summerproject kedar gidh sbi

SUMMER INTERNSHIP PROJECT WITH

SBI LIFE INSURANCE COMPANY LTD.

Topic : Analysis of Claims Settlement Process and

Comparitive analysis of Claim Settlement Ratios of life

Insurance players

Presented By : Kedar Gidh

Under the able Guidance of Prof. Natika Jain

Executive Summary :

In today’s cut-throat competition, every business organisaton strives hard to acquire customers

and retain them. It is conside red that retaining customers is the need of the hour, it is also

difficult to acqiure new customers. This statement is apt in the Insurance industry where there are

a number of players offering insurance products and try to acquire customers to increase their

customer base. Also, every common man tries to get an insurance policy to secure his future

form any risks. In this sense, he has to be very careful in choosing the best insurance policy that

fits his budget. So, a proper and a detailed analysis of the various players offering insurance

products is a must. In order to make it easy for the common man to make a wise decission, this

study would enable him to get an insight in the insurance industry and make a correct decission

about the player he want’s to choose for his insurance plan.

SBI Life Insurance is a joint venture between State Bank of India and BNP Paribas

Cardif. SBI owns 74% of the total capital and BNP Paribas Cardif the remaining

26%. SBI Life Insurance has an authorized capital of Rs. 2,000 crores and a paid

up capital of Rs 1,000 crores.

Our Vision :

http://www.sbilife.com/sbilife/content/home?ln=en

"To be the most trusted and preferred life insurance provider "

Our Mission :

"To emerge as the leading company offering a comprehensive range of life insurance and

pension products at competitive prices, ensuring high standards of customer satisfaction and

world class operating efficiency, and become a model life insurance company in India in the

post liberalization period".

Our Values :

• Trustworthiness• Ambition• Innovation• Dynamism• Excellence

Multi- Distribution Model

SBI Life has a unique multi-distribution model encompassing vibrant Bancassurance, Retail

Agency, Institutional Alliance and Corporate Solutions distribution channels. SBI Life

extensively leverages the State Bank Group relationship as a platform for cross-selling

insurance products along with its numerous banking product packages such as housing loans

and personal loans. SBI’s access to over 100 million accounts across the country provides a

vibrant base for insurance penetration across every region and economic strata in the country,

thus ensuring true financial inclusion. Agency Channel, comprising of the most productive

force of over 80,000 Insurance Advisors, offers door to door insurance solutions to customers.

Key Milestones for the Financial Year 10-11: • SBI Life won the coveted Bloomberg UTV Financial Leadership Award 2011 - "Life Insurer

of the year".

• Won the most coveted NDTV Profit Business Leadership Award 2010.

• Globally topped the prestigious Million Dollar Round Table (MDRT) 2010 for having the

maximum number of MDRT members.

• Awarded the Gold Shield by Institute of Chartered Accountants of India (ICAI) for

Excellence in Financial Reporting.

• Won the ‘ICS Quality Champion Award 2010’ for Continual Quality Improvement.

• Adjudged Best Life Insurer 2010 - Runner Up by Outlook Money.

• Launched an innovative customer care initiative - SMS ‘SOLVE’ for prompt Grievance

Redressal.

• Appraised at Maturity level 3 of Capability Maturity Model Integration (CMMI) Version 1.2

for its ISG Division.

• ICRA reaffirmed ’iAAA’ rating to SBI Life, indicating highest claims paying ability and

meeting policyholders obligations.

• CRISIL, country’s leading rating agency, reaffirmed its highest financial rating AAA/Stable

to SBI Life.

Corporate Social Responsibility Activities

Gift Drishti :

One of our corporate ethos, enhancing our SBI Life brand value, is about giving

back to the society. In line with our Corporate Social Responsibility (CSR)

initiatives, the cause of supporting our Elderly Citizens was initiated. Incidence

of cataract blindness, annually at 3.28 million, is one of the most prevalent

health ailments suffered by old people, particularly in rural pockets of our country.

On the occasion of World Elder's Day on 1st October, CSR initiative - "Gift Drishti" (Restoring

vision) was launched in partnership with HelpAge India, a registered national level voluntary

body, working for the cause of disadvantaged aged persons. Restoring vision is done through

Intra Ocular Surgery (IOL). SBI Life employees made monetary contributions to the cause. SBI

Life donated twice the sum contributed by its employees. Eye sight for thousands of elderly

citizens was restored across the rural parts of the country.

Read India Pledge

SBI Life undertook the Corporate Social Responsibility (CSR) initiative, aimed

at driving the cause to make children read and write. The campaign, "Read India

Pledge" sensitized general public towards the cause and urged them to pledge &

support the cause monetarily or by devoting time.

The campaign was partnered by Pratham, one of the leading child-cause related NGOs and Radio

Mirchi, a leading radio station.

The Project Topic :

In today’s insurance scenario, there are various players offering a boquet of insurance products

to the customers. This makes it a tough call for the customer to select the best insurance player to

insure his life against various uncertainties. In order to help the customer to help him to choose

him the right insurance player, my topic will enable him to do so. Also there are various factors

that one has to ensure before selecting a particular insurance policy from an insurance provider.

The later part of this project would focus on the claim settlement ratios of various insurance

players in the insurance sector which would give an idea to the customer about who is quick in

settling their claim once it is submitted to the insurance company.

Hypotheses:

The hypotheses can be framed as under :

H0 : There is no relation between the claim settlement ratios of various insurance companies and

the choice made by the customer.

H0 : There is no market leader in the insurance sector. All insurance companies enjoy an equal

share of the pie.

Area of Research :

The research will try to understand the claim settlement process adopted by SBI life and then try

to genrealise the process for the entire insurance industry.

The research area will also include the preferencesd of the cuatomers and will try to understand

the factors that they consider while selecting an insurance policy. The research will cover a

period of four financial years starting from 2007-08 to 2010-11.

Need for the study :

In today’s world there are many uncertainties, the most important being the uncertainty of life

everyone tries to get himself insured against natural or unnatural calamities for a better future of

his family members. This gives a great opportunity for various insurance companies to provide a

boquet of insurance products to the customers and also increase their customer strength. Also the

selection of the insurance company depends on various factors. To enable the customers to what

to look before selecting an insurance company for its products thier arises a need for this study.

Because in today’s world people only go for quick returns without knowing the in and out of a

particular product. So to present a clear picture before selection of an insurance company, it is

important to know the time it takes to process the claims of the customers. This study would

definately guide the customers in that aspect providning a better knowledge of an insurance

company.

Literature Review:

Life insurance has become the most widely used means of family financial security planning.

Apart from that, it can help ensures the financial security of family, pay the support of dependents

and meet outstanding financial obligations when the policyholder dies. Furthermore individuals

and families need to become aware of the benefits, issues and differences in various life insurance

plans, (BCG, 2003).

Life insurance programs are an important part of an individual’s financial plan. The traditional

view of life insurance as a commodity – simply underwriting coverage, differentiated by price and

little else evolving as communication, education, and benefit enhancements are added. Research

and trends support the evolution of employer - based life insurance programmes from merely

providing a benefit to beneficiaries at the point of claim to a programme that is an important, vent

critical components to an individual’s overall financial plan (metlife, 2001).

As (Hofstede, 1995) stated, the major function of life insurance is to protect against financial

loss from loss of human life. Besides covering the risk of death, it also covers the risks of

disability, critical illness, etc. Life insurance is therefore developed on the concept of human life

value (Saying, 2003). Human life value approach focuses on the economic component of human

life. Any event affecting an individual’s earning capacity, retirement or unemployment (Black,

2000). The human life value concept provides the philosophical basis for thee life insurance,

which is a product deigned to protect the individual against two distinct risks Premature death

and superannuating (Browne, 1993).

FIRST DRAFT

Research Objectives :

The research objectives of my project are as follows :

To find whether the time taken by any insurance company to settle the claims can be

reduced.

To find whether there is any relation between the claim settlement ratio of a particular

insurance company and the customer selecting the same .

To find out who among the prevailing insurance players is the leader in the insurance

sector.

Development Plan:

To achieve the above mentioned objectives, secondary data has been collected for the four

financial years 2007-08 to 2010-11 relating to the claim settlement ratios of various insurance

providers.

Also the process at sbi life will be thoroughly studied and then conclusions will be drawn based

on the findings.

Research Methodology :

The research methodology adopted is analysing the secondary data available from various

sources. After the analysis, conclusions regarding the objectives will be drawn based on the

outcome of the analysis.

SECOND DRAFT

Summary of previous work :

The previous work was to gather information about the topic assigned and frame suitable

hypothesis/hypotheses to conduct a systematic study of the project. Also, a brief history about

the organisation was also to be found out. It also included finding out of drawbacks of the

present system if any and try and find solutions to overcome these drawbacks. It also included

finding out the need of conducting such a study and why is it important to carry out such a study.

After finding out more about the topic, framing of the ressearch objectives was done. Then, in

order to achieve these objectives what development plan would be adopted was to be listed. Inorder to

achieve the objectives and to implement the development plan, research methodology was to be decided

upon. The previous work’s finding s will enable me to go forward with the next steps involved.

Data Collection :

For the purpose of carrying out the research study, 12 insurance companies have been taken into

consideration. The claim settlemnt ratios of these companies has been taken and compiled for the

research purpose. The details of these 12 companies is explained in brief below :

1. Life Insurance Corporation of India : The Parliament of India passed the Life

Insurance Corporation Act on the 19th of June 1956, and the Life Insurance Corporation

of India was created on 1st September, 1956, with the objective of spreading life

insurance much more widely and in particular to the rural areas with a view to reach all

insurable persons in the country, providing them adequate financial cover at a reasonable

cost. LIC continues to be the dominant life insurer even in the liberalized scenario of

Indian insurance and is moving fast on a new growth trajectory surpassing its own past

records. It has crossed the milestone of issuing 1,01,32,955 new policies by 15th Oct,

2005, posting a healthy growth rate of 16.67% over the corresponding period of the

previous year.

2. HDFC STANDARD LIFE : It was started in the year 2000. It is a joint venture between

HDFC ltd and STANADARD LIFE. HDFC Life, one of India's leading private life

insurance companies, offers a range of individual and group insurance solutions. It is a

joint venture between Housing Development Finance Corporation Limited (HDFC),

India's leading housing finance institution and Standard Life plc, the leading provider of

financial services in the United Kingdom.

HDFC Ltd. holds 72.37% and Standard Life (Mauritius Holding) Ltd. holds 26.00% of

equity in the joint venture, while the rest is held by others.

HDFC Life continues to have one of the widest reaches among new insurance companies

with about 500 branches in India touching customers in over 900 cities and towns.

3. BIRLA SUNLIFE : Birla Sun Life Insurance Company Limited (BSLI) is a joint

venture between the Aditya Birla Group, a well known Indian conglomerate and Sun Life

Financial Inc, one of the leading international financial services organizations from

Canada. It was started in the year 2001. With an experience of over a decade, BSLI has

contributed to the growth and development of the Indian life insurance industry and

currently is one of the leading life insurance companies in the country.

4. ICICI PRUDENTIAL : ICICI Prudential Life Insurance Company is a joint venture

between ICICI Bank - one of India's foremost financial services companies-and

Prudential plc - a leading international financial services group headquartered in the

United Kingdom. Total capital infusion stands at Rs. 47.80 billion, with ICICI Bank

holding a stake of 74% and Prudential plc holding 26%. The company started its

operation in the year 2000 after getting approval from IRDA. We began our operations in

December 2000 after receiving approval from Insurance Regulatory Development

Authority (IRDA). We have a network of approximately 1,400 offices and over

1,75,0000 advisors, as at June 30, 2011. In addition to this, we also have over 5000

distribution touch-points and over 10,000 servicing touch-points across the country.

5. ING LIFE : ING Life Insurance recently achieved the significant milestone of

completing 10 years of operations in India. The company is a joint venture between ING

Insurance International B.V. and Exide Industries. Headquartered in Bangalore, ING

Life India is currently present in over 200 cities and serves over 1 million policy holders

in India. The company started its operation in the year 2001 after getting approval from

IRDA. The company distributes its products through two channels, the Tied Agency and

the Alternate Channel.The Tied Agency channel comprises over 30,000 ING Life

Advisors, spread across the country. The Alternate Channels business within ING Life

India is a fast growing distribution channel, and includes the Banc assurance partner

(ING Vysya Bank), Referral Partners, Corporate Agents and Brokers.

6. KOTAK MAHINDRA : Kotak Mahindra Old Mutual Life Insurance Ltd is a 74:26 joint

venture between Kotak Mahindra Bank Ltd., its affiliates and Old Mutual plc. The

company started its operation in the year 2000 after getting approval from IRDA. A

Company that combines its international strengths and local advantages to offer its

customers a wide range of innovative life insurance products, helping them take

important financial decisions at every stage in life and stay financially independent. The

company covers over 3 million lives and is one of the fastest growing insurance

companies in India.

7. BAJAJ ALLIANZ : Bajaj Allianz Life Insurance is a union between Allianz SE, one of

the largest Insurance Company and Bajaj Finserv. Allianz SE is a leading insurance

conglomerate globally and one of the largest asset managers in the world, managing

assets worth over a Trillion (Over INR. 55, 00,000 Crores). Allianz SE has over 119

years of financial experience and is present in over 70 countries around the world. The

company started its operation in the year 2000 after getting approval from IRDA. At

Bajaj Allianz Life Insurance, customer delight is our guiding principle. Our business

philosophy is to ensure excellent insurance and investment solutions by offering

customised products, supported by the best technology.

8. BHARTI AXA : Bharti AXA Life is a life Insurance player that was started in 2006. It

brings together strong financial expertise of the Paris-headquartered AXA Group, and

Bharti Enterprises - one of India's leading business groups with interests in telecom,

agricultural business, financial services, and retail. The joint venture has a 74% stake

from Bharti and 26% stake from AXA Asia Pacific Holdings Ltd.(APH).The company

launched national operations in December 2006. Today, Bharti AXA Life has a national

footprint of distributors trained to provide quality financial advice and insurance

solutions to the large Indian customer base.

9. MetLIFE : MetLife India Insurance Company Limited (MetLife) operates in India since

2001 and is an affiliate of MetLife, Inc. MetLife headquartered in Bangalore and

Gurgaon, is one of the fastest growing life insurance companies in the country. It serves

its customers by offering a range of innovative products to individuals and group

customers through its 29 bank partners across retail and group business, strong broker

network besides an agency force of over 30,000 financial advisors. MetLife declared

profits of 35 Crores for the first time in year ended March 2011, making it one of the few

profitable and growing life insurers in India. MetLife, Inc.is a leading global provider of

insurance, annuities and employee benefit programs, serving 90 million customers in

over 50 countries. Through its subsidiaries and affiliates, MetLife holds leading market

positions in the United States, Japan, Latin America, Asia Pacific, Europe and the Middle

East.

10. AVIVA : Aviva India is a joint venture between one of the country’s oldest and largest

groups, Dabur, and Aviva Group, one of the UK's largest insurance group, whose

association with India dates back to 1834. Our vision is to be amongst India’s leading life

insurers with a quality business model, focused on sustainable growth. We seek to build a

robust product portfolio meeting all customer lifecycle needs related to –

Protection, Retirement, Savings and Investments. The company started its operation in

the year 2002 after getting approval from IRDA.

11. TATA AIG: Tata AIG General Insurance Company Limited (Tata AIG General) is a

joint venture company, formed by the Tata Group and American International Group,

Inc. (AIG). Tata AIG General combines the Tata Group's pre-eminent leadership position

in India and AIG's global presence as the world's leading international insurance and

financial services organization. The Tata Group holds 74 per cent stake in the insurance

venture with AIG holding the balance 26 percent. Tata AIG General Insurance Company,

which started its operations in India on January 22, 2001, provides insurance solutions to

individuals and corporates.

12. RELIANCE LIFE : Reliance Life Insurance offers products that fulfill your savings

and protection needs. Our aim is to emerge as a transnational Life Insurer of global scale

and standard. Reliance Life Insurance is a Reliance Capital Company and is part of

Reliance Group. The company started its operation in the year 2002 after getting approval

from IRDA. Reliance Capital is one of India’s leading private sector financial services

companies, and ranks among the top 3 private sector financial services and banking

companies, in terms of net worth. Reliance Capital has interests in asset management and

mutual funds, stock broking, life and general insurance, proprietary investments, private

equity and other activities in financial service. Nippon Life Insurance Company acquired

26% interest in equity share capital of the Company effective October 7, 2011 subsequent

to receipt of all regulatory approval. Nippon Life Insurance, also called Nissay, is Japan's

largest private life insurer with revenues of Rs 346,834 crore (US$ 80 Billion) and profits

of over Rs 12,199 crore (US$ 3 billion). The company primarily operated in Japan ,

North America, Europe and Asia and is headquartered in Osaka, Japan. It is ranked 81st

in Global Fortune 500 firms in 2011.

Data Analysis :

Claim settlement Ratio for 2008-2009:

Company Claim Settled

LIC 95.48%

MAX NEW YORK 90.02%

BIRLA SUNLIFE 89.12%

HDFC STANDARD LIFE 87.96%

BAJAJ ALLIANZ 87.29%

RELIANCE LIFE 86.57%

ICICI PRUDENTIAL 86.55%

ING LIFE 77.48%

KOTAK MAHINDRA 77.08%

SBI LIFE 76.57%

AVIVA 71.77%

TATA AIG 61.19%

MetLIFE 57.89%

BHARTI AXA 53.20%

Source: Annual Report od IRDA 2008-2009

LIC

MAX NEW YO

RK

BIRLA SU

NLIFE

HDFC LIF

E

BAJAJ A

LLIANZ

RELAINCE L

IFE

ICICI PRUDEN

TIAL

ING LIFE

KOTAK M

AHINDRA

SBI LI

FEAVIVA

TATA

AIG

METLIF

E

BHARTI AXA

0.00%10.00%20.00%30.00%40.00%50.00%60.00%70.00%80.00%90.00%

100.00%

CLAIM SETTLED

CLAIM SETTLED

Claim Settlement Ratio for 2009-2010:


LIC 96.54%


ICICI PRUDENTIAL 90.17%

ING LIFE 89.30%




AVIVA 87.11%


SBI LIFE 83.27%

MetLIFE 82.54%

TATA AIG 78.17%

BHARTI AXA 77.80%

MAX NEW YORK 65.51%

Source: Annual Report of IRDA 2009-2010

LIC

HDFC LIF

E

ICICI PRUDEN

TIAL

ING LIFE

BIRLA SU

NLIFE

RELAINCE L

IFE

BAJAJ A

LLIANZ

AVIVA

KOTAK M

AHINDRA

SBI LI

FE

METLIF

E

TATA

AIG

BHARTI AXA

MAX NEW YO

RK0.00%

10.00%20.00%30.00%40.00%50.00%60.00%70.00%80.00%90.00%

100.00%

Claims settled

Claims settled

Claim Settlement Ratio for 2010-2011


LIC 97.03%



ICICI PRUDENTIAL 94.61.%

ING LIFE 90.49%



BHARTI AXA 87.17%

MetLIFE 85.43%

AVIVA 84.15%

SBI LIFE 82.24%

TATA AIG 81.93%


MAX NEW YORK 77.96.%

Source : Annual Report of IRDA 2010-2011

LIC

HDFC LIF

E

BIRLA SU

NLIFE

ICICI PRUDEN

TIAL

ING LIFE

KOTAK M

AHINDRA

BAJAJ A

LLIANZ

BHARTI AXA

METLIF

EAVIVA

SBI LI

FE

TATA

AIG

RELAINCE L

IFE

MAX NEW YO

RK0.00%

20.00%40.00%60.00%80.00%

100.00%120.00%

Claims settled

Claims settled

Comparitive Performance of the life insurance players:

Company 2008-09 2009-10 2010-11

AVIVA 71.77%


BHARTI AXA 53.20%


HDFC LIFE 87.96%

ICICI PRUDENTIAL

86.55%

ING LIFE 77.48%

KOTAK MAHINDRA

77.08%

LIC 95.48%

MAX NEW YORK

90.02%

METLIFE 86.57%

RELAINCE LIFE 57.89%

SBI LIFE 76.57%

TATA AIG 61.19%

AVIVA

BAJAJ A

LLIANZ

BHARTI AXA

BIRLA SU

NLIFE

HDFC LIF

E

ICICI PRUDEN

TIAL

ING LIFE

KOTAK M

AHINDRA LIC

MAX NEW YO

RK

METLIF

E

RELAINCE L

IFE

SBI LI

FE

TATA

AIG0.00%

10.00%

20.00%

30.00%

40.00%

50.00%

60.00%

70.00%

80.00%

90.00%

100.00%

2008-092009-20102010-11

Comparitive performance of various life insurers during the period from

2008-2011

summerproject kedar gidh sbi

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