Strategic Analysis and Strategic Analysis and Analyzing SWOT of Analyzing SWOT of “ICICI Prudential Life “ICICI Prudential Life

Insurance”Insurance”

PREPARE BY:- GAURAV BHUT PREPARE BY:- GAURAV BHUT

Objective1: Objective1:

What the Life Insurance What the Life Insurance Industry is all aboutIndustry is all about

What Insurance is?What Insurance is?

Insurance is concerned with the protection of Insurance is concerned with the protection of economic value of an asset.economic value of an asset.

Advantages of Insurance:Advantages of Insurance: Financial security for the family.Financial security for the family. Facility of nomination and assignment on Facility of nomination and assignment on

death.death. Compulsory savings.Compulsory savings. Tax benefitsTax benefits Loans against policy.Loans against policy.

Life Insurance Industry in IndiaLife Insurance Industry in India The first Indian Insurance company was the The first Indian Insurance company was the

Bombay Mutual Assurance Society Ltd., Bombay Mutual Assurance Society Ltd., formed in 1870.formed in 1870.

In 1956, Life Insurance business was In 1956, Life Insurance business was nationalized and LIC of India came into nationalized and LIC of India came into existence.existence.

Right now, there are 18 private sector and Right now, there are 18 private sector and 1 public sector Life Insurance companies in 1 public sector Life Insurance companies in India.India.

Life Insurance sector is growing at 10.48%Life Insurance sector is growing at 10.48% LIC of India has a dominating market share LIC of India has a dominating market share

of 87% of total market covered.of 87% of total market covered. The private sector companies has the The private sector companies has the

growth of 153%growth of 153%

Objective 2: Objective 2:

What is the Environmental What is the Environmental Scenario of Insurance BusinessScenario of Insurance Business

Legal ScenarioLegal Scenario

Indian government Act in 1912Indian government Act in 1912 Insurance Act 1938Insurance Act 1938 Insurance act 1950Insurance act 1950 IRDA Act 1999IRDA Act 1999 Duties, Power and Function of IRDADuties, Power and Function of IRDA Tax Benefits from Life Insurance Tax Benefits from Life Insurance

PoliciesPolicies

Economic ScenarioEconomic Scenario

Increasing Mobilization through Public Increasing Mobilization through Public Savings through Life Insurance PremiumSavings through Life Insurance Premium

Increasing Foreign Joint Venture in Life Increasing Foreign Joint Venture in Life Insurance BusinessInsurance Business

Increasing Regulation and SupervisionIncreasing Regulation and Supervision The move towards importance of safety The move towards importance of safety

with good returnswith good returns

Social ScenarioSocial Scenario

Life Insurance is a social security toolLife Insurance is a social security tool Safety of investment in IndiaSafety of investment in India Increasing education of People about Increasing education of People about

Life InsuranceLife Insurance Ageing populationAgeing population Special schemes for weaker section Special schemes for weaker section

of the societyof the society

Technological ScenarioTechnological Scenario

Insurance companies have been in Insurance companies have been in the forefront to adopt the latest the forefront to adopt the latest advances of Technologyadvances of Technology

Internet and IntranetInternet and Intranet KiosksKiosks Benefits to the customers and Benefits to the customers and

insurerinsurer

Industry Rivalry - HighIndustry Rivalry - HighFactorsFactors HighHigh ModeratModerat

eeLowLow

# of Firms# of Firms

Market GrowthMarket Growth

Fixed costFixed cost

Switching costSwitching cost

Product Product DifferenceDifference

Exit barriersExit barriers

Industry Industry ShakeoutShakeout

Threat of Substitute – Threat of Substitute – ModerateModerate

FactorsFactors HighHigh ModerateModerate LowLow

Switching costSwitching cost

Product Product DifferenceDifference

SubstitutesSubstitutes

Access to Access to ProductsProducts

Bargaining Power of Buyer- Bargaining Power of Buyer- HighHigh

FactorsFactors HighHigh ModerateModerate LowLow

Switching costSwitching cost

# of Customers# of Customers

Awareness of Awareness of ProductsProducts

Bargaining Power of Supplier - Bargaining Power of Supplier - HighHigh

FactorsFactors HighHigh ModeratModeratee

LowLow

# of Suppliers# of Suppliers

Suppliers Suppliers ConcentrationConcentration

CollaborationsCollaborations

Barriers to Entry - HighBarriers to Entry - High

FactorsFactors HighHigh ModeratModeratee

LowLow

Legal BarriersLegal Barriers

Investment CostInvestment Cost

Access to Access to DistributionDistribution

Objective 3:Objective 3:Various Processes of ICICI Various Processes of ICICI Prudential Life InsurancePrudential Life Insurance

Principles Principles Life Insurance Contracts Life Insurance Contracts

Utmost Good FaithUtmost Good Faith 'A positive duty to disclose, accurately and 'A positive duty to disclose, accurately and

fully, all the facts material to the risk being fully, all the facts material to the risk being proposed. whether asked for or not'.proposed. whether asked for or not'.

Insurable interest Insurable interest Principle of indemnityPrinciple of indemnity

Insurance cannot be used as a means to Insurance cannot be used as a means to make profit out of it make profit out of it

Different risksDifferent risks

Premium Premium

DefinitionDefinition Premium is the amount, which is paid by the insured to the Premium is the amount, which is paid by the insured to the

insurer for an insurance contract. In other words, insurer for an insurance contract. In other words, premium is the price for a policy.premium is the price for a policy.

Basic elements of PremiumBasic elements of PremiumMortality, Interest yield , Expenses , Contingency FactorMortality, Interest yield , Expenses , Contingency Factor

Tabular premiumsTabular premiums Risk Premium , Net/pure annual premium , Office Risk Premium , Net/pure annual premium , Office

premium , Tabular premium premium , Tabular premium

Conti…Conti…

Factors affecting Premium to be paidFactors affecting Premium to be paid Type of policy Type of policy

Age of insured personAge of insured person Term of policyTerm of policy Sum AssuredSum Assured Mode of paymentMode of payment State of health, occupation and hazards.State of health, occupation and hazards. Additional benefitAdditional benefit

Extra Premium – Rider PremiumExtra Premium – Rider Premium

Basic Products Basic Products

Popular plansPopular plans Term Assurance PlansTerm Assurance Plans Endowment PlansEndowment Plans Convertible PlansConvertible Plans With-profit & Without Profit PlansWith-profit & Without Profit Plans Children's PlansChildren's Plans Industrial Assurance PlansIndustrial Assurance Plans Salary Savings Scheme policiesSalary Savings Scheme policies Unit link plansUnit link plans

Documents Documents Proposal Form Proposal Form Other important documentsOther important documents

Personal statement Personal statement Agent’s report Agent’s report Medical report Medical report Proof of age Proof of age First Premium ReceiptFirst Premium Receipt Renewal Premium ReceiptRenewal Premium Receipt Policy bond Policy bond EndorsementsEndorsements

Bonus Notices Bonus Notices Prospectus issued by the InsurerProspectus issued by the Insurer

Policy Conditions Policy Conditions

Age Age Days Of GraceDays Of Grace Lapse And Non-Forfeiture Lapse And Non-Forfeiture Paid-up Value Paid-up Value NominationNomination Surrenders and LoansSurrenders and Loans

ClaimsClaims Intimations Intimations Claim DocumentsClaim Documents

Maturity claimsMaturity claims Death claimsDeath claims

The conditions applicable to accidental cases The conditions applicable to accidental cases Settlement procedure Settlement procedure

Survival BenefitsSurvival Benefits Unusual situationsUnusual situations Life assured missingLife assured missing MiscellaneousMiscellaneous

Chairman

Training Actuarial Investment

IT Marketing Client services

RM corporate agent

SM

agents agents agents

SMSMSM

RM (east) RM (west) RM (south) RM (north)

Marketing Department Marketing Department

Marketing for Intangibles Marketing for Intangibles Distribution Channel Distribution Channel Customers Relationship Customers Relationship Strengthening Relationships Strengthening Relationships Advertisements Advertisements Marketing Mix Marketing Mix

Promotion StrategyPromotion Strategy Product StrategyProduct Strategy Product PricingProduct Pricing

Functions of An Agent Functions of An Agent

Before saleBefore sale

Contact prospectsContact prospects Study their insurance Study their insurance

needs Completion of needs Completion of formalities for proposal formalities for proposal of new insurance viz, of new insurance viz, Filling of formFilling of form

Arranging for Medical Arranging for Medical ExaminationExamination

Collection proofs of age Collection proofs of age and incomeand income

Any other information Any other information required by the required by the underwriters..underwriters..

After saleAfter sale

Ensure payment of Ensure payment of renewal premiums.renewal premiums.

Assist policyholder for Assist policyholder for nomination / or change nomination / or change thereof.thereof.

Assist the policyholder in Assist the policyholder in case he wants to get loan case he wants to get loan against the policy against the policy assignment.assignment.

Assist the policyholder or Assist the policyholder or the claimant to comply the claimant to comply with the requirement for with the requirement for getting timely settlement getting timely settlement of claims.of claims.

Underwriting Underwriting

Classification Of RisksClassification Of Risks Financial UnderwritingFinancial Underwriting Non-Medical UnderwritingNon-Medical Underwriting Underwriting By AgentsUnderwriting By Agents Recent Trends In UnderwritingRecent Trends In Underwriting

Objective 4: Objective 4: Comparison of ICICI Comparison of ICICI

Prudential Life Insurance Prudential Life Insurance with other Playerswith other Players

Endowment Plan:

ICICI prudential has the advantage in the endowment policy over other companies’ polices in terms of: Extended maturity period of 5 years Loan against 3 years full premium Facility of cancellation of policy within 15 days Premium paid will be refundable Higher returns include policy value, sum assured and the vested bonuses

The ICICI Prudential has the disadvantage against OM Kotak and Birla Sunlife Insurance it terms that both of these companies give benefit of Insurance cover as well as investment opportunity in government securities and AAA companies.

Money Back Plan:

Advantage of ICICI is that it gives survival benefit at shorter interval which will be very much helpful in planning of life cash flow to middle Class people.

ICICI Prudential is at the disadvantage position as compared to others in terms of: Birla Sunlife Insurance invests in government securities and other financial instruments specified by IRDA, which gives the higher returns to the customers at a moderate risk Birla Sunlife Insurance and OM Kotak Life Insurance are giving loans against the policy The customer can know his repayment amount at the pre-cancellation stage before maturity

Smart Kid Plan:

ICICI Prudential has the advantage against others in terms of:

It covers the life insurance of the children during the termRisk starts at the commencement of the policy, which is not the case with LIC

ICICI Prudential has the disadvantages also against others in terms of:

Only concentrates on Educational BenefitsThe Policy can be replaced by other persons like relatives, friends, etc. in the policy of LIC

Unit Link Policy:ICICI Prudential has the advantage of starting the death benefit from the commencement of the policy. While in LIC, the particular percentage of amount is to be paid to the insurer.In LIC on death after 1st year they are paying sum assured along with along with the bid value of the fund units while ICICI pays bid value or sum assured whichever is higher.

The returns are secured at certain stage and unsecured at more than that. The insurance companies invest the money of the person in Equity and debt specified by IRDA, which may give higher or lower returns to the customers. But, still, the minimum sum assured is given to the customers at the end of the maturity period.

Product Premium and Market Product Premium and Market shareshare

Premium (Rs. in Mn)Premium (Rs. in Mn) Market Market ShareShare

2002-2002-0303

2003-2003-0404

% of % of growthgrowth

2002-2002-0303

2003-2003-0404

Pvt. Pvt. playersplayers

9581.9581.33

2425524255 153.15153.15 5.665.66 12.9512.95

LICLIC 159761597688

162841628477

1.931.93 94.3494.34 87.0587.05

TotalTotal 169341693499

187101871022

10.4810.48 100100 100100

Objective 5:Objective 5:Findings of ICICI Prudential Findings of ICICI Prudential

Life InsuranceLife Insurance

Opportunities for Life Insurance Opportunities for Life Insurance CompaniesCompanies

High market growthHigh market growth Increasing awarenessIncreasing awareness Technological AdoptionTechnological Adoption Economies of scaleEconomies of scale Self regulation Self regulation Joint VenturesJoint Ventures

Threats for Life Insurance Threats for Life Insurance CompaniesCompanies

Increasing RivalryIncreasing Rivalry Standardization of productsStandardization of products Higher commissions to the agentsHigher commissions to the agents Legal frameworksLegal frameworks Image of Private sectors companiesImage of Private sectors companies

Strengths of ICICI PrudentialStrengths of ICICI Prudential

Competing productsCompeting products Ability to serve multiple segmentsAbility to serve multiple segments High market share growthHigh market share growth Multiple product linesMultiple product lines Higher premium growthHigher premium growth Increasing networkIncreasing network

Weaknesses of ICICI Weaknesses of ICICI PrudentialPrudential

Strong competing brandsStrong competing brands Marketing and promotional efforts Marketing and promotional efforts

from other playersfrom other players Lower believability Lower believability Lower coverageLower coverage

Seven ‘S’ AnalysisSeven ‘S’ Analysis

Strategy

Shared Value

Structure

Skill

Staff

Super ordinateGoal

System

FindingsFindings Insurance is concerned with the protection Insurance is concerned with the protection

of economic value of assets.of economic value of assets. IRDA is to regulate, promote and ensure IRDA is to regulate, promote and ensure

growth of the Life Insurance business.growth of the Life Insurance business. Foreign joint ventures are increasing in Foreign joint ventures are increasing in

Life Insurance Business.Life Insurance Business. Industry is growing at the rate of 10.48% Industry is growing at the rate of 10.48%

in terms of premiums collections.in terms of premiums collections. Advance technology adoption Advance technology adoption ICICI prudential is business oriented, ICICI prudential is business oriented,

customer service oriented and support customer service oriented and support oriented.oriented.

ConclusionConclusion

Corporate Growth Strategy Corporate Growth Strategy

Market Penetration Market Penetration

ICICI PrudentialICICI PrudentialIncrease Market ShareIncrease Market ShareIncrease product usage Increase product usage through New applicationthrough New application

Product Development Product Development

ICICI PrudentialICICI PrudentialProduct ImprovementsProduct ImprovementsProduct line ExtensionProduct line Extension

Market Development Market Development

ICICI PrudentialICICI PrudentialExpand Market by Expand Market by existing Products by existing Products by geographic expansion geographic expansion and new target marketsand new target markets

Diversification Diversification StrategyStrategy

Current Product New Product

CurrentMarket

NewMarket

Market Growth Relative Share Market Growth Relative Share MatrixMatrix

StarStar

Life Insurance Life Insurance CorporationCorporation

Question MarkQuestion Mark

ICICI Prud.ICICI Prud.

Other Private Insurance Other Private Insurance CompaniesCompanies

Cash CowCash Cow DogsDogs

High

High

Low

LowRelative Market share

Market Growth

Rate

Marketing strategy – Marketing strategy – Encirclement Encirclement

Primary Objective Primary Objective Market CharacteristicsMarket Characteristics CompetitionCompetition Firm CharacteristicsFirm Characteristics