Assurance Individual Pension Group Superannuation Group Gratuity Reserve for lapsed unit linked policies Unlikely to be revived TOTAL
7,019 23,456 670,923 1,358,813
2,029,736 67,631,851
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APPLICATION OF FUNDS INVESTMENTS Share holders’ Policy holders’ Participating Individual Assurance Individual Pension Non Participating Individual Assurance Individual Annuity Group Assurance Linked Individual Assurance Individual Pension Group superannuation Group Gratuity ASSETS HELD TO COVER LINKED LIABILITIES LOANS FIXED ASSETS Gross Block Less: Accumulated Depreciation Net Block Capital work in progress CURRENT ASSETS Cash and bank balances Advances and other Assets Sub-Total(A) LESS: CURRENT LIABILITIES AND PROVISIONS Current Liabilities Provisions Sub-Total(B) NET CURRENT ASSETS (C)= (A-B) MISCELLANEOUS EXPENDITURE (To the extent not written off or adjusted) DEBIT BALANCE IN PROFIT AND LOSS ACCOUNT(Shareholders’ account) SIT PGDMS&R-Tumkur.
6,536,500 6,162,724 220,101 208,183 50,900 231,297 2,152,260 21,112 2,610 1,571 9,050,758 51,868,401 18,630 1,043,272 510,127 533,145 2,549 535,694 4,198,042 854,477 5,052,519
8,093,047 97,733 8,190,780 (3,138,261) 2,760,129 67,631,851 42
Bajaj Allianz Life Insurance Co. Ltd.
Analysis
Bajaj Allianz continues to be at the second position amongst the private life insurers on the basis of new business premium and first position on the basis of the number of policies. It wrote new business of Rs. 2,698 million compared to Rs. 27,168 million in the previous year and registered a market share of 5.7% compared to 7.6% in the previous year. The gross premium written for the financial year 2006-07 was Rs.53,100 million, as compared to Rs. 31,336 million in the previous year. The Company has recorded a profit of Rs. 662 million during the financial year and is the highest profit making company in the private sector. The Agency channel largely contributed to the extra ordinary growth achieved by the Company. Strength of agents doubled in the year from 109,000 to 213,000. The Company has the largest distribution network in the private sector and has its presence in 876 offices across the country. Alternate channels have also picked up with a good performance of the corporate agents and other distribution networks. Our Bancassurance channel has also performed well and has tied up with pan-India financial institutions, various Co-Operative banks and Regional Rural Banks. The Company has successfully developed a comprehensive product range covering individual life and group business by introducing a number of products during the year. Your Company has been monitoring its solvency margins, which have been maintained in accordance with IRDArequirements
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LEARNING EXPERIENCE
The main purpose of the “organization study’ is to make the students acquainted with the practical knowledge about the overall functioning of the organization. It gives opportunity to study the human behavior and also makes one ready to face different situation, which normally would come across while on work in the office or factory environment. It was a great experience working in Bajaj Allianz Life Insurance Co.Ltd, where I learnt many things about the functioning of the company in accordance with the present market trends. The interaction with the employees gave me an insight and practical experience of the industrial scenario in the competitive environment outside the realms of the institute. During this period, it was totally a new experience for me to enter into the organization. I spent most of time in visiting various departments in the factory and interacting with employees. I went to different departments like finance, human resources. I was able to understand the importance of each department and their contribution towards the achievements of the company’s objectives. I also learnt how the company always tries to feel the pulse of the customers, because customers are the purpose of the business. More importantly, I was able to understand the different tactics of the companies to attract and retain the customers. I had interactions with each of the departmental heads and I came to know the real situation, duties, responsibilities and functions of each of the departments.
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INTRODUCTION
Life insurance or life assurance is a contract between the policy owner and the insurer, where the insurer agrees to pay a sum of money upon the occurrence of the policy owner's death. In return, the policy owner (or policy payer) agrees to pay a stipulated amount called a premium at regular intervals. As with most insurance polices, life assurance is a contract between the insurer and the policy owner (policyholder) whereby a benefit is paid to the designated Beneficiary (or Beneficiaries) if an insured event occurs which is covered by the policy. To be a life policy the insured event must be based upon life (or lives) of the people named in the policy. Insured events that may be covered include:
• •
death, accidental death
Life policies are legal contracts and the terms of the contract describe the limitations of the insured events. Specific exclusions are often written into the contract to limit the liability of the insurer; for example claims relating to suicide, fraud, war, riot and civil commotion. Life based contracts tend to fall into two major categories:
• •
Protection policies - designed to provide a benefit in the event of specified event, typically a lump sum payment. Investment policies - where the main objective is to facilitate the growth of capital by regular or single premiums.
Parties to contract
There is a difference between the insured and the policy owner (policy holder), although the owner and the insured are often the same person. For example, if Joe buys a policy on his own life, he is both the owner and the insured. But if Jane, his wife, buys a policy on Joe's life, she is the owner and he is the insured. The policy owner is the grantee and he or she will be the person who will pay for the policy. The insured is a participant in the contract, but not necessarily a party to it. The beneficiary receives policy proceeds upon the insured's death. The owner designates the beneficiary, but the beneficiary is not a party to the SIT PGDMS&R-Tumkur. 1
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policy. The owner may change the beneficiary unless the policy has an irrevocable beneficiary designation. With an irrevocable beneficiary, that beneficiary must agree to any beneficiary changes, policy assignments, or cash value borrowing. In cases where the policy owner is not the insured (also referred to as the cestui qui vit or CQV), insurance companies have sought to limit policy purchases to those with an "insurable interest" in the CQV. For life insurance policies, close family members and business partners will usually be found to have an insurable interest. The "insurable interest" requirement usually demonstrates that the purchaser will actually suffer some kind of loss if the CQV dies. Such a requirement prevents people from benefiting from the purchase of purely speculative policies on people they expect to die. With no insurable interest requirement, the risk that a purchaser would murder the CQV for insurance proceeds would be great. In at least one case, an insurance company which sold a policy to a purchaser with no insurable interest (who later murdered the CQV for the proceeds), was found liable in court for contributing to the wrongful death of the victim (Liberty National Life v. Weldon, 267 Ala.171 (1957)).
Contract terms
Special provisions may apply, such as suicide clauses wherein the policy becomes null if the insured commits suicide within a specified time (usually two years after the purchase date; some states provide a statutory oneyear suicide clause). Any misrepresentations by the insured on the application are also grounds for nullification. Most US states specify that the contestability period cannot be longer than two years; only if the insured dies within this period will the insurer have a legal right to contest the claim on the basis of misrepresentation and request additional information before deciding to pay or deny the claim. The face amount on the policy is the initial amount that the policy will pay at the death of the insured or when the policy matures, although the actual death benefit can provide for greater or lesser than the face amount. The policy matures when the insured dies or reaches a specified age (such as 100 years old).
Costs, insurability, and underwriting
The insurer (the life insurance company) calculates the policy prices with an intent to fund claims to be paid and administrative costs, and to make a profit. The cost of insurance is determined using mortality tables calculated by actuaries. Actuaries are professionals who employ actuarial science,
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which is based in mathematics (primarily probability and statistics). Mortality tables are statistically-based tables showing expected annual mortality rates. It is possible to derive life expectancy estimates from these mortality assumptions. Such estimates can be important in taxation regulation. The three main variables in a mortality table have been age, gender, and use of tobacco. More recently in the US, preferred class specific tables were introduced. The mortality tables provide a baseline for the cost of insurance. In practice, these mortality tables are used in conjunction with the health and family history of the individual applying for a policy in order to determine premiums and insurability. Mortality tables currently in use by life insurance companies in the United States are individually modified by each company using pooled industry experience studies as a starting point. In the 1980s and 90's the SOA 197580 Basic Select & Ultimate tables were the typical reference points, while the 2001 VBT and 2001 CSO tables were published more recently. The newer tables include separate mortality tables for smokers and nonsmokers and the CSO tables include separate tables for preferred classes. Recent US select mortality tables predict that roughly 0.35 in 1,000 nonsmoking males aged 25 will die during the first year of coverage after underwriting.Mortality approximately doubles for every extra ten years of age so that the mortality rate in the first year for underwritten non-smoking men is about 2.5 in 1,000 people at age 65.Compare this with the US population male mortality rates of 1.3 per 1,000 at age 25 and 19.3 at age 65 (without regard to health or smoking status). The mortality of underwritten persons raises much more quickly that the general population. At the end of 10 years the mortality of that 25 year-old, non-smoking male is 0.66/1000/year. Consequently, in a group of one thousand 25 year old males with a $100,000 policy, all of average health, a life insurance company would have to collect approximately $50 a year from each of a large group to cover the relatively few expected claims. (0.35 to 0.66 expected deaths in each year x $100,000 payout per death = $35 per policy). Administrative and sales commissions need to be accounted for in order for this to make business sense. A 10 year policy for a 25 year old non-smoking male person with preferred medical history may get offers as low as $90 per year for a $100,000 policy in the competitive US life insurance market. The insurance company receives the premiums from the policy owner and invests them to create a pool of money from which it can pay claims and
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finance the insurance company's operations. Contrary to popular belief, the majority of the money that insurance companies make comes directly from premiums paid, as money gained through investment of premiums can never, in even the most ideal market conditions, vest enough money per year to pay out claims. Rates charged for life insurance increase with the insured's age because, statistically, people are more likely to die as they get older. Given that adverse selection can have a negative impact on the insurer's financial situation, the insurer investigates each proposed insured individual unless the policy is below a company-established minimum amount, beginning with the application process. Group Insurance policies are an exception. This investigation and resulting evaluation of the risk is termed underwriting. Health and lifestyle questions are asked. Certain responses or information received may merit further investigation. Life insurance companies in the United States support the Medical Information Bureau (MIB), which is a clearinghouse of information on persons who have applied for life insurance with participating companies in the last seven years. As part of the application, the insurer receives permission to obtain information from the proposed insured's physicians. Underwriters will determine the purpose of insurance. The most common is to protect the owner's family or financial interests in the event of the insured's demise. Other purposes include estate planning or, in the case of cash-value contracts, investment for retirement planning. Bank loans or buy-sell provisions of business agreements are another acceptable purpose. Life insurance companies are never required by law to underwrite or to provide coverage to anyone, with the exception of Civil Rights Act compliance requirements. Insurance companies alone determine insurability, and some people, for their own health or lifestyle reasons, are deemed uninsurable. The policy can be declined (turned down) or rated. Rating increases the premiums to provide for additional risks relative to the particular insured. Many companies use four general health categories for those evaluated for a life insurance policy. These categories are Preferred Best, Preferred, Standard, and Tobacco. Preferred Best is reserved only for the healthiest individuals in the general population. This means, for instance, that the proposed insured has no adverse medical history, is not under medication
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for any condition, and his family (immediate and extended) has no history of early cancer, diabetes, or other conditions. Preferred means that the proposed insured is currently under medication for a medical condition and have a family history of particular illnesses. Most people are in the Standard category. Profession, travel, and lifestyle factor into whether the proposed insured will be granted a policy and which category the insured falls. For example, a person who would otherwise be classified as Preferred Best may be denied a policy if he or she travels to a high risk country. Underwriting practices can vary from insurer to insurer which provide for more competitive offers in certain circumstances. Life insurance contracts are written on the basis of utmost good faith. That is, the proposer and the insurer both accept that the other is acting in good faith. This means that the proposer can assume the contract offers what it represents without having to fine comb the small print and the insurer assumes the proposer is being honest when providing details to underwriter.
Death proceeds
Upon the insured's death, the insurer requires acceptable proof of death before it pays the claim. The normal minimum proof required is a death certificate and the insurer's claim form completed, signed (and typically notarized). If the insured's death is suspicious and the policy amount is large, the insurer may investigate the circumstances surrounding the death before deciding whether it has an obligation to pay the claim. Proceeds from the policy may be paid as a lump sum or as an annuity, which is paid over time in regular recurring payments for either a specified period or for a beneficiary's lifetime
HISTORY OF INSURANCE
1. The business of insurance started with marine business. Traders, who used to gather in the Lloyd’s coffee house in London, agreed to share the losses to their goods while being carried by ships. The losses used to occur because of pirates who robbed on the high seas or because of bad weather spoiling the goods or sinking the ships. The first insurance policy was issued in 1583 in England. In India, insurance began in 1870 with life insurance being transacted by an English company, the European and the Albert. The first Indian insurance company was the Bombay Mutual
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Assurance Society Limited formed in 1870. This was followed by the Oriental Life insurance co. in 1874, the Bharat in 1896 and the Empire Of India in 1897. 2. Later, the Hindustan cooperative was formed in Calcutta, the United India in Madras, the Bombay Life in Bombay, the National in Calcutta, the New India in Bombay, the Jupiter in Bombay and the Lakshmi in New Delhi. These were all Indian companies, started as a result of the swadeshi movement in the early 1900s. By the year 1956, when the life insurance was nationalized and the Life Insurance Corporation of India (LIC) was formed on first September 1956, there were 170 companies and 75 provident fund societies transacting life insurance business of India. After the amendment to the relevant laws in1999, the L.I.C. did not have the exclusive privilege of doing life insurance business in India. By 31.3.2002, 11 new insurers had been registered and had begun to transact life insurance business in India.
PRE LIBERALIZATION ERA OF INDIA INSURANCE INDUSTRY Insurance business is not new to India. It finds mentions in to writing of Manu, Rishi yagnavalkya and other indicating that it has existed in India of ancient times. It has evolved over times and has drawn heavily from the experience of other countries specially England where insurance companies have a more than 500 years of history. The business of Life insurance: In India in its existing from 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:
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1921: The Indian Life assurance companies Act enacted as the first statute to regulate the life insurance business.
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1928: The Indian insurance companies act enacted to enable the government to collect statistical information about both life and life insurance business.
•
1938: Earliest legislation consolidated and amended to by the insurance Act with the objective of protecting the interest of the insuring public.
•
1956: 245 Indian and foreign insures and provident societies taken over by the central government and nationalized. LIC formed by an Act of parliament viz LIC Act 196 with capital contribution of Rs.5 corer from the government of India.
Indian insurance industry, as 1.4.2000, comprised mainly two players: the state insurance, Life insurance Corporation of India (LIC). For life insurance and General Insurance Corporation of India (GIC) for general insurance ( with effect from Dec’2000, a National reinsures) GIC had four subsidiary companies, namely (with effect from DEC’2000, these subsidiaries have been de-linked from the parent company and made as independent insurance companies.) 1. The Oriental Insurance Company Limited. 2. The New India Assurance Company Limited. 3. National Insurance Company Limited. 4. United India insurance Company Limited. SIT PGDMS&R-Tumkur. 7
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REFORMS IN INSURANCE SECTOR
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 provision of IRDA Act, 1999 , Insurance Regulatory and Development Authority(IRDA) was established on 19 th 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. Under the new dispensation India insurance companies in private sector were permitted to operate in India with the following conditions. • • Company is formed and registered under Act,1956, The aggregate holding of equity shares by a foreign company, either by itself or through its subsidiary companies or its nominees; do not exceed 26%, paid up equity capital of such Indian insurance company. • • The minimum paid up equity capital for life or general insurance business is Rs.100 corers. The minimum paid up equity capital for carrying on reinsurance business has been prescribed as Rs. 200 corers. The authority has notified 27 Regulation on various issue, which include Registration of insurers, Regulation on insurance agents, Solvency Margin, Re-insurance ,Obligation of insurance to Rural the companies
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and
social
sector,
Investment
and
Accounting
procedure,
protection of policy holders’ interest etc. Applications were invited by the authority with effect from 15 th August 2000 for issue of the certificate of registration of both life and non-life insurers. The authority has its Head Quarter at Hyderabad.
POST LIBERALIZATION ERA OF INDIAN INSURANCE INDUSTRY In 1999 IRDA was founded to regulate the insurance industry (insurance Regulatory Development authority) Mission of IRDA: To protect the interest the policyholders to regulate promote and ensure orderly growth of the insurance industry and for matters connected there with or incidental there to. BACKGROUND: MAJOR MILESTONES IN THE INSURANCE BUSINESS IN INDIA: 1921: 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 life insurance business. 1938: Earliest legislation consolidated and amended to by the insurance Act with the objective of protecting the interest of the insuring public.
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The general insurance business in India, on the other hand can trace its root to the Triton Insurance company Ltd., the first general insurance company established in the year 1850 in Calcutta by British.
COMPANY PROFILE
Bajaj Group
Bajaj Auto Ltd, the flagship company of the Rs. 8000 crore Bajaj group is the largest manufacturer of two-wheelers and threewheelers in India and one of the largest in the world. A household name in India, Bajaj Auto has a strong brand image & brand loyalty synonymous with quality & customer focus.
A STRONG INDIAN BRAND- HAMARA BAJAJ
• • • •
One of the largest 2 & 3 wheeler manufacturer in the world 21 million+ vehicles on the roads across the globe Managing funds of over Rs 4000 cr. Bajaj Auto finance one of the largest auto finance cos. in India Rs. 4,744 Cr. Turnover & Profits of 538 Cr. in 2002-03 10
•
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•
It has joined hands with Allianz to provide the Indian consumers with a distinct option in terms of life insurance products As a promoter of Bajaj Allianz Life Insurance Co. Ltd., Bajaj Auto has the following to offer Financial strength and stability to support the Insurance Business A strong brand-equity. A good market reputation as a world class organization. An extensive distribution network. Adequate experience of running a large organization
•
•
• • • •
Allianz AG, Germany
Allianz AG is in the business of General (Property & Casualty) Insurance; Life & Health Insurance and Asset Management and has been in operation for over 110 years. Allianz is one of the largest global composite insurers with operations in over 70 countries. Further, the Group provides Risk Management and Loss Prevention Services. Allianz has insured most of the world's largest infrastructure projects (including Hongkong Airport and Channel Tunnel between UK and France), further Allianz insures the majority of the fortune 500 companies, besides being a large industrial insurer, Allianz has a substantial portfolio in the commercial and personal lines sector, using a wide variety of innovative distribution channels. Allianz AG offers Bajaj Allianz life Insurance Company Ltd. : • • New and improved international products One of the world's leading insurance companies
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Bajaj Allianz Life Insurance Co. Ltd.
• • •
More than 700 subsidiaries and 2 lac employees in over 70 countries worldwide Provides insurance to almost half the Fortune 500 companies Latest Technology
BACKGROUND AND INCEPTION
Bajaj Allianz General Insurance Company Limited Bajaj Allianz General Insurance Company Limited is a joint venture between Bajaj Auto Limited and Allianz AG of Germany. Both enjoy a reputation of expertise, stability and strength. Bajaj Allianz General Insurance received the Insurance Regulatory and Development Authority (IRDA) certificate of Registration (R3) on May 2nd, 2001 to conduct General Insurance business (including Health Insurance business) in India. The Company has an authorized and paid up capital of Rs 147 crores. Bajaj Auto holds 74% and the remaining 26% is held by Allianz, AG, Germany. In its first year of operations, the company has acquired the No. 1 status among the private non-life insurers. As on 31st March 2006 Bajaj Allianz General Insurance maintained its leadership position by garnering the premium income of Rs.1285 crore. Bajaj Allianz has made a profit after tax of Rs.52crores. Bajaj Allianz today has a network presence in over 100 towns spread across the length and breadth of the country. From Surat to Siliguri and Jammu to Thiruvananthapuram, all the offices are interconnected with the Head Office at Pune. In the first half of the current financial year, 2006-07, Bajaj Allianz garnered a premium income of Rs. 842 crores, achieving a growth of 35% and Net profits rose to Rs.27 Crores.
VISION
• To be the first choice insurer for customers • To be the preferred employer for staff in the insurance industry. • To be the number one insurer for creating shareholder value
MISSION
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As a responsible, customer focused market leader, we will strive to understand the insurance needs of the consumers and translate it into affordable products that deliver value for money.
QUALITYPOLICY
Bajaj Allianz General Insurance Company offers technical excellence in all areas of General and Health Insurance as well as Risk Management. This partnership successfully combines Bajaj Auto's in-depth understanding of the local market and extensive distribution network with the global experience and technical expertise of the Allianz Group. As a registered Indian Insurance Company and a capital base of Rs. 147 crores, the company is
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Fully licensed to underwrite all lines of general insurance business including health
Trust
Bajaj Auto Limited is trusted name for over 55 years in the Indian market and Allianz SE has over 110 years of global experience in financial services. Together they are committed to provide you with time tested and trusted financial solutions that provide you all the security you need for your investments. Underwriting Philosophy Our underwriting philosophy focuses on :
• • • •
Understanding the customer's needs Underwriting what we understand Meeting the customer's requirements Ensuring optimal coverage at lowest cost
Claims Philosophy The Bajaj Allianz team follows a service that aims at taking the anxiety out of claims processing. They are focused towards providing you a hassle free and speedy claims processing. Their claims philosophy is to:
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Be flexible and settle fast 13
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Ensure no claim file to be seen by more than 3 people Check processes regularly against the global Allianz OPEX (Operational Excellence) methodology sold over 1 million since inception.
Customer Orientation At Bajaj Allianz, guiding principles are customer service and client satisfaction. All their efforts are directed towards understanding the culture, social environment and individual insurance requirements - so that we can cater to all your varied needs. Experienced and Expert Servicing Team They are driven by a team of experienced people who understand Indian risks and are supported by the necessary international expertise required to analyze and assess them. Service engineers located in every major city Superior Technology
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In order to ensure speedy and accurate processing of your needs, they have established world class technology, with renowned insurance software, which networks all our offices and intermediaries Using the Web, policies can be issued from any office across the country for retail products Unique, user friendly software developed to make the process of issue of policies and claims settlement simpler (e.g. online insurance of marine policy certificate)
Unique Forms of Risk Cover • Special PA cover for Amarnath Yatris • Film insurance • Event management cover • Sports & Entertainment Insurance Package
Risk ManagementTheir service methodology is tried, tested and Proven the world over and involves: • Risk identification: Inspections SIT PGDMS&R-Tumkur. 14
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• • • • •
Risk analysis: Portfolio review and gap analysis Risk retention Risk Transfer: To an insurer as well as reinsurer (as required) Creation of need based products Ongoing dialogue and proactivity Strategy
• • • •
Business strategy aligned to clients' needs and trends in Indian and global economy / industry Internationally experienced core team, majority with local background Fast, decentralized decision making Long-term commitment to market and clients.
Why Bajaj Allianz Life Insurance? An Impeccable track record across the globe in providing security and cover for you and your family... We, at Bajaj Allianz, realize that you seek an insurer who you can trust your hard earned money with. Allianz AG with over 110 years of experience in over 70 countries and Bajaj Auto, trusted for over 55 years in the Indian market, together are committed to offering you financial solutions that provide all the security you need for your family and yourself. Bajaj Allianz brings to you several innovative products, the details of which you can browse in this section.
PRODUCTS AND SERVICES PROFILE: INDIVIDUAL PLANS
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TERM CARE
Term plan with return of premium Lifetime care Whole life plan Protector A mortgage reducing term insurance plan Keyman insurance A promising business opportunity New unitgain plus Unit link plan with higher allocation Mahila gain rider The unique plan that takes care of you and your loved ones. Swarna raksha I A plan that provides you with regular income for life Bajaj allianz care first Guaranteed renewals up to age 65 without medicals New unit gain premier SP Upfront allocation of 105% of single premium on day 1 New family gain The only unitlinked insurance plan with ethical equity fund. New unitgain plus SP
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A single premium plan with maxx allocations Choice of 4 investments funds and 3 free switches allowed each year. Capital Unit gain Capital unit gain is a unit linked endowment regular premium plan that is designed to suit all your insurance & investment needs. New risk care “insure your today with us to ensure your family smiles tomorrow.” • A non-participating traditional term assurance plan
Invest gain An endowment plan Child gain Children’s policy Cash gain Money back plan Swarna vishranti Retirement plan Additional riders benefits for unit linked product While the basic life insurance New unit gain easy pension plus A plan that enables you retire with laughter lines….not worry lines
Health care This is a three-year health insurance plan, with life insurance benefit
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Additional benefits for traditional product Redesign your life insurance coverage to suit your needs, providing total protection. New unit gain super High allocation guaranteed life cover Save care economy-SP An investment that provides financial security and liquidity. Samraksha Bajaj allianz samraksha- a rural insurance plan. Unit gain guarantee SP High allocation and full or partial withdrawals are allowed anytime after 3 years.
GROUP PLANS: GROUP CREDIT SHIELD Available for Employer - Employee Groups and Non EmployerEmployee Groups. GROUP TERM LIFE Available for Employer - Employee Groups and Non EmployerEmployee Groups. GROUP TERM LIFE SCHEME In lieu of EDLI (Employees Deposit Linked Insurance). NEW GROUP GRATUITY CARE SCHEME Giving your Employees and their families the heartening reassurance of your care and financial security.
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AREA OF OPERATION
Indian Operations
Growing at a breakneck pace with a strong pan Indian presence Bajaj Allianz has emerged as a strong player in India …. Bajaj Allianz Life Insurance Company Limited is a joint venture between two leading conglomerates Allianz and Bajaj Auto Limited. Characterized by global presence with a local focus and driven by customer orientation to establish high earnings potential and financial strength, Bajaj Allianz Life Insurance Company Limited was incorporated on 12 th March 2001. the company received the Insurnace Regulatory Development Authority (IRDA) certificate of Registration (R3) no. 116 on 3rd August 2001 to conduct Life Insurance business in India. Bajaj Allianz – THE PRESENT • Product tailored to suit your needs • Decentralized organization structure for faster response • Wide reach to serve you better- a nationwide network of 700+branches • Specialized departments for Bancassurance, Corporate Agency and Group Business • Well networked Customer Care Centres (CCCs) with state of art IT systems • Highest standard of customer service & simplified claims process in the industry
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• Website to provide all assistance and information on products and service, online buying and online renewals • Toll-free number to answer all your queries, accessible from anywhere in the country- call now 1800225858 and a strong telemarketing and Direct marketing team • Swift and easy claim settlement process
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COMPETITORS INFORMATION:
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The competitors for Bajaj Allianz life insurance are, 1.Birla Sun Life Insurance Co. Ltd 2.HDFC Standard Life Insurance Co. Ltd 3.ICICI Prudential Life Insurance Co. Ltd 4.ING Vysya Life Insurance Company Ltd. 5.Life Insurance Corporation of India 6.Max New York Life Insurance Co. Ltd 7.Met Life India Insurance Company Pvt. Ltd. 8.Kotak Mahindra Old Mutual Life Insurance Limited 9.SBI Life Insurance Co. Ltd 10.Tata AIG Life Insurance Company Limited 11.Reliance Life Insurance Company Limited. 12.Aviva Life Insurance Co. India Pvt. Ltd.
Products of the competitors L.I.C life insurance: • Basic life insurance plans o o o o o o Whole life insurance Term insurance plans Specific plan for children Pension plans Plans for handicapped dependents Unit linked plans and others
AMP SANMAR life insurance: • • • • • • • Nithya shree plan Shuba shree plan Raksha shree plan Yuva shree plan Dhan shree plan Kanaka shree plan Bhagya shree plan
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DABUR AVIVA Life insurance: • • Life long plan Life saver plan
HDFC life insurance: • • • • • • Flexi bond Endowment Term assurance Children plan Money back plan Loan cover term
ING VYSYA: • • • Fulfilling life Reinsuring life Conquering life
OM KOTAK MAHINDRA: • • • • Capital Multiplier Preferred term Child Advantage Money back policy
ICICI Prudential life insurance; • • • • • Life guard Secure plan Life guard Smart kid Cash back
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State Bank of India: • • Sudarshan Swadhan shield
TATA AIG life insurance: • • Maha life 15 years life line security & growth
Max-New York life insurance; • • • • Whole life Endow age-60 5 Term Renewal Children endowment
ACHIEVEMENTS Achievements in Financial year 2005-06 :
Achievements
• Races past GWP of over Rs. 1001 Cr, with growth of over 357% over previous year’s GWP of Rs. 219 Crores • FYP of Rs 860 cr a 380% growth over last year’s FYP of Rs 179 cr. • Rocketed to No. 2 position as against No 6 at the end of last financial year amongst pvt Life Insurance cos., with a clear lead of Rs 240 cr
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• Fastest growing insurance company with 380% growth • Market share jumps almost 4 times from 0.95 % to 3.39 % amongst all life Insurance cos. • Increased its product portfolio from 7 to 19 simple and flexible products • Launched complete suite of employee benefit solutions (Group products for corporates
Mckinsey’s 7’s framework model:
WHAT IS 7-S FRAMEWORK? The 7-s framework of Mc Kinsey is a management model that describes the seven factors to organize a company in a holistic and effective way. Together these factors determine the way in which a corporation operates. Managers should take into account all seven of these factors, to be sure of successful implementation of a strategy, they are all interdependent, so if you pay proper attention to one of them, this may affect all others as well. On top of that, the relative importance of each factor may vary overtime. The outstanding feature of the 7-s model is that it has been tested extensively by Mc Kinsey consultants in their studies of many companies. At the same time this framework has been used by respected business schools such as Harvard and Standford. Thus theory and practice seem to support each other in the study of management perhaps the most surprising fact about the 7-s model is that it supports and is similar to the framework of the managerial functions planning, organizing, leading and controlling.
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Those are briefly discussed in following manner.
STRUCTURE: Organization structure refers to the way in which organization activities are divided, grouped and coordinated into relationship between managers and employees, managers and managers, employees and employees, organization department can be formally structured in three ways. 1. By Function. 2. By Product/ Services. SIT PGDMS&R-Tumkur. 26
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3. In Matrix Form. The structure of organization is basically a network of authorities’ and responsibilities, which has been assumed by and delegated to employees. It provides basis for managers and non mangers personnel perform the job assigned to them. The structure of organization deliberately designed and planned on the following factors. 1. Objectives and Goals. 2. Technology. 3. Environment. 4. People. STRUCTURE OF BAJAJ LIFE INSURANCE; At Bajaj life insurance the various activities are classified on the basis of job profile. The communication is the both vertical and horizontal in organization. The company is divided based on territory as it is the geographically dispersed. The decision making in Bajaj life insurance is centralized.
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ORGANIZATIONAL STRUCTURE
Executive Committee/Board
Operations Risk evaluation Production Design Underwriting
Marketing Marketing Selling Customer servicing Premium
Finance Fund Management Investments/ portfolio management
Administration Support functions
OPERATION
SALES
REGIONAL HEAD OPERATOR
SALES MGR
ZONAL MGR
ASM
STATE MGR
AGENCYMGR
BRANCH MGR
UNIT MGR
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TEAM LEADER
FINANCIAL ADVISORS
EXECUTIVE
Board of directors: 1. Rahul Bajaj 2. Dr. Werner Zedelius 3. Sanjay Asher 4. Heinz Dollberg 5. Sanjay Bajaj 6. Craig Ellis 7. Ranjit Gupta 8. Suraj Mehta 9. Manu Tandon 10. 11. 12. Bruce Bowers S. H. Khan Dr. P. S. Palande Werner Zedelius) -Director -Director
-Chairman
-Director -Director -Director -Director -Director -Director -Director -Additional Director -(Alternate Director to Dr.
Functions of Various Departments.
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1. Operational Department: • • • • Verification and data entry. Issuing checks for cancelled policy. Issue of receipt. Withdrawals (withdrawal of money form his policy) and top up (Adding and shift from one policy to another)
2. Human Resource department: • • • • Strategic HRM. Recruitment and selection. Performance appraisal. Training and salary administration.
3. Administrative Department. • • • Overall back office operation(which look after at right time of insurance) Look after commission that must be given to the agent. Maintenance of employees’ record.
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4.
Marketing Department: • • • • • Sales promotional activate. Looking after overall sales (Number of policies). Looking after underwriting department. Opening up of new branches. Selection of media for advertisements.
SKILLS: Skill is McKensey’s framework is “Distinctively
Competitiveness”, this dominant skill or the distinctive competence becomes the character of the organization. The strength develops over a period of time due to interaction of numbers of factors such as 1. The style of people in the organization. 2. The management style. 3. The structure. 4. The system. 5. The repetition of work over a period of time. SKILLS IN RELATION TO BAJAJ LIFE INSURANCE : Skills are much needed for employees to carry out the company strategy. Thus the required skills for employees in order to enhance their job efficiently namely; 1. Interpersonal skills. 2. People management skills.
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3. Process knowledge. 4. Good product knowledge. 5. Analytical thinking innovations. STYLE; The style of the organization refers to the pattern of action taken by the top management team over a period of time. The leadership style depends upon the organization culture that is in practice. The decision in the organization is taken by the top management may be in consultation with subordinates or without consultation.
Style consists of two components: 1. Organizational culture: - the dominant value beliefs and norms which develops over a period time and becomes relatively enduring, futures of organization life. 2. Management style: - more matters what managers do, than what they say how a company managers spend their time / what they are focusing on /symbolism. The creation and maintain ace (sometimes deconstruction) is the fundamental responsibility of the managers. Bajaj allianz follows participative and social type of leadership in which all level of managers interact with each other for the achievement towards goal and report to the higher officials. Managers work together as a team to solve problem in a significant manner.
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In the Bajaj allianz some of the decisions may have to be taken with the mutual consultation of top management and middle level management. These decisions are through mutual exchange of knowledge and the experience of the employees. The top management will consult their immediate subordinates of any important decisions is to be taken. Some decisions that are strategic and do not need intervention of middle level management these decisions are taken by top level management only.
STRATEGY: In a dynamic scenario organization can’t move without strategies. Strategy means those actions that company plans in response to or anticipation of change in its external environment. Its customers and its competitor’s strategy ids the way the company aims to improve its position vis-à-vis competition.
Throughout the past decade the corporate world has given close attention to the interplay between strategy and structure. Certainly clear idea about strategy makes the job to a structural and design more rational. Business strategy aligned to clients' needs and trends in Indian and global economy / industry
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Internationally experienced core team, majority with local background Fast, decentralized decision making
•
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Long-term commitment to market and clients.
In relation to Bajaj allianz;
Bajaj allianz strategy is to be number one insurance company of India. Bajaj allianz strategy is to achieve goals are, • • • • • Business strategy aligned to clients' needs and trends in Indian and global economy / industry Internationally experienced core team, majority with local background Fast, decentralized decision making Long-term commitment to market and clients. Regarding pricing of products there are two types. Tariff product. Non tariff product.
SYSTEMS: System consists of all formal and informal procedure that allows organizational functions, including capital budgeting system, accounting and management information system.
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The system in organization the system in organization is well established so as take easy end proper decisions related to particular branch in country. I each branch also the company has maintained the proper system so as to facilitate the proper functioning of organization. The formal rules and regulations of the organization are in accordance with the specification given by IRDA. The IRDA acts as a watch dog in the whole insurance industry. Among many system followed by Bajaj life insurance to meet its day to day objects, the merit rating system in follows; 1. Based on performance (number of policies sold). 2. Based on sales and licensed consultant, performance appraisal will be done. 3. Depending on the less lapsed ratio of the policies, which are sold by particular team, points will be added. 4. Depending on the number of unit meetings conducted by sales manager and outcome of results. 5. Depending on the consistency of sales manger. sales department is as
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required by the employee. The staff required by a particular branch will be selected by the branch according to their requirement and this will be done with the consultation of head office. : Classification of employees: 1. Permanent: - a permanent employee is an employee who has been employed on a permanent basis against permanent vacancy by an order in writing by an authorized officer of a company. 2. Probationary: Probationer is an employee who has been provisionally employed to fill a permanent vacancy and has not completed the period of probation. 3. Temporary/ Contractual: - A temporary employee is an employee who has been engaged for a specified limited period, for work which is essentially of a temporary nature or who is engaged temporarily as an additional employee in connection with a temporary increases in work of permanent nature.
SHARED VALUES:
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The word ‘super ordinate’ literally means “of higher order”. By
super
ordinate goals , we mean Guiding concepts- a set of values and aspirations, often unwritten that beyond the conventional formal statement cooperate objectives. Super ordinates goals are the fundamental ideas around which a business is built. They are its main values. That they are more as well. They are the board notions of future directions that the top mgt team wants to infuse throughout the organization. They are the way in which the team want to express it self, to leave its own mark. E.g.- would include Theodore vial’s “universal services” objective, which as so dominated AT & T ;the strong to “customer service” which guides IBM marketing. In a sense, super ordinate goals are like basic postulates in a mathematical system they are the starting point on which the system is logical built, in themselves are not logically derived. The ultimate test of their value is not there logic but the usefulness ensures. Every ones seem to know he importance of compelling super ordinate goals. The drive of accomplishments pulls an organization together. They provide stability in what other wise would be a shifting set of organization dynamics. Unlike the other six S’s super ordinate goals don’t seem to be present in all, or even most, organizations. They are, however, evident in most of the superior performers. The value shared by the members of an enterprise is know as the shared values. IN RELATION TO COMPANY Core values: SIT PGDMS&R-Tumkur. 37 of the system that
Bajaj Allianz Life Insurance Co. Ltd.
Trust , relationship, challenge & foster ownership Other values: Concern for employees, customer satisfaction, commitment society, creating shareholders’ wealth. to
SWOT ANALYSIS: STRENGTHS: 1. Brand name. 2. In-house fund management. 3. Product portfolio (diversified). 4. Channel partner (banks). 5. Hardworking and committed employees. WEAKNESS: 1. Lot of procedures. 2. Low awareness of the company in rural sectors: 3. Tough competitors such as LIC playing predominant role.
OPPORTUNITIES: 1. Demography- building network in order to capture rural areas. 2. Untapped market opportunities. SIT PGDMS&R-Tumkur. 38
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3. To penetrate global markets. 4. To gain the upper hand in market share in India. THREATS; 1. Intensive competition due to liberalization. 2. Rules and regulations- IRDA rules and regulations are not stablecompany may find it difficult to plan out its strategies even it is certified by IRDA. 3. The company is innovating more and more products are design regularly.
COMPANY’S LATEST ANNUAL REPORT:
The following is the Bajaj Allianz life insurance company’s annual report,
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(Amount in Rs. ‘000)
PARTICULARS
SOURCES OF FUNDS SHARE HOLDER’S FUNDS Share Capital Reserves & Surplus Credit/(Debit) Fair Value Change Account SUB TOTAL BORROWINGS POLICY HOLDER’S FUNDS Credit/(Debit) Fair Value Change Account Policy Liabilities Participating Individual Assurance Individual Pension Non participating Individual Assurance Individual Annuity Group Assurance Linked Individual Assurance Individual Pension Group Superannuation Group Gratuity Insurance Reserves Provision For Linked Liabilities Linked Liabilities Fair Value Change SUB TOTAL FUNDS FOR FUTURE APPROPRIATIONS Participating Individual Assurance Individual Pension Non participating Individual Assurance
Current year
Current year
1,503,680 5,501,600 85 7,005,365 15,443
5,493,958 211,463 154,036 43,243 198,175 591,016 21,015 48,845,768 3,022,633
6,712,906
51,868,401 58,596,750
585,104 4,383 50,961
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Individual Annuity Group Assurance Linked Individual Assurance Individual Pension Group Superannuation Group Gratuity Reserve for lapsed unit linked policies Unlikely to be revived TOTAL
7,019 23,456 670,923 1,358,813
2,029,736 67,631,851
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APPLICATION OF FUNDS INVESTMENTS Share holders’ Policy holders’ Participating Individual Assurance Individual Pension Non Participating Individual Assurance Individual Annuity Group Assurance Linked Individual Assurance Individual Pension Group superannuation Group Gratuity ASSETS HELD TO COVER LINKED LIABILITIES LOANS FIXED ASSETS Gross Block Less: Accumulated Depreciation Net Block Capital work in progress CURRENT ASSETS Cash and bank balances Advances and other Assets Sub-Total(A) LESS: CURRENT LIABILITIES AND PROVISIONS Current Liabilities Provisions Sub-Total(B) NET CURRENT ASSETS (C)= (A-B) MISCELLANEOUS EXPENDITURE (To the extent not written off or adjusted) DEBIT BALANCE IN PROFIT AND LOSS ACCOUNT(Shareholders’ account) SIT PGDMS&R-Tumkur.
6,536,500 6,162,724 220,101 208,183 50,900 231,297 2,152,260 21,112 2,610 1,571 9,050,758 51,868,401 18,630 1,043,272 510,127 533,145 2,549 535,694 4,198,042 854,477 5,052,519
8,093,047 97,733 8,190,780 (3,138,261) 2,760,129 67,631,851 42
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Analysis
Bajaj Allianz continues to be at the second position amongst the private life insurers on the basis of new business premium and first position on the basis of the number of policies. It wrote new business of Rs. 2,698 million compared to Rs. 27,168 million in the previous year and registered a market share of 5.7% compared to 7.6% in the previous year. The gross premium written for the financial year 2006-07 was Rs.53,100 million, as compared to Rs. 31,336 million in the previous year. The Company has recorded a profit of Rs. 662 million during the financial year and is the highest profit making company in the private sector. The Agency channel largely contributed to the extra ordinary growth achieved by the Company. Strength of agents doubled in the year from 109,000 to 213,000. The Company has the largest distribution network in the private sector and has its presence in 876 offices across the country. Alternate channels have also picked up with a good performance of the corporate agents and other distribution networks. Our Bancassurance channel has also performed well and has tied up with pan-India financial institutions, various Co-Operative banks and Regional Rural Banks. The Company has successfully developed a comprehensive product range covering individual life and group business by introducing a number of products during the year. Your Company has been monitoring its solvency margins, which have been maintained in accordance with IRDArequirements
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LEARNING EXPERIENCE
The main purpose of the “organization study’ is to make the students acquainted with the practical knowledge about the overall functioning of the organization. It gives opportunity to study the human behavior and also makes one ready to face different situation, which normally would come across while on work in the office or factory environment. It was a great experience working in Bajaj Allianz Life Insurance Co.Ltd, where I learnt many things about the functioning of the company in accordance with the present market trends. The interaction with the employees gave me an insight and practical experience of the industrial scenario in the competitive environment outside the realms of the institute. During this period, it was totally a new experience for me to enter into the organization. I spent most of time in visiting various departments in the factory and interacting with employees. I went to different departments like finance, human resources. I was able to understand the importance of each department and their contribution towards the achievements of the company’s objectives. I also learnt how the company always tries to feel the pulse of the customers, because customers are the purpose of the business. More importantly, I was able to understand the different tactics of the companies to attract and retain the customers. I had interactions with each of the departmental heads and I came to know the real situation, duties, responsibilities and functions of each of the departments.
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