CHANNEL DEVELOPMENT OF ICICI PRUDENTIAL LIFE INSURANCE CO. LTD.

-PROCESS & PROBLEMS

Under the Guidance of: MR. GAURAV JAIN MANAGER- CHANNEL DEVELOPMENT ICICI PRUDENTIAL LIFE INSURANCE CO. LTD KOLKATA

Submitted by: PARTHA PAUL

MBA SIKKIM MANIPAL UNIVERSITY KOLKATA 2008 - 2010

CONTENTS
PAGE NO.

ACKNOWLEDGEMENT

CHAP.1:INTRODUCTION

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CHAP.2:RESEARCH METHODOLOGY

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CHAP.3:FINDINGD & ANALYSIS

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CHAP.4:CONCLUSION & RECOMMENDATION

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CHAP.5:BIBLIOGRAPHY

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APPENDIX

ACKNOWLEDGEMENT The present report on Channel Development & Investment Opportunities in ICICI Prudential is the culmination of a whole sequence of activities, events, and thought processes which I faced in my Summer Internship in ICICI Prudential Life Insurance Co. Ltd. from 1st Sept, 10 to 10th Nov ,10 in Kolkata. This report which turned out extremely successful would not have been possible without the active involvement and guidance of
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Mr. Gaurav Jain, Manager-Channel Development, ICICI Prudential Life Insurance Co. Ltd. who have most enthusiastically supported at all times and in all Mr. Subhra Bishnu ways through out my project. Mr. Partha Sarathi Chowdhury, Sales Manager who has showed me the path for my project. Mr. Sk. Nasir , Unit Manager who brought life to this project and the backbone to the initiative of this project.

I felt it my honor, immense pleasure and pride to express my indebtness and sincere and heartfelt thanks to all of the above persons. Last but not the least I would like to extend my heartfelt thanks to all of fellow interns, my friends and my parents who given full support in this project.

OBJECTIVE OF THE PROJECT 1. To know what insurance is. 2. To know why people buy insurance. 3. To understand the procedures involved in recruitment of advisors. 4. To know about various relationships between the profile of advisors and their productivity,
5. To know why people should JOIN ICICI Prudential Life Insurance Co.Ltd.

NEED OF THE PROJECT Our need of the project is to study the process and problems of recruiting Advisors or FOS. These are those members which contribute towards huge portion of the revenue earned by the company. They are the most important link between the market and the company. Therefore it is very important to select the right type of person who can understand the need of the customer and also be beneficial for the company. SCOPE OF THE PROJECT The scope of the project is huge and it can enter in to tender details of Recruitment and discussions about them, which intends to form a research work of pervious track records of Advisors and drawing conclusions out of them, by forming relations in them. LIMITATIONS The following limitations may arise during the summer internship: 1. It was difficult to cover all the aspects of project with in a limited period of time. 2. All the information gathered from the individual may not be correct. 3. Some information cannot be gathered due to confidential nature of the company.

INTRODUCTION
Insurance may be described as a social device to reduce or eliminate risk of life and property. Under the plan of insurance, a large number of people associate themselves by sharing risk, attached to individual. The risk, which can be insured against include fire, the peril of sea, death, incident, & burglary. Any risk contingent upon these may be insured against at a premium commensurate with the risk involved. Insurance is actually a contract between 2 parties whereby one party called insurer undertakes in exchange for a fixed sum called premium to pay the other party happening of a certain event. Insurance is a contract whereby, in return for the payment of premium by the insured, the insurers pay the financial losses suffered by the insured as a result of the occurrence of unforeseen events. With the help of insurance, large number of people exposed to a similar risk make contributions to a common fund out of which the losses suffered by the unfortunate few, due to accidental events, are made good.

Life Insurance Vs. Other Savings Contract of Insurance A contract of insurance is a contract of utmost good faith technically known as uberrima fides. The doctrine of disclosing all material facts is embodied in this important principle, which applies to all forms of insurance. At the time of taking a policy, policyholder should ensure that all questions in the proposal form are correctly answered. Any misrepresentation, non-disclosure or fraud in any document leading to the acceptance of the risk would render the insurance contract null and void. Protection: Savings through life insurance guarantee full protection against risk of death of the saver. Also, in case of demise, life insurance assures payment of the entire amount assured (with bonuses wherever applicable) whereas in other savings schemes, only the amount saved (with interest) is payable. Aid To Thrift: Life insurance encourages 'thrift'. It allows long-term savings since payments can be made effortlessly because of the 'easy installment' facility built into the scheme. (Premium payment for insurance is either monthly, quarterly, half yearly or yearly). Liquidity: In case of insurance, it is easy to acquire loans on the sole security of any policy that has acquired loan value. Besides, a life insurance policy is also generally accepted as security, even for a commercial loan. Tax Relief: Life Insurance is the best way to enjoy tax deductions on income tax and wealth tax. This is available for amounts paid by way of premium for life insurance subject to income tax rates in force. Assesses can also avail of provisions in the law for tax relief. In such cases the assured in effect pays a lower premium for insurance than otherwise. Money When You Need It: A policy that has a suitable insurance plan or a combination of different plans can be effectively used to meet certain monetary needs that may arise from time-to-time. Children's education, start-in-life or marriage provision or even periodical needs for cash

over a stretch of time can be less stressful with the help of these policies. Alternatively, policy money can be made available at the time of one's retirement fromservice and used for any specific purpose, such as, purchase of a house or for other investments. Also, loans are granted to policyholders for house building or for purchase of flats (subject to certain conditions).

INSURANCE IN INDIA
The insurance sector in India has come a full circle from being an open competitive market to nationalization and back to a liberalized market again. Tracing the developments in the Indian insurance sector reveals the 360 degree turn witnessed over a period of almost two centuries. A brief history of the Insurance sector The business of life insurance in India in its existing form started in India in the year 1818 with the establishment of the Oriental Life Insurance Company in Calcutta. Some of the important milestones in the life insurance business in India are: 1912: The Indian Life Assurance Companies Act enacted as the first statute to regulate the life insurance business. 1928: The Indian Insurance Companies Act enacted to enable the government to collect statistical information about both life and non-life insurance businesses. 1938: Earlier legislation consolidated and amended to by the Insurance Act with the objective of protecting the interests of the insuring public. 1956: 245 Indian and foreign insurers and provident societies taken over by the central government and nationalized. LIC formed by an Act of Parliament, viz. LIC Act, 1956, with a capital contribution of Rs. 5 crore from the Government of India. The General insurance business in India, on the other hand, can trace its roots to the Triton Insurance Company Ltd., the first general insurance company established in the year 1850 in Calcutta by the British. Some of the important milestones in the general insurance business in India are: 1907: The Indian Mercantile Insurance Ltd. set up, the first company to transact all classes of general insurance business. 1957: General Insurance Council, a wing of the Insurance Association of India, frames a code of conduct for ensuring fair conduct and sound business practices. 1968: The Insurance Act amended to regulate investments and set minimum solvency margins and the Tariff Advisory Committee set up. 1972: The General Insurance Business (Nationalisation) Act, 1972 nationalised the general insurance business in India with effect from 1st January 1973. 107 insurers amalgamated and grouped into four companies viz. the National
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Insurance Company Ltd., the New India Assurance Company Ltd., the Oriental Insurance Company Ltd. and the United India Insurance Company Ltd. GIC incorporated as a company. Insurance sector reforms In 1993, Malhotra Committee, headed by former Finance Secretary and RBI Governor R. N. Malhotra, was formed to evaluate the Indian insurance industry and recommend its future direction. The Malhotra committee was set up with the objective of complementing the reforms initiated in the financial sector. The reforms were aimed at creating a more efficient and competitive financial system suitable for the requirements of the economy keeping in mind the structural changes currently underway and recognizing that insurance is an important part of the overall financial system where it was necessary to address the need for similar reforms In 1994, the committee submitted the report and some of the key recommendations included: i) Structure Government stake in the insurance Companies to be brought down to 50% Government should take over the holdings of GIC and its subsidiaries so that these subsidiaries can act as independent corporations All the insurance companies should be given greater freedom to operate ii) Competition Private Companies with a minimum paid up capital of Rs.1bn should be allowed to enter the industry No Company should deal in both Life and General Insurance through a single entity. Foreign companies may be allowed to enter the industry in collaboration with the domestic companies Postal Life Insurance should be allowed to operate in the rural market Only one State Level Life Insurance Company should be allowed to operate in each state iii) Regulatory Body The Insurance Act should be changed An Insurance Regulatory body should be set up Controller of Insurance (Currently a part from the Finance Ministry) should be made independent

iv) Investments Mandatory Investments of LIC Life Fund in government securities to be reduced from 75% to 50% GIC and its subsidiaries are not to hold more than 5% in any company (There current holdings to be brought down to this level over a period of time) v) Customer Service LIC should pay interest on delays in payments beyond 30 days Insurance companies must be encouraged to set up unit linked pension plans Computerisation of operations and updating of technology to be carried out in the insurance industry The committee emphasised that in order to improve the customer services and increase the coverage of the insurance industry should be opened up to competition. But at the same time, the committee felt the need to exercise caution as any failure on the part of new players could ruin the public confidence in the industry. Hence, it was decided to allow competition in a limited way by stipulating the minimum capital requirement of Rs.100 crores. The committee felt the need to provide greater autonomy to insurance companies in order to improve their performance and enable them to act as independent companies with economic motives. For this purpose, it had proposed setting up an independent regulatory body. The Insurance Regulatory and Development Authority Reforms in the Insurance sector were initiated with the passage of the IRDA Bill in Parliament in December 1999. The IRDA since its incorporation as a statutory body in April 2000 has fastidiously stuck to its schedule of framing regulations and registering the private sector insurance companies. The other decisions taken simultaneously to provide the supporting systems to the insurance sector and in particular the life insurance companies was the launch of the IRDAs online service for issue and renewal of licenses to agents. The approval of institutions for imparting training to agents has also ensured that the insurance companies would have a trained workforce of insurance agents in place to sell their products, which are expected to be introduced by early next year. Since being set up as an independent statutory body the IRDA has put in a framework of globally compatible regulations. In the private sector 12 life insurance and 6 general insurance companies have been registered.

ICICI Prudential Life Insurance Company Ltd.

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Overview India's Number One private life insurer, ICICI Prudential Life Insurance Company is a joint venture between ICICI Bank-one of India's foremost financial services companiesand Prudential plc- a leading international financial services group headquartered in the United Kingdom. Total capital infusion stands at Rs. 20.60 billion, with ICICI Bank holding a stake of 74% and Prudential plc holding 26%. We began our operations in December 2000 after receiving approval from Insurance Regulatory Development Authority (IRDA). Today, our nation-wide team comprises of over 580 offices, over 234,000 advisors; and 22 bancassurance partners. ICICI Prudential was the first life insurer in India to receive a National Insurer Financial Strength rating of AAA (Ind) from Fitch ratings. For three years in a row, ICICI Prudential has been voted as India's Most Trusted Private Life Insurer, by The Economic Times - AC Nielsen ORG Marg survey of 'Most Trusted Brands'. As we grow our distribution, product range and customer base, we continue to tirelessly uphold our commitment to deliver world-class financial solutions to customers all over India.

About The Promoters ICICI Bank (NYSE:IBN) is India's second largest bank and largest private sector bank with assets of Rs. 2958.32 billion as on December 31, 2006. ICICI Bank provides a broad spectrum of financial services to individuals and companies. This includes mortgages, car and personal loans, credit and debit cards, corporate and agricultural finance. The Bank services a growing customer base through a multi-channel access network which includes over 695 branches and extension counters, 3051 ATMs, call centers and Internet banking. Established in London in 1848, Prudential plc, through its businesses in the UK and Europe, the US and Asia, provides retail financial services products and services to more than 21 million customers, policyholder and unit holders worldwide. Today, Prudential has millions of customers worldwide and over 238 billion (as of 30 June 2006) of funds under management. In Asia, Prudential is the leading European life insurance company with a vast network of life and fund management operations in thirteen countries - China, Hong Kong, India, Indonesia, Japan, Korea, Malaysia, the Philippines, Singapore, Taiwan, Thailand, Vietnam and United Arab Emirates.

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The ICICI Prudential Edge The ICICI Prudential edge comes from our commitment to our customers, in all that we do - be it product development, distribution, the sales process or servicing. Here's a peek into what makes us leaders. 1. Our products have been developed after a clear and thorough understanding of customers' needs. It is this research that helps us develop Education plans that offer the ideal way to truly guarantee your child's education, Retirement solutions that are a hedge against inflation and yet promise a fixed income after you retire, or Health insurance that arms you with the funds you might need to recover from a dreaded disease. 2. Having the right products is the first step, but it's equally important to ensure that our customers can access them easily and quickly. To this end, ICICI Prudential has an advisor base across the length and breadth of the country, and also partners with leading banks, corporate agents and brokers to distribute our products 3. Robust risk management and underwriting practices form the core of our business. With clear guidelines in place, we ensure equitable costing of risks, and thereby ensure a smooth and hassle-free claims process. 4. Entrusted with helping our customers meet their long-term goals, we adopt an investment philosophy that aims to achieve risk adjusted returns over the long-term. 5. Last but definitely not the least, our 16,000 plus strong team is given the opportunity to learn and grow, every day in a multitude of ways. We believe this keeps them engaged and enthusiastic, so that they can deliver on our promise to cover you, at every step in life.

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Vision: To make ICICI Prudential the dominant Life and Pensions player built on trust by worldclass people and service. This we hope to achieve by:

Understanding the needs of customers and offering them superior products and service. Leveraging technology to service customers quickly, efficiently and conveniently. Developing and implementing superior risk management and investment strategies to offer sustainable and stable returns to our policyholders. Providing an enabling environment to foster growth and learning for our employees. And above all, building transparency in all our dealings.

The success of the company will be founded in its unflinching commitment to 5 core values -- Integrity, Customer First, Boundaryless, Ownership and Passion. Each of the values describe what the company stands for, the qualities of our people and the way we work. We do believe that we are on the threshold of an exciting new opportunity, where we can play a significant role in redefining and reshaping the sector. Given the quality of our parentage and the commitment of our team, there are no limits to our growth. Values: Every member of the ICICI Prudential team is committed to 5 core values: Integrity, Customer First, Boundaryless, Ownership, and Passion. These values shine forth in all they do, and have become the keystones of their success.

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THE Company ICICI Prudential Life Insurance Company is a joint venture between ICICI Bank, a premier financial powerhouse, and Prudential plc, a leading international financial services group headquartered in the United Kingdom. ICICI Prudential was amongst the first private sector insurance companies to begin operations in December 2000 after receiving approval from Insurance Regulatory Development Authority (IRDA). ICICI Prudential's capital stands at Rs. 18.15 billion with ICICI Bank and Prudential plc holding 74% and 26% stake respectively. For the 10 months ended January 31, 2007, the company garnered Rs 3,240 crore of weighted retail + group new business premiums and wrote over 1.3 million policies. The company has assets held to the tune of over Rs. 14,000 crore. ICICI Prudential is also the only private life insurer in India to receive a National Insurer Financial Strength rating of AAA (Ind) from Fitch ratings. The AAA (Ind) rating is the highest rating, and is a clear assurance of ICICI Prudential's ability to meet its obligations to customers at the time of maturity or claims. For the past six years, ICICI Prudential has retained its position as the No. 1 private life insurer in the country, with a wide range of flexible products that meet the needs of the Indian customer at every step in life

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THE CURRENT MARKET SCENARIO The life insurance industry has clocked 49 per cent growth in new businesses, while general insurance players have seen 16 per cent increase in April, the first month of the current financial year. Strong performance by Life Insurance Corporation, ICICI Prudential and SBI Life helped the 16 player-strong life insurance industry to mop up Rs 2,982 crore in April this year compared with Rs 1,996 crore collected in the same month last year, according to data compiled by the Insurance Regulatory and Development Authority. However, some life insurers such as Bajaj Allianz, ING Vysya Life and Reliance Life saw a decline in premium collections during the period under review. The countrys largest life insurer, LIC, saw new premiums grow 57 per cent to Rs 2,134 crore in April by selling 15,89,684 policies against Rs 1,355 crore a year ago. It had a market share of 71.56 per cent in April. The 15 private players together saw their business grow 32 per cent to Rs 848 crore with a market share of 28.44 per cent. ICICI Prudential is quite ahead of its competitors. Its top 5 competitors are : Bajaj Allianz SBI Life HDFC Standard Max New York Life Tata AIG

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Insurers ICICI Prudential Bajaj Allianz SBI Life HDFC Standard Max New York Life Tata AIG Aviva Reliance Life Birla Sunlife Kotak Mahindra Old Mutual ING Vysya Met Life Shriram Life Sahara Life Bharti Axa Life

Premium (Rs cr) 271.00 124.00 90.00 70.00 69.00 48.00 39.00 33.00 28.00 26.00 22.00 19.00 4.50 1.70 0.72

ICICI Prudential topped the private players chart with its premium income rising 84.5 per cent to Rs 271 crore and had 9.08 per cent share of the market. Bajaj Allianz, which saw 15 per cent decline in business, collected Rs 124 crore with a market share of 4.16 per cent.

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ICICI Prudential Bajaj Allianz

SBI Life

HDFC Standard Max New York Life Tata AIG

Aviva

Reliance Life

Birla Sunlife

Kotak Mahindra Old Mutual

THE COMPETITORS The major competitors of ICICI prudential in the market are as follows: Aviva Life Insurance Company India Pvt. Ltd. is a joint venture between Aviva of UK and Dabur, one of India's leading producer of traditional healthcare products. Aviva holds a 26 per cent stake in the joint venture and the Dabur group holds the balance 74 per cent share. Aviva is UK's largest and the world's sixth largest insurance Group. It is one of the leading providers of life and pensions products to Europe and has substantial businesses elsewhere around the world. Aviva pioneered the concept of Bancassurance in India. Currently, Aviva has Bancassurance tie-ups with ABN Amro Bank, American Express Bank, Canara Bank, Centurion Bank of Punjab, The Lakshmi Vilas Bank Ltd. and Punjab & Sind Bank, 11 Cooperative Banks in Gujarat, Rajasthan, Jammu & Kashmir and Maharashtra and one regional Bank in Sikkim. Aviva has 40 Branches in India (including rural branches) supporting its distribution network. Through its Bancassurance partner locations, Aviva products are available in 378 towns and cities across India. Bajaj Allianz is a joint venture between Allianz AG one of the world's largest insurance companies, and Bajaj Auto, one of the biggest 2 and 3 wheeler manufacturers in the world. Bajaj Allianz is into both life insurance and general insurance. Allianz Group is one of the world's leading insurers and financial services providers. Founded in 1890 in Berlin, Allianz is now present in over 70 countries with almost 174,000 employees. Bajaj group is the largest manufacturer of two-wheelers and threewheelers in India and one of the largest in the world.

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Today, Bajaj Allianz is one of India's leading and fastest growing insurance companies. Currently, it has presence in more than 550 locations with over 60,000 Insurance Consultants. Birla Sun Life Insurance Company Limited is a joint venture between Aditya Birla Group and Sun Life Financial of Canada. Aditya Birla Group is an Indian multinational conglomerate with presence in India, Thailand, Indonesia, Malaysia, Philippines, Egypt, Canada, Australia and China. Sun Life Assurance, Sun Life Financial's primary insurance business, is one of the leading insurance companies of the world and ranks amongst the largest international financial services organisations in the world. The Group has presence in several countries such as Canada, United States, Philippines, Japan, Indonesia, India and Bermuda. HDFC Standard Life Insurance Co. Ltd. is a joint venture between HDFC Ltd., India's largest housing finance institution and Standard Life Assurance Company, Europe's largest mutual life company. It was the first life insurance company to be granted a certificate of registration by the IRDA on the 23rd of October 2000. Standard Life, UK was founded in 1825 and has experience of over 180 years. Companies. The company is rated as "very strong" by Standard & Poor's (AA) and "excellent" by Moody's (Aa2). HDFC Standard Life's cumulative premium income, including the first year premiums and renewal premiums is Rs. 672.3 Crores for the financial year, Apr-Nov 2005. So far the company has covered over 11,00,000 individuals and has declared 5th consecutive bonus in as many years for its 'with profit' policyholders. MetLife India Insurance Co. Pvt Ltd is a joint venture between MetLife Group and its Indian partners. The Indian partners include J&K Bank, Dhanalakshmi Bank, Karnataka Bank, Karvy Consultants, Geojit Securities, Way2Wealth, and Mini Muthoothu.

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Met Life Group has presence in America and Asia and has an experience of over 137 years in providing financial services. The MetLife companies are the number one life insurer in the U.S. with approximately US $2.8 trillion of life insurance in force. MetLife serves 88 of the top one hundred FORTUNE 500 companies. MetLife entered Indian insurance sector in 2001. Tata AIG Life Insurance Company Limited is a joint venture between Tata Group and American International Group, Inc. (AIG). Tata Group is one of the oldest and leading business groups of India. Tata Group has had a long association with India's insurance sector having been the largest insurance company in India prior to the nationalisation of insurance. The Late Sir Dorab Tata, was the founder Chairman of New India Assurance Co. Ltd., a group company incorporated way back in 1919. American International Group, Inc is the leading U.S. based international insurance and financial services organization and the largest underwriter of commercial and industrial insurance in the United States. AIG has one of the most extensive life insurance networks in the world. Life Insurance Corporation of India (LIC) is an autonomous body authorized to run the life insurance business in India with its Head Office at Mumbai. It has been established by an act of the Parliament and started functioning from 1/9/1956. LIC is the biggest insurance player in the country. Out of the total premium of Rs 3766 crore generated by the insurance industry through group business in the year 2005-06, LIC alone accounted for Rs 3051 crore. In the financial year 2005-06, LIC has grown at 30.68%. In respect of number of lives insured, LIC has shown a growth of over 152%. In respect of number of schemes, LIC has a growth of 2%. LIC's market share in number of individuals covered and number of policies stands at 77% and 81%, respectively.

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SBI Life Insurance is a joint venture between the State Bank of India and Cardif SA of France. SBI Life Insurance is registered with an authorised capital of Rs 500 crore and a paid up capital of Rs 350 crores. State Bank of India is the largest banking franchise in India. Along with its 7 Associate Banks, SBI Group has a network of over 14,000 branches across the country, the largest in the world. Cardif is a wholly owned subsidiary of BNP Paribas, which is The Euro Zone's leading Bank. BNP is one of the oldest foreign banks with a presence in India dating back to 1860. Max New York Life Insurance Company Limited is a joint venture between Max India Limited, a multi-business corporate, and New York Life International, a global expert in life insurance. New York Life is a Fortune 100 company that has over Research, IT and Telecom Services, and Specialty Plastic Products businesses. Max New York Life Insurance started its operations in India in 2000. It is the first life insurance company in India to be awarded the IS0 9001:2000 certification. Max New York offers customized products tailored to suit individual's needs. With its various Products and Riders, there are more than 400 product combinations to choose from. Today, Max New York Life Insurance has a network of 57 offices spread over 37 cities all over India. Shriram Life Insurance Company Ltd is a joint venture between the Chennai-based Shriram Group and the South African insurance major Sanlam. The company launched its operations in India in December 2005. Shriram Life has set a target of achieving a premium income of Rs 110 crore during the first year of operations. While focussing largely on the strong network of over 65,000

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agents and distribution network of more than 550 branches, Shriram Life is also contemplating bancassurance alliances with couple of banks. Reliance Life Insurance Company Limited is a part of Reliance Capital Ltd. of the Reliance - Anil Dhirubhai Ambani Group. The company acquired 100 per cent shareholding in AMP Sanmar Life Insurance Company in August 2005. Taking over AMP Sanmar Life provided Reliance Life Insurance a readymade infrastructure and a portfolio. AMP Sanmar Life Insurance was a joint venture between AMP, Australia and the Sanmar Group. Headquartered in Chennai, AMP Sanmar had over 90 offices across the country, 9,000 agents, and more than 900 employees. Kotak Mahindra Old Mutual Life Insurance Ltd. is a joint venture between Kotak Mahindra Bank Ltd.(KMBL), and Old Mutual plc. Kotak Mahindra is one of India's leading financial institutions and offers a range of financial services such as commercial banking, stock broking, mutual funds, life insurance, and investment banking. Old Mutual was established more than 150 years ago and offers a diverse range of financial 160 years of experience in the life insurance business. Max India Limited is a multi-business corporate dealing in Clinical services in South Africa, the United States and the United Kingdom. The company is listed on the London Stock Exchange with a market capitalization and has its headquarters in London. ING Vysya Life Insurance Company Limited is a joint venture between Vysya Bank and ING Group of Holland, the world's 4th largest financial services group, with presence across 50 countries, and a heritage of over 150 years. ING Vysya Life Insurance Company Private Limited entered the private life insurance industry in India in September 2001. With in a short span of time ING Vysya Life Insurance has registered an impressive growth. The company currently has over 10,000 active advisors working from 75 branches (in 30 cities) across the country and over 2300 employees.
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THE ISSUE CHANNEL DEVELOPMENT PROCESS OF ICICI Prudential ICICI Prudential has one of the largest distribution networks amongst private life insurers in India. As of January 31, 2007 the company has over 540 offices across the country and over 200,000 advisors, Its distribution channel comprises of the following members: Tied Agency Channel The Tied Agency Channel, as the name suggests, is driven by agents (advisors) of the company. For insurance distribution, this is the most popular channel. This channel sources around 70 % of ICICI Prudentials business. Bancassurance Bancassurance is a setup whereby a tie up is made with a Bank. This distribution model works on referral basis. The Insurance Company is benefited by the customer base of the bank that is made available to it. The bank, in return earns a referral commission for every policy issued to bank customer. In this arrangement, typically an employee of the ICICI Prudential is stationed at the bank branch and he sources the business through walk-ins that happen at the bank. His domain of prospective customers is the banks customers. Such agents put up at banks are called as Financial Service Consultant (FSC). Bancassurance, as an arrangement for distribution, has been proved successful because of the extended reach that the insurance company gets through the bank branch network. The company has over 20 bancassurnace partners, having tie-ups with ICICI Bank, Federal Bank, South Indian Bank, Bank of India, Lord Krishna Bank, Idukki District Cooperative Bank, Jalgaon Peoples Co-operative Bank, Shamrao Vithal Co-op Bank, Ernakulam Bank and 9 Bank of India sponsored Regional Rural Banks (RRBs). It has also tied up with NGOs MFIs and corporates for the distribution of rural policies. Corporate Agents Corporate Agents (CAs) are the Corporate entities that source policies for the Insurance Company with whom they have a tie up. They are authorized to source policies for one insurance company only. The difference between CA & Bancassurance arrangement is that the former trains its own employees to sell the policies while in case of Bancassurance arrangement, the employees of the insurance company (FSCs) source the business.
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Brokers A variant of CAs, Brokers are not tied to a particular company and are allowed to source business for more than one insurance company. Direct Marketing Direct marketing, as a channel of distribution, is relatively a new one. It basically encompasses all unconventional channels of distribution. Inter alia, it includes call center, internet and other mass media channels. All leads that come from this channel are then attended and closed by the branches. Advisor An Advisor is the agent of the Company who sources or sells the policy for the company. They are called as FOS Feet on Street.

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Selecting the right mix of sales channels and optimizing their performance is a critical issue for any insurance company to be successful. The effectiveness of the distribution channel is one of the most critical issues facing sales and marketing management. Sales and channel managers are constantly evaluating performance of each partner and each program, tuning them to produce better results. Today, a "one size fits all" approach to channel management and development will not produce results effectively. Money will be wasted on programs or partners that will not produce the required ROI. Our objective of the project is to study the process and problems of recruiting Advisors or FOS. These are those members which contribute towards huge portion of the revenue earned by the company. They are the most important link between the market and the company. Objective - The need for an independent insurance advisor Insurance companies rarely sell policies directly to organizations. Companies that sell directly to organizations are referred to as "direct writers." More often, insurance companies use intermediaries to market and explain insurance products to the client or insured. Due to the complexity of insurance coverage, every organization needs a trusted insurance advisor -- either an agent, broker, or consultant -- to counsel it on insurance matters. The distinction between agents and brokers is worth noting. State insurance departments license brokers to place insurance on behalf of clients (individuals and organizations) with any number of insurance companies. States also license insurance agents. However, insurance laws restrict agents to only market and place coverage with carriers with whom they have a contractual relationship. Some agents have relationships with a number of companies, while others represent a single insurer. A broker technically represents the client, while an agent represents the company or companies with whom he or she has a relationship. However, keeping their customers and the insurance companies where they place business happy is important to both agents and brokers.

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The hierarchy of any branch of ICICI Prudential can be described as follows: ASSOCIATE REGIONAL MANAGER (ARM) BRANCH MANAGER (BM) AGENCY MANAGER (SM) UNIT MANAGER (UM) ADVISOR There are normally 5 -6 branches under an ARM. In a particular branch there are approximately 30 UMs. Under each UM there are a number of advisors. Even if we assume that under one UM there is minimum 5 Advisors, then a particular branch has around 750 Advisors. Therefore, we can say that advisors are very important members of the distribution channel. The process of recruiting advisors is very critical. There is a direct relationship between recruiting and production. A right team is the foundation for success in the life insurance business. It is very important to select the right person who can understand the needs of the ultimate customers and serve them accordingly. The Unit Managers, Project Trainees, and Executive Trainees etc recruit the advisors. Following steps, if followed properly helps to build a perfect team.

The SEARCH for Talent. The ENGAGEMENT of Prospect. The EVALUATION of Potential. The CONFIRMATION of Intent The LICENSING of Advisors. The BUILDING of Team.
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SEARCH
This is the first and foremost step of recruitment. When a person starts the process of building his or her team, they have to search for the right person. It is very important because the advisors represent the company to the customers. The values and visions for which the company stands for reflects in the kind of personnel who work with the company. The questions, which arise here, are Where can we find the advisors? This is very important. When a person starts recruiting, he would first think of the people whom he knows, i.e his NATURAL MARKET. During my training, I learnt a very easy technique to identify the areas from where one can recruit. This theory is known as the FRIENDS theory. F Friends R Relatives I Institutes, where one has studied, also other institutes. E Employment Exchanges. N Neighbours D Doctors/ Professionals S Strangers. How do we find them? Once we identify the sources, now we try to find them. All the names are gathered and more references are taken from the people we know. More the names, more the scope of success. Also various activities can be conducted to gather more and more names. Presentations can be given in various institues. How many advisors should one UM have?

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There is no fixed number for the number of advisors one UM should have. It always happens that there are some advisors become inactive due to various reasons. Hence to keep the business the UM should have sufficient number of advisors so that even if a few of them are inactive, the business is not hampered. Generally 35 advisors under one UM is an acceptable number. What should be the profile of these advisors? The profile of the advisors plays a very important role in their productivity. Analysis on this issue is done further in the project. Basically the following profiles have been found to be quite successful : Housewives Businessman Accountants/ Financial Consultants Sales Persons employed in Public/ Private Companies. Office bearers of Leading Clubs / Associations. Consistent LIC MDRT Agents. Other Professionals.

ENGAGEMENT This is the next step of recruitment. After completing the initial search for names we start engaging the prospects. This is done through telecalling and fixing appointments. Then a face-to-face meeting is conducted with the prospective advisor. When the meeting takes place, the positive sides of the business opportunity with ICICI Prudential Co. Ltd.should be highlighted. EVALUATION After meeting the prospective client, its very necessary to evaluate him, whether he meets all the criteria laid down my IRDA and ICICI Pru, his ability to succeed, his profile etc. The various criteria to be an Insurance Advisor are :
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Is the candidates age above 25 years? Is the candidate a graduate? Is the person married? Is the family income above 2 lakhs? Is the person residing in the current location for more than 5 years?

At least 3 criteria must be fulfilled to join ICICI Prudential. It is so because it helps to identify quality candidates who would be an asset, not a liability for the company.

CONFIRMATION After the candidate passes the Evaluation stage, and is found suitable, then he has to fill up the Advisor recruitment Form with a payment of Rs. 1000, and certain essential documents.

LICENSING The next step is to obtain the 50 hours of IRDA training, mandatory for the candidate. The importance of training can never be underestimated. Knowledge is power. If we have the complete knowledge of the issue then we can easily be successful in pitching the product in the market. After the training is completed and exam is conducted and after passing the exams the IRDA license is issued to the candidate. In this way a team is build. The success of the company lies in the ability of such teams.

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RESEARCH METHODOLOGY: Research Problem: A pilot study was conducted to make the definition of the problem and an understanding of the environment. This helped to concentrate on important areas of the problem of various factors that affect the recruitment process. Research Design: A research design calls for developing the most efficient plan for gathering the needed information. The design of research study is based on the purpose of the study. A research design is the specification of methods and procedures for acquiring the information needed. Its overall and operational pattern or framework of the project that stipulates what information is to be collected from which source by what procedures. Quantitative Research Design: If descriptive information is needed, then a quantitative study is likely to be needed. The choice of data collection methods for this study includes: Primary Data Collection If researchers wish to ask consumers about their purchase preferences, they do if through survey, which are of three types - Personal interview - Telephone surveys : through meeting various people. : through telephone

- Also questionnaires were being filled up to gather primary information. Secondary Data Collection Secondary data has been gathered from the internet.

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The research design adopted in this study is descriptive research in order to produce descriptive information such as awareness about various attributes attached to ICICI Prudential Life Insurance Co. Ltd.

SAMPLING METHOD: Sample Profile: Simple Random Sampling method has been adopted for the study consisting of 300 samples. The respondents were selected from all the categories. Sample Size: The sample size was fixed at 300 respondents.

Data Analysis Tool: Primary data collected through questionnaire was tabulated and analyzed using statistical techniques such as correlation, analysis of variance, hypothesis testing etc.

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FINDINGS AND ANALYSIS PROBLEM 1 We asked 300 people their preference for joining LIC or ICICI Prudential as an Advisor. The null hypothesis is that there will be no difference for LIC and ICICI Prudential. Assuming that the expected frequency of stated preference will be 150 (300/2) for each brand, we found out through a survey that the results were that 200 chose LIC and 75 chose ICICI Prudential. FREQUENCY OBSERVED LIC ICIC I 225 75 EXPECTED 150 150 OE 75 75 (OE)^2 5625 5625 (OE)^2/E 37.5 37.5 2=75

We see that 2 = (O-E)^2 E = 75. The degree of freedom here is one and the chi-square required for significance at the .05 level is 3.84 . Since,
2 tab

<

cal

The null hypothesis is rejected. Therefore, the frequency with which LIC was chosen over ICICI Prudential was statistically significant.

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PROBLEM 2 There are various types of advisors working for ICICI Prudential. The company has a mixed profile of advisors. We have studied that the number of policies (NOPs) depends upon the profile of the advisors. To prove it we have used the one-way ANOVA test. For the sake of simplicity we have taken only 3 types of advisor profiles and the average number of policies they sell in month. The null hypothesis of no difference in sample means is taken, meaning that the difference in NOPs is insignificant to advisors profile. HOUSEWIFE PROFILE NOP OF MONTH 1 NOP OF MONTH 2 NOP OF MONTH 3 3 4 5 7 8 10 2 3 2 FRESHER HNI

T2 / N = 44*44 / 9 = 215

TOTAL SS=X2ij (T)2 /n

=(3)2 +(4)2 +(5)2 +(7)2 +(8)2 + (10)2 + (2)2+ (3)2+ (2)2 (44*44/9) = 280-215 =65 SS BETWEEN= [(Tj)2 /nj] - [(T)2 / n] =(12*12/3)+(25*25/3)+(7*7/3)-(44*44/9)
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=48+208+16-215 =57 SS WITHIN=X2ij -[(Tj)2 /nj] =280-272 =8 SOURCE OF VARIATION BETWEEN SAMPLE WITHIN SAMPLE TOTAL SS d.f. MS 57/2=28.5 8/6=1.33 F-RATIO 5% F-LIMIT(from F- table)

57 3-1=2 8 9-3=6 65 9-1=8

28.5/1.33=21.43 F(2,6)= 5.1433

The above table shows that the calculated value of F IS 21.3 which is more than the table value of 5.1433 at 5% level with d.f. being v1 =2 and v2 =6. This analysis rejects the null hypothesis of no difference in sample means. We may therefore conclude that the difference in no of policies is significant and that it depends on the profile of the advisors. The fresher, students etc are able to sell many policies, but the WAPS is of smaller amount. The housewives give a mixture of business. They give moderate NOPs as well as at times give higher premium policies. Whereas, the HNI advisors just give 2-3 policies in a month, but these policies are of large amount. Thus we can conclude that the NOPs depends upon the advisors profile.

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PROBLEM 3 This problem concerns with dependency of the business given by advisor on the amount of income he earns. We have taken the advisor from 5 income levels only. This is done for the sake of simplicity. We have also taken the average business given by the advisor on the basis of the study conducted. Here Income is the independent variable, whereas Business is the dependent variable. Income stands for the yearly income of the advisor and Business stands for the yearly business that an advisor gives to the company.
INCOME (in lakhs) 0-2 2-4 4-6 6-8 8-10 BUSINESS (in lakhs) .5-1 1-3 3-5 5-7 7-9 1 3 5=a 7 9 .75 2 4=b 6 8 -4 -2 0 2 4 0=x -1.25 -2 0 2 4 2.75=y 16 4 0 4 16 40=x2 1.56 16 0 4 16 37.56=y2 24.96 20 0 8 32 84.96=xy X Y x = X-a y= Y- b x2 y2 xy

Pearsons coefficient of correlation (r) is given by

xy (x)( y) n R = x2 - (x)2 * y2 - (y)2 n n

84.96-(0)*(2.75)/5 R = 40 - (0)2 * 37.56 (2.75)2

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84.96 R = 6.32 * 6

R = + 2.23

Thus we see that there is a positive correlation between the Income and Business given by the advisor. This is so because a persons network depends upon his status in the society and status of a person is build through his level of income.

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SOME OTHER FINDINGS During the two months of my summer internship I also came across various other issues. The potential clients give following reasons for not joining the company. 1. I want to think it over need more time. 2. I would like to work with LIC only as that is more secure. 3. I already have a job and I am happy with it. 4. I cannot pay Rs. 1000 as fee 5. My spouse/ parents do not want me to do this. 6. I dont have time for training. 7. I dont like the profile of an advisor 8. There would be no saving as LIC agents offer discount. 9. I need a salary job or guaranteed income.

For this there are various reasons that why one should join ICICI Prudential Life Insurance Co. Ltd 1. ICICI Prudential is the largest life private player in the insurance industry in India. 2. The total market share of ICICI prudential as of 31st March 2005 is at 10% 3. ICICI prudential have sold over 14 policies. 4. ICICI prudential sells policy for every 2 minutes 5. ICICI prudential is the first co. to introduce unit linked life insurance and pension products previously the maximum no of ranges under the ULIP like life insurance, investment as well as pension plans. Presently with new IRDA guideline now they are concentrating on Traditional products. 6. ICICI prudential is the first life insurance company to offer ECS debit facility. 7. ICICI prudential has been awarded the best insurer award by outlook money.

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8. As per Economic Times survey AC Nielson survey 2003, ICICI Prudential has been stated as the most trusted Private Life Insurer.

9. ICICI was formed by government of India, along with the world bank and Indian industry, to assist in the development of Indian industry.

10. It is a 50- year- old institute (estd. 05 Jan 1955), older than LIC.

11. It is one of the largest financial institute in India. It has a network of 562 branches and extension counters. 12. ICICI bank is the largest private sector bank in India. 13. ICICI is Indias first company to be listed in NYSE. 14. ICICI has over 10 million customers. 15. ICICI has been awarded the best bank by global finance media Inc. in the year 2000. 16. ICICI was awarded for Excellent in Retail Financer services in 2003, by Asian Bankers journal. 17. ICICI ltd. ranked fifth in the survey of Indias most respected companies. 18. Prudential is the first insurer to list its service on mobile phone network using the latest WAP technology. 19. ICICI bank is Indias first internet bank and has always been pioneer in information technology. 20. Over forty lakh investors have put in trust and invest in ICICI safety bonds. 21. ICICI was the second entity in India to set up merchant banking service.
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22. ICICI offers payment facilities through BILL JUNCTION and INFINITY 23. ICICI Ltd. also received national HRD network award 2000 for innovative HR practice. 24. ICICI bank has the largest ATM network in India over 1400 ATMS and the number is growing.

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CONCLUSION This study shows that though insurance market in India is growing still insurance penetration is very low. Also the channel development process of ICICI Pru is a very affective one. Agents are not selected just for sake of recruitment. The selection is done keeping the future in mind. Here the agent has a full scope of development. A person joining the company as an agent or financial advisor, through his performance can climb up the ladders of success and work on the companys payroll. Being an insurance advisor is not just a part time job to earn some extra amount of money. It has become a full fleged profession where people are carving out excellent careers for themselves.

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RECOMMENDATION Though the channel development process of ICICI Pru is quite good but there is always a scope of development. The company should tie-up with various colleges, recruit and train interested students for building their future with ICICI Pru. The company follows a same commission structure for all types of advisors, for e.g.: a graduate advisor as well as a Chartered Accountant gets the same percentage of commission, although the type of clients they bring to the company are different.. The company can increase the productivity of its advisors by giving them a commission according to their profile. The rural penetration is very low. The company should concentrate on attracting people from rural area. This would help in increasing the companies business.

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BIBLIOGRAPHY
1. www.iciciprulife.com 2. www.google.com

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APPENDIX This is the copy of questionnaire which was used for the survey conducted for the study. Name: Date of birth/ age:- . Phone/ mobile no.: - Address:-. Occupation : A) Salaried B) Self employed professional C) Student D) Business E) House wife F) Others 1. What is your existing income(in Rs. Per annum) i) ii) iii) iv) v) annum) i) ii) less than 1 lacs 1 lacs 3 lacs less than 1lacs 1 lacs 3 lacs 3 lacs - 5 lacs 5 lacs 10 lacs above 10 lacs

2. How much more do you expect to earn than your existing income(in Rs. Per

iii)

5lacs - 7 lacs
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iv) i) ii) i) ii) iii) iv) i) ii) i) ii) iii) iv) i) ii) i) ii) iii) iv) v) i)

more than 7 lacs earning by working part time job earning doing a full time job less than 5 hrs in a week 5 10 hrs a week 10 15 hrs a week more than 15 hrs in a week yes no 0 100 100 300 300 500 more than 500 working as a boss working under the boss bank account loans insurance credit card others Savings

3. Do you prefer: -

4. How much time can you spend to earn extra money apart from your busy schedule

5. Do you have the desire to go aboard for trip: -

6. How many people are working under you in your organization

7. Do you prefer

8. Any existing relationship with ICICI?

9. Any idea about insurance

ii) iii)

protection tax benefits

iv)

of no use

10. From where have you heard ICICI prudential i) ii) iii) iv) media ads. Relationship with ICICI Friends and relatives Not heard about it

11. Are you going to spend your precious time and some money (Rs. 1,000) if you get some opportunity to earning money i) ii) i) ii) year. yes no yes no

12. Do you like to interact with people

13. Do you have any goal in your life which you want to achieve in next 6 months to 1

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