Report on Idbi

CHAPTER I: INTRODUCTION AND DESIGN OF THE STUDY

1. INTRODUCTION

In today’s corporate and competitive world, I find that insurance sector has the maximum growth potential as compared to other sectors. Insurance has the maximum growth rate of 70-80% while FMCG sector has a maximum growth of 12-15%. The growth potential attracts individuals to enter this sector and IDBI FEDERAL Life Insurance Co. Ltd. has given me the opportunity to get a peek of highly competitive and enhancing sector.

The awareness related to life insurance products in India, among the mass is still very low. The level is even lower in rural areas. Insurance is still considered as a tool for tax planning only, even when companies have attached investment benefits to it.

The major factors affecting the purchase of an insurance product are trust, service, product features and relationship with advisors. Firms like LIC are still favored only because of being a government undertaking unit. The concept of mis-selling has paralyzed the sector itself. People find it hard to keep faith on advisors. People are now getting aware of the various investment tools available in the market. The masses in big cities have started comparing the products. While talking to different people, I found that their purchase decision was highly influenced by their family, colleagues and income.

They purchased the insurance products at the time when they needed it most, at the time of tax planning, whereas any insurance product must be bought when the individual needs it least so that they can actually calculate the amount of life cover they need and the type of investment they want.

1.2 NEED & SCOPE OF STUDY

The need for this study is to get an overall idea about the functioning of an
Organization and how various departments function side by side enhancing each other to achieve the organization’s goals. It helps us to know what real work life culture will be and this practical knowledge will help to implement the theoretical knowledge once we settle with real work.

1.3 OBJECTIVES

The following are the objectives of the study that was conducted in IDBI Federal.

1. To understand the organizational framework and it’s functioning. 2. To understand how the key business processes are carried out in an organization. 3. To gain knowledge about different departments of the organizational and the functions. 4. To study about the procedures of purchase and sales. 5. To study the interdependence of different departments. 6. To study overall performance of the organization. 7. To make a SWOT analysis of the organization. 8. To understand the difference between theoretical and practical aspects of functioning organization.

1.4 LIMITATIONS

The following were some of the limitation that were encountered

1. An in-depth study of the company could not be carried out due to shortage of time. 2. The reliability of data used for study is largely depends upon the companies reports and the information given by executives. 3. The company has the limitation to disclose their financial details, so a detailed analysis of financial performance of the company is not possible.

CHAPTER II: INDUSTRY PROFILE AND COMPANY PROFILE

2.1 INDUSTRY PROFILE

The insurance industry consists mainly of insurance carriers (or insurers) and insurance agencies and brokerages. In general, insurance carriers are large companies that provide insurance and assume the risks covered by the policy. Insurance agencies and brokerages sell insurance policies for the carriers. While some of these establishments are directly affiliated with a particular insurer and sell only that carrier’s policies, many are independent and are thus free to market the policies of a variety of insurance carriers. In addition to supporting these two primary components, the insurance industry includes establishments that provide other insurance-related services, such as claims adjustment or third-party administration of insurance.

These other insurance industry establishments also include a number of independent organizations that provide a wide array of insurance-related services to carriers and their clients. One such service is the processing of claims forms for medical practitioners. Other services include loss prevention and risk management. Also, insurance companies sometimes hire independent claims adjusters to investigate accidents and claims for property damage and to assign a dollar estimate to the claim.

In the policy, the carrier states the length and conditions of the agreement, exactly which losses it will provide compensation for, and how much will be awarded. The premium charged for the policy is based primarily on the amount to be awarded in case of loss, as well as the likelihood that the insurance carrier will actually have to pay. In order to be able to compensate policyholders for their losses, insurance companies invest the money they receive in premiums, building up a portfolio of financial assets and income-producing real estate which can then be used to pay off any future claims that may be brought. There are two basic types of insurance carriers: primary and reinsurance. Primary carriers are responsible for the initial underwriting of insurance policies and annuities, while reinsurance carriers assume all or part of the risk associated with the existing insurance policies originally underwritten by other insurance carriers.

Primary insurance carriers offer a variety of insurance policies. Life insurance provides financial protection to beneficiaries—usually spouses and dependent children—upon the death of the insured. Disability insurance supplies a preset income to an insured person who is unable to work due to injury or illness, and health insurance pays the expenses resulting from accidents and illness. An annuity (a contract or a group of contracts that furnishes a periodic income at regular intervals for a specified period) provides a steady income during retirement for the remainder of one’s life. Property-casualty insurance protects against loss or damage to property resulting from hazards such as fire, theft, and natural disasters. Liability insurance shields policyholders from financial responsibility for injuries to others or for damage to other people’s property. Most policies, such as automobile and homeowner’s insurance, combine both property-casualty and liability coverage. Companies that underwrite this kind of insurance are called property-casualty carriers.

Some insurance policies cover groups of people, ranging from a few to thousands of individuals. These policies usually are issued to employers for the benefit of their employees or to unions, professional associations, or other membership organizations for the benefit of their members. Among the most common policies of this nature are group life and health plans. Insurance carriers also underwrite a variety of specialized types of insurance, such as real-estate title insurance, employee surety and fidelity bonding, and medical malpractice insurance.

Other organizations in the industry are formed by groups of insurance companies, to perform functions that would result in a duplication of effort if each company carried them out individually. For example, service organizations are supported by insurance companies to provide loss statistics, which the companies use to set their rates.

THE HISTORY OF INDIAN INSURANCE INDUSTRY

In 1818 the British established the first insurance company in India in Calcutta, the Oriental Life Insurance Company. First attempts at regulation of the industry were made with the introduction of the Indian Life Assurance Companies Act in 1912. A number of amendments to this Act were made until the Insurance Act was drawn up in 1938. Noteworthy features in the Act were the power given to the Government to collect statistical information about the insured and the high level of protection the Act gave to the public through regulation and control.

When the Act was changed in 1950, this meant far reaching changes in the industry. The extra requirements included a statutory requirement of a certain level of equity capital, a ceiling on share holdings in such companies to prevent dominant control (to protect the public from any adversarial policies from one single party), stricter control on investments and, generally, much tighter control. In 1956, the market contained 154 Indian and 16 foreign life insurance companies. Business was heavily concentrated in urban areas and targeted the higher echelons of society. “Unethical practices adopted by some of the players against the interests of the consumers” then led the Indian government to nationalize the industry. In September 1956, nationalization was completed, merging all these companies into the so-called Life Insurance Corporation (LIC). It was felt that “nationalization has lent the industry fairness, solidity, growth and reach.”

Some of the important milestones in the life insurance business in India are:

1912: The Indian Life Assurance Companies Act enacted as the first statute to regulate the life insurance business.

1928: The Indian Insurance Companies Act enacted to enable the government to collect statistical information about both life and non-life insurance businesses.

1938: Earlier legislation consolidated and amended to by the Insurance Act with the objective of protecting the interests of the insuring public.

1956: The market contained 154 Indian and 16 foreign life insurance companies.

2.2 COMPANY PROFILE

|Company name |IDBI Federal Life Insurance Co. Ltd. |
|Type |Joint venture |
|Industry |Life insurance |
|Founded |March 2008 |
|Shareholders |IDBI bank 48%, Federal bank & AGEAS 26% each |
|Headquarters |Mumbai, India |
|Key people |Chairman – RM Malla, MD & CEO – G V Nageswara rao |
|Products |Individual life insurance, group insurance, pension plans |
|Employees |More than 1000 on roll and 7500 agents |

Vision
To be the leading provider of wealth management, protection and retirement solutions that meets the needs of our customers and adds value to their lives.

Mission
To continually strive to enhance customer experience through innovative product offerings, dedicated relationship management and superior service delivery while striving to interact with our customers in the most convenient and cost effective manner.
To be transparent in the way we deal with our customers and to act with integrity.
To invest in and build quality human capital in order to achieve our mission
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Values

▪ Transparency: Crystal Clear communication to our partners and stakeholders ▪ Value to Customers: A product and service offering in which customers perceive value ▪ Rock Solid and Delivery on Promise: This translates into being financially strong, operationally robust and having clarity in claims ▪ Customer-friendly: Advice and support in working with customers and partners ▪ Profit to Stakeholders: Balance the interests of customers, partners, employees, shareholders and the community at large

ABOUT IDBI FEDERAL LIFE INSURANCE

IDBI Federal Life Insurance Co Ltd is a joint-venture of IDBI Bank, India’s premier development and commercial bank, Federal Bank, one of India’s leading private sector banks and Ageas, a multinational insurance giant based out of Europe. In this venture, IDBI Bank owns 48% equity while Federal Bank and Ageas own 26% equity each. .

Having started in March 2008, in just five months of inception, IDBI Federal became one of the fastest growing new insurance companies to garner Rs 100 Cr in premiums. Through a continuous process of innovation in product and service delivery IDBI Federal aims to deliver world-class wealth management, protection and retirement solutions that provide value and convenience to the Indian customer.

The company offers its services through a vast nationwide network of 2,186 partner bank branches of IDBI Bank and Federal Bank in addition to a sizeable network of advisors and partners. As on 31stMarch 2013, the company has issued over 4.99 lakh policies with a sum assured of over Rs. 28,580 Cr.

IDBI Federal today is recognized as a customer-centric brand, with an array of awards to their credit. They have been awarded the PMAA Awards (2009) for best Dealer/Sales force Activity, EFFIE Award (2011) for effective advertising, and conferred with the status of ‘Master Brand 2012-13’ by the CMO Council USA and CMO Asia.

ABOUT THE SPONSORS OF IDBI FEDERAL LIFE INSURANCE CO LTD

IDBI BANK

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IDBI Bank Ltd. continues to be, since its inception, India’s premier industrial development bank. It came into being as on July 01, 1964 to support India’s industrial backbone. Today, it is amongst India’s foremost commercial banks, with a wide range of innovative products and services, serving retail and corporate customers in all corners of the country from 1082 branches and 1715 ATMs.

The Bank offers its customers an extensive range of diversified services including project finance, term lending, working capital facilities, lease finance, venture capital, loan syndication, corporate advisory services and legal and technical advisory services to its corporate clients as well as mortgages and personal loans to its retail clients.

As part of its development activities, IDBI Bank has been instrumental in sponsoring the development of key institutions involved in India’s financial sector –National Stock Exchange of India Limited (NSE) and National Securities Depository Ltd, SHCIL (Stock Holding Corporation of India Ltd), CARE (Credit Analysis and Research Ltd).

FEDERAL BANK

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Federal Bank is one of India’s leading private sector banks, with a dominant presence in the state of Kerala. It has a strong network of over 1104 branches and 1195 ATMs spread across India.

The bank provides over four million retail customers with a wide variety of financial products. Federal Bank is one of the first large Indian banks to have an entirely automated and interconnected branch network. In addition to interconnected branches and ATMs, the Bank has a wide range of services like Internet Banking, Mobile Banking, Tele Banking, Any Where Banking, debit cards, online bill payment and call centre facilities to offer round the clock banking convenience to its customers.

The Bank has been a pioneer in providing innovative technological solutions to its customers and the Bank has won several awards and recommendations.

AGEAS
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Ageas is an international insurance group with a heritage spanning more than 180 years. Ranked among the top 20 insurance companies in Europe, Ageas has chosen to concentrate its business activities in Europe and Asia, which together make up the largest share of the global insurance market. These are grouped around four segments: Belgium, United Kingdom, Continental Europe and Asia and served through a combination of wholly owned subsidiaries and partnerships with strong financial institutions and key distributors around the world.

Ageas operates successful partnerships in Belgium, UK, Luxembourg, Italy, Portugal, Turkey, China, Malaysia, India and Thailand and has subsidiaries in France, Hong Kong and UK. Ageas is the market leader in Belgium for individual life and employee benefits, as well as a leading non-life player through AG Insurance.

In the UK, Ageas has a strong presence as the fourth largest player in private car insurance and the over 50’s market. Ageas employs more than 13,000 people and has annual inflows of more than EUR 21 billion.

2.3 PRODUCTS OFFERED

At IDBI Federal, it’s a constant endeavor to create innovations that create value for the customers. These innovations are brought to life through wide array of products that fit the varying financial and investment needs at different stages of life.

Childsurance
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What makes Childsurance a must-have for any parent who is looking to make their child’s future shock-proof is its powerful insurance benefits.

Healthsurance
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IDBI Federal Healthsurance Hospitalization and Surgical Plan offers a host of features and benefits that are designed to help you manage the extra financial burden that comes with hospitalizations.

Lifesurance
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Lifesurance represents the range of participating endowment plans, designed with the twin benefits of long-term savings and life insurance cover.

Bondsurance
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Bondsurance is a single premium plan that offers guaranteed returns on your investment combined with life insurance protection...

Wealthsurance
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Wealthsurance, our flagship product, is a unique combination of 13 investment options and a host of 7 insurance options that aims to provide people with an insured wealth plan...

Homesurance
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Homesurance offers comprehensive protection for your home loan at a minimal cost. These unique plans also take into account the fluctuating floating interest rates...

Termsurance
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Termsurance is a range of unique protection plans that cater to different needs of diverse groups of customers…

Incomesurance
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Incomesurance is a combination of endowment and money back, both built into a single unique product that Guarantees you an Annual Income each time you pay your premium.

Loansurance
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IDBI Federal Loansurance Group Life Plan, a comprehensive solution that enables you to help protect your borrower’s assets and savings…

IDBI along with FEDERAL & AGEAS offer fruitful service in life insurance and other forms of insurances with assurance.

2.4 COMPANY PERFORMANCE

IDBI Federal Life Insurance has achieved break even in 2012-13, its fifth year of operations. The company has reported a maiden profit of Rs 9.24 crore in 2012-13, thus making it one of the fastest to break-even in the Life Insurance industry. In an industry challenged by falling margins, shrinking new business volumes, high cost ratios and low profitability, this is a significant achievement.

IDBI Federal’s New Business Premium (APE) grew by 23% in 2012-13, which compares with the negative growth of -15% posted by the industry. The company also witnessed a 44% increase in the number of new business policies sold as compared to the previous year. IDBI Federal has also been driving profitability through the right product mix. The product mix has continuously been shifted to long-term, traditional products. Share of traditional products in the new business premium increased to 83% as compared to 67% in the previous year. Share of regular premium products increased to 78% as compared to 69% in the previous year.

2.5 FINANCIAL STRUCTURE AND PERFORMANCE

IDBI Federal has a healthy solvency ratio at 491% as against the regulatory requirement of 150% .The Company’s AUM has moved up by 24% from Rs. 2,208 crores to Rs 2,732 crores during the current year. IDBI Federal has paid-up share capital of Rs 800 crore.
A strong focus on cost discipline ensured a drop in IDBI Federal’s cost ratio from 26% in 2011-12 to 24% in 2012-13, which is among the lowest expense ratios in the industry.
The company recorded a 13th month persistency rate of 76% which is among the top 5 in the industry. In terms of 25th, 37th and 49th month persistency rates, IDBI Federal is among the top 3. IDBI Federal’s strong persistency record is testimony to the quality of its sales and the confidence the customers have shown in the company’s products and its investment performance. For the calendar year 2012, IDBI Federal’s Equity Fund raked No 1 in its investment performance among the 72 ulip funds in the industry against which it is benchmarked internally. IDBI Federal’s customer complaints, as reported by IRDA, are among the lowest in the industry.