Study of Product Analysis of Idbi Fortis Life Insurance Co. Ltd.

RESEARCH PROBLEM AND PURPOSE COMPANY PROFILE

IDBI Fortis Life Insurance Co Ltd, is a joint venture between three leading financial conglomerates – India’s premier development and commercial bank, IDBI, India’s leading private sector bank, Federal Bank and Europe’s premier Bancassurer, Fortis, each of which enjoys a significant status in their respective business segments. In this venture, IDBI owns 48% equity while Federal Bank and Fortis own 26% equity each.

IDBI Fortis launched its first set of products across India in March 2008, after receiving the requisite approvals from the Insurance Regulatory Development Authority (IRDA). Today, we offer our services through a vast nationwide network across the branches of IDBI Bank and Federal Bank in addition to a sizeable network of advisors and partners. At IDBI Fortis we endeavor to deliver products that provide value and convenience to the customer. Through a continuous process of innovation in product and service delivery we intend to deliver world-class wealth management, protection and retirement solutions to Indian customers.

About our Heritage IDBI Bank Ltd. continues to be, since its inception, India’s premier industrial development bank. Created in 1956 to support India’s industrial backbone, IDBI Bank has since evolved into a powerhouse of industrial and retail finance. Today, it is amongst India’s foremost commercial banks, with a wide range of innovative products and services, serving retail and corporate customers in all corners of the country from over 538 branches and more than 921 ATMs.

The Bank offers its customers an extensive range of diversified services including project financing, term lending, working capital facilities, lease finance, venture capital, loan syndication, corporate advisory services and legal and technical advisory services to its corporate clients as well as mortgages and personal loans to its retail clients. As part of its development activities, IDBI Bank has been instrumental in sponsoring the development of key institutions involved in India’s financial sector – such as the Securities and Exchange Board of India (SEBI), National Stock Exchange of India Limited (NSE) and National Securities Depository Ltd.

Please visit www. idbibank. com  to know more. Federal Bank is one of India’s leading private sector banks, with a dominant presence in the state of Kerala. It has a strong network of over 600 branches and 600 ATMs spread across India. The bank provides over four million retail customers with a wide variety of financial products. Federal Bank is one of the first large Indian banks to have an entirely automated and interconnected branch network.

The Bank operates on the core banking platform and is RTGS/ NEFT enabled through which it offers state-of-the-art technology enabled products and services. In addition to interconnected branches and ATMs, the Bank has a wide range of services like Internet Banking, Mobile Banking, Tele Banking, Any Where Banking, debit cards, online bill payment and call centre facilities to offer round the clock banking convenience to its customers. The Bank has been a pioneer in providing innovative technological solutions to its customers and the Bank has won several awards and recommendations. Please visit www. federalbank. co. in to know more.

Fortis is an international insurance group composed of Insurance Belgium, a leader in life and non-life insurance in Belgium distributing its insurance products through the network of Fortis Bank and independent insurance brokers and Insurance International with subsidiaries in the UK, France, Hong Kong, Luxembourg (Non-life), Germany, Turkey, Russia and Ukraine, and joint ventures in Luxembourg (Life), Portugal, China, Malaysia, Thailand and India. With great delight, I present before you IDBI Fortis Life Insurance Co Ltd, a company committed to bringing you products that help realise your unique dreams and aspirations.

Everyone has life goals but you need a reliable partner to work with in making a secured plan that can achieve those goals. IDBI Fortis will offer innovative solutions that meet your protection, savings and investment needs. The insurance proposition offered by IDBI Fortis will help you meet all of your personal goals whether it is to educate your child, build or manage wealth, establish a retirement fund or gain protection against medical costs. IDBI Fortis comes with impeccable parentage, being the result of the coming together of three financial giants: IDBI Bank, Federal Bank and Fortis.

IDBI Bank, India’s premier development and commercial bank, has been instrumental in sponsoring the development of key national institutions in the financial sector including the Securities and Exchange Board of India (SEBI), National Stock Exchange of India Ltd (NSE) and National Securities Depository Ltd (NSDL). Today, it ranks amongst India’s foremost commercial banks, with a wide range of innovative products and services, serving retail as well as corporate customers in all corners of the country.

Its offerings such as IDBI Flexibonds and Suvidha deposits have attracted unparalleled response demonstrating utmost customer confidence. Federal Bank, one of India’s leading private sector banks, has a dominant presence in the state of Kerala along with a strong network across the rest of India. The bank serves over four million retail customers with a full complement of financial products and is known for its deeply rooted customer relationships both amongst resident and non-resident Indians. Federal Bank is one of the first large Indian banks to have an entirely automated and interconnected branch network.

Fortis, a European financial services provider engaged in banking and insurance with a presence in over 50 countries, offers its personal, business and institutional customers a comprehensive package of products and services through its own channels, in collaboration with intermediaries and through other distribution partners. With the recent acquisition of ABN Amro Bank as part of a consortium, Fortis ranks among the largest financial institutions in Europe. Fortis also has insurance joint ventures in several countries of Europe as well as Asia.

IDBI Fortis is dedicated to building on the rich traditions of its founding companies to deliver products and services that suit your financial needs in a clear, transparent and cost-effective manner. Vision and Values Vision To be the leading provider of wealth management, protection and retirement solutions that meets the needs of our customers and adds value to their lives. Mission To continually strive to enhance customer experience through innovative product offerings, dedicated relationship management and superior service delivery while striving to interact with our customers in the most convenient and cost effective manner.

It was enturies after the first “insurance policies” were drafted in efforts to aid commerce, that the concept of life insurance took hold in ancient Rome. The ancient Romans believed that anyone who was wrongly buried would become “an unhappy ghost. ” This idea of a “forlorn and shivering spirit in an agony of loneliness” so bothered the Romans that they tended to invest large sums in elaborate burials. Although the belief in the importance of “correct” burial reached through all levels of society, resources did not. Roman society suffered a rather large gap between the rich and the poor.

Those on the lower socioeconomic strata, including many soldiers, lacked the requisite resources for a proper Roman burial. These factors led to the creation of burial clubs. Groups of individuals formed and all members were required to regularly donate to a common fund that was used in the event of a member’s death to fund his funeral. A Roman military leader, Marius, created a burial club among his troops in approximately 100 B. C. and many similar organizations came into being in this era. Eventually, the practice grew to include providing a stipend to the survivors of the deceased.

The Roman burial clubs represent the beginning of life insurance as we know it. A group of people enters into a voluntary agreement to pay premiums that are used to provide benefits to any paying member of the group who happens to die. Stripped to its essence, life insurance today, in all of its complexity and with all of its variations, still bears a remarkable resemblance to the burial clubs of ancient Rome. The idea of the Roman burial club was compelling then. The Roman government was not fond of organizations of any sort forming-perceiving them as potential breeding grounds for challengers to the power structure.

The burial clubs, however, were allowed to exist. The sensibility of their plan was obvious even to tyrants. Today we may be more concerned with providing replacement income for the family of the deceased than we are about funerary expenses. We also tend to worry considerably less about whether or not a funeral might produce a forlorn or shivering ghost. We still do, however, embrace the principle that the financial strength of many, when combined, can produce necessary results for others in difficult times. Life insurance continues today because those underlying principles remain unchanged.

We don’t often see ourselves as being akin to Roman legionnaires marching into battle, but those of us who pay our life insurance premiums in an effort to protect ourselves and our family from expense and difficulty do share a common trait with the ancients who invented life insurance in the form of burial clubs.

LIFE INSURANCE MARKET

The Life Insurance market in India is an underdeveloped market that was only tapped by the state owned LIC till the entry of private insurers. The penetration of life insurance products was 19 percent of the total 400 million of the insurable population.

The state owned LIC sold insurance as a tax instrument, not as a product giving protection. Most customers were under- insured with no flexibility or transparency in the products. With the entry of the private insurers the rules of the game have changed. The 12 private insurers in the life insurance market have already grabbed nearly 9 percent of the market in terms of premium income. The new business premium of the 12 private players has tripled to Rs 1000 crore in 2002- 03 over last year. Meanwhile, with regard to state owned LIC’s new premium business has fallen.

Innovative products, smart marketing and aggressive distribution. That’s the triple whammy combination that has enabled fledgling private insurance companies to sign up Indian customers faster than anyone ever expected. Indians, who have always seen life insurance as a tax saving device, are now suddenly turning to the private sector and snapping up the new innovative products on offer. The growing popularity of the private insurers is evidenced in other ways. They are coining money in new niches that they have introduced. The state owned companies still dominate segments like endowments and money back policies.

But in the annuity or pension products business, the private insurers have already wrested over 33 percent of the market. And in the popular unit-linked insurance schemes they have a virtual monopoly, with over 90 percent of the customers. The private insurers also seem to be scoring big in other ways- they are persuading people to take out bigger policies. For instance, the average size of a life insurance policy before privatization was around Rs 50,000. That has risen to about Rs 80,000. But the private insurers are ahead in this game and the average size of their policies is around Rs 1. lakh to Rs 1. 2 lakh- way bigger than the industry average.

Buoyed by their quicker than expected success, nearly all private insurers are fast- forwarding the second phase of their expansion plans. No doubt the aggressive stance of private insurers is already paying rich dividends. But a rejuvenated LIC is also trying to fight back to woo new customers. The introduction of private players in the industry has added colours to the dull industry. The initiatives taken by the private players are very competitive and have given immense competition to the on time monopoly of the market LIC.

Since the advent of the private players in the market the industry has seen new and innovative steps taken by the players in the sector. The new players have improved the service quality of the insurance. As a result LIC down the years have seen the declining in its career. The market share was distributed among the private players. Though LIC still holds 75% of the insurance sector the upcoming nature of these private players are enough to give more competition to LIC in the near future. LIC market share has decreased from 95%(2002-03) to 81% (2004-05). The following company holds the rest of the market share of the insurance industry

INSURANCE REGULATORY AND DEVELOPMENT AUTHORITY (IRDA) M I S S I O N

To protect the interests of the policyholders, to regulate, promote and ensure orderly growth of the insurance industry and for matters connected therewith or incidental thereto. Duties,Powers and Functions of IRDA Section 14 of IRDA Act, 1999 laysdown the duties,powers and functions of IRDA.

Subject to the provisions of this Act and any other law for the time being in force, the Authority shall have the duty to regulate, promote and ensure orderly growth of the insurance business and re-insurance business.  Without prejudice to the generality of the provisions contained in sub-section, the powers and functions of the Authority shall include,

• Issue to the applicant a certificate of registration, renew, modify, withdraw, suspend or cancel such registration;
• protection of the interests of the policy holders in matters concerning assigning of policy, nomination by policy holders, insurable interest, settlement of insurance claim, surrender value of policy and other terms and conditions of contracts of insurance;
• specifying requisite qualifications, code of conduct and practical training for intermediary or insurance intermediaries and agents;
• specifying the code of conduct for surveyors and loss assessors;
• promoting efficiency in the conduct of insurance business;

The Life Insurance market in India is an underdeveloped market that was only tapped by the state owned LIC till the entry of private insurers. The penetration of life insurance products was 19 percent of the total 400 million of the insurable population.

The state owned LIC sold insurance as a tax instrument, not as a product giving protection. Most customers were under- insured with no flexibility or transparency in the products. With the entry of the private insurers the rules of the game have changed For the purpose of this study, the research has been done for the analysis of various Products offered by the new co. idbi fortis, which is trying to establish its footprints in the industry the various products of the co. has been analysed one by one in the given study also their comparison is made on the basis of similar parameters.

Unlike other investment alternatives, it allows investor to ensure that his goals of wealth creation are achieved even in the event of serious illness, accidents.

1. Wealthsurance is a comprehensive investment Solution: Wealthsurance is designed to be an investment solution. It offers a full range of investment choices similar in features to those you are already familiar with such as bank deposits, bonds, post office schemes or mutual funds. The investment options are designed to meet the needs of all types of investors, whether cautious or risk taking. So whenever you are looking to make an investment, think about investing in Wealthsurance.
2. Wealthsurance is a wealth-management account: Wealthsurance is indeed a wealth-management solution. You can make a single investment or regular contributions. You can even manage most of your financial savings in it by choosing an appropriate mix of investment options. Think about the convenience of managing your entire portfolio in a single account and watch your wealth grow over time.
3. Wealthsurance is for those who will live: Life insurance is sometimes thought of as for those who might die, but. Wealthsurance is for those who will live. While it provides benefits upon death, Wealthsurance is also designed to offer a whole package of living benefits. You can get benefits on terminal illness, major diseases, hospitalization and disablement so you are well cared for in the event of a health crisis or accident.
4. Wealthsurance is a tax-free wealth-builder account: In Wealthsurance, you can build wealth free of income tax. Not only do you get tax benefits on your contributions, but all the returns you earn on your investments and the benefits you receive are tax-free. You can also switch amongst investment options without incidence of any tax. In essence, Wealthsurance is a tax-free wealth management account.
5. Wealthsurance is a long-term plan with short term liquidity: Wealthsurance allows you to build wealth over the long-term, but it also gives you the ability to withdraw your money when needed, after completion of three years from the commencement of the plan. With Wealthsurance you can achieve medium as well as long-term financial goals.
6. Wealthsurance meets your changing needs: Wealthsurance is designed to meet your investment and insurance needs even as they change over time. You may not need another plan because you will be able to increase, decrease or manage the wealth-building and insurance benefits as you desire.
7. Wealthsurance is different from traditional insurance: Wealthsurance is not like traditional life insurance you might know. It is an investment plan focused on wealth creation and living benefits. Sometimes people think that they only need a limited amount of life insurance. But as long as you have financial goals and you wish to build and manage wealth, or desire living benefits in your own lifetime, you will find Wealthsurance useful.
8. Wealthsurance has as many options as you need: Wealthsurance gives you multiple options because we want to meet your specific needs. At the same time we have made it easy for you to choose by developing Ready Plans to meet the typical needs of customers. Quite likely there is a Ready Plan that meets your needs. But if you wish, you can build a Custom Plan to suit your own circumstances
9. Wealth Plan can be insured against unforeseen events Wealthsurance can protect investor Wealth Plan against a range of events such as death, terminal illness, 17 major diseases, sickness requiring hospitalisation, serious accidental injuries or total and permanent disablement.

With other investment products, if any such event happens, invest or may not be able to save as planned or even be forced to withdraw from his savings. But in Wealthsurance, these benefits allow him to meet additional expenses without affecting his fund value so that his plans to save and accumulate wealth are not affected even if life throws surprises.