Life Insurance India Term Paper

Market

For over 50 years, life insurance in India was defined and driven by only one company вЂ" the Life Insurance Corporation of India (LIC). With the Insurance Regulatory and Development Authority (IRDA) Bill 1999 paving the way for entry of private companies into both life and general sectors there was bound to be new-found excitement вЂ" and new success stories. Today, just three years since their entry, their cumulative share has crossed 13% (Source: IRDA), far exceeding expectations.

Clearly insurance is on a growth path. The percentage of premium income to GDP which was just 2.3% in 2000/01 rose to 3.3% in 2002/03; and life insurance has emerged as the dominant contributor to this growth.

The industry presented a huge opportunity. Life insurance penetration, for instance, was at an abysmal 22% of the insurable population. However, private players have had to rise to many challenges. They were faced with attitudinal barriers towards the category and the perception that insurance was only a tax-saving tool. Insurance per se had lost it basic rationale: protection. It wasn’t surprising then that its potential lay frozen and unexploited. The challenge for private insurance players was to change the established category driver and get customers to evaluate life insurance as an investment-cum-protection tool.

Achievements

Beginning operations in December 2000, ICICI Prudential’s success has been meteoric, becoming the number one private life insurer within months of launch. Today, it has one of the largest distribution networks amongst private life insurers in India, with branches in 54 cities. The total number of policies issued stands at more than 780,000 with a total sum assured in excess of Rs. 160 billion.

ICICI Prudential closed the financial year ended March 31, 2004 with a total received premium income of Rs. 9.9 billion, up 135% from last years total premium income of Rs. 4.20 billion. New business premium income shows a 106% growth at Rs. 7.5 billion, driven mainly by the company’s range of unique unit-linked policies and pension plans. The company’s retail market share amongst private companies stood at 36%, making it a clear leader in the segment.

To add to its achievements, in the year 2003/04 it was adjudged Most Trusted Private Life Insurer (Economic Times вЂ?Most Trusted Brand Survey’ by ACNielsen ORG-MARG). It was also conferred the вЂ?Outlook Money вЂ" Best Life Insurer’ award for the second year running. The company is also proud to have won Silver at EFFIES 2003 for its вЂ?Retire from work, not life’ campaign. Notably, ICICI Prudential was also short-listed to the final round for its вЂ?Sindoor’ campaign in EFFIES 2002.

ICICI Prudential’s success is rooted in its philosophy to always offer the customer a

choice. This has been the driving force behind its multi-channel distribution strategy, which includes advisors, banks, direct marketing and corporate agents. In fact, ICICI Prudential was the first life insurer to invest in multiple channels and offer the customer choice and access; thus reducing dependency on any one channel.

ICICI Prudential also made

great strides in the retirement solutions and pensions market. The company's penetration of the retirement market was driven by the focussed approach towards creating awareness through a sustained campaign: �Retire from work, not life’. Within six months, the campaign rewarded ICICI Prudential with an increased share of 23% of the total pensions market and 78% amongst private players.

History

ICICI Prudential Life Insurance Company Limited is a 74:26 joint venture between ICICI Bank and Prudential plc, UK. The company brings together the local market expertise and financial strength of ICICI Bank and Prudential’s international life insurance experience. The company was granted a Certificate of Registration by the IRDA on November 24, 2000 and eighteen days later, issued its first policy on December 12.

From its early days, ICICI Prudential seemed to have the wherewithal for a large-scale business. By March 31, 2002, a little over a year since its launch, the company had issued 100,000 polices translating into a premium income of approximately Rs. 1,200 million on a sum assured of over Rs. 23 billion.

When the company began its operations, the need was to build a brand that was relatable to, symbolised trust and was easily recognised and understood. It launched a corporate campaign

using the theme of вЂ?Sindoor’ to epitomise protection, trust, togetherness and all that is Indian; endearing itself to the masses. The success of the campaign, вЂ?the calling card of the company’, saw the brand awareness scores almost at par with its 40 year old competitor. The theme of protection was also extended to subsequent product and category specific campaigns вЂ" from child plans to retirement solutions вЂ" which highlight how the company will be with its customers at every step of life.

From day one, the company has unflinchingly focussed on being a mass-market player, developing products, creating a distribution network and deploying resources that would further its goal. Apart from ramping up and thoroughly training its advisors, the company has twelve вЂ?Bancassurance’ partners вЂ" the largest in the country. It swiftly revised and added to its initial range of products, pioneering market-linked products and pension plans, to offer customers the most flexible life insurance policies in the country.

In February 2004, ICICI Prudential increased its capital base by Rs. 500 million, its ninth capital hike, bringing the total paid-up equity capital to Rs. 6,750 million. With the authorised capital of the company standing at Rs. 12 billion, ICICI Prudential continues to have the highest capital base amongst all life insurers in the country. The challenge ICICI Prudential now faces is to retain its top-notch position and continue to deliver the finest life insurance and pension solutions to its ever-growing customer base.

Product

ICICI Prudential’s ultimate promise is financial security. A strong brand certainly boosts sales, but without customer-friendly, innovative products, even the best brand would not last long.

ICICI Prudential’s product range has been developed on the understanding that different people have their own sets of needs at various stages of