Iffco tokio general insurance co.ltd

Iffco tokio general insurance co.ltd

1. IFFCO-TOKIO GENERAL INSURANCE CO.LTD
Executive Summary
As the student of NAVNITLAL RANCHHODLAL INSTITUTE OF
BUSINESS OF MANAGEMENT (Gujarat university Ahmedabad) I have to
present the project regarding my training, In the course of M.B.A. Summer
training work has to be presented as project report. It is very important for
student to select proper topic and training center.
z for his/her summer training, as it will be helpful for student to have
practical experience corporate world & partial fulfillment of the M.B.A programme.
I have completed my training at
“IFFCO TOKIO”
1
ST
Floor, House-A, 21
st
Century Business Centre.
Nr.World Trade Centre, Ring Road,
surat-395002.
which is the Surat S.B.U of Iffco Tokio General Insurance Co. Ltd.
Iffco Tokio General Insurance Co. Ltd. is one of the leading player in
general insurance industry among the private players. It is increasing its market
share day by day.
This project contains general detail of insurance industry, brief detail of
private players in the market & brief detail of IRDA bill along with detail of
different product & analysis of marketing channel of insurance industry.
NAVANITLAL RANCHHODLAL INSTITUTE OF BUSINESS MANAGEMENT
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2. IFFCO-TOKIO GENERAL INSURANCE CO.LTD
Introduction Of industry
Introduction
Insurance in India started without any regulation in the Nineteenth
Century. It was a typical story of a colonial era: a few British insurance
companies dominating the market serving mostly large urban centers. After the
independence, it took a dramatic turn. Insurance was nationalized. First, the life
insurance companies were nationalized in 1956, and then the general insurance
business was nationalized in 1972. Only in 1999 private insurance companies
have been allowed back into the business of insurance with a maximum of 26%
of foreign holding & latest updating about the same is proposed to be 49%.
History of General Insurance in India
The Indian insurance industry is segmented into two distinct markets: the
life insurance market and the non-life, or general, insurance market. The General
insurance business in India 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.
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3. IFFCO-TOKIO GENERAL INSURANCE CO.LTD
·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 (Nationalization) Act, 1972
nationalized the general insurance business in India.
·January 1973: 107 insurers amalgamated and grouped into four
companies.
1. Oriental Insurance Company Limited.
2. New India Assurance Company Limited.
3. National Insurance Company Limited and.
4. United India Insurance Company Limited.
General Insurance in India
·Features of Indian General Insurance Market
·Low market penetration.
·Ever-growing middle class component in population.
·Growth of consumer movement with an increasing demand for better
insurance products.
·Inadequate application of information technology for business.
·Adequate fillip from the Government in the form of tax incentives to the
insured, etc.
·India is one of the least insured countries but the potential for further
growth is phenomenal.
·Rates of claim settlement were earlier in India the highest in the world, 70
per cent in general
·insurance, compared to around 40 per cent internationally.
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4. IFFCO-TOKIO GENERAL INSURANCE CO.LTD
·Non-life premium has a 0.71 per cent share of GDP.
·General Insurers (Private Companies) have earned around Rs.1000-cr
income.
·Half of the current demand for comes from the corporate segment.
Benefits of General Insurance
·Insurance is the instrument of Security, saving and peace of mind. It
provides several benefits by paying a small amount of premium to an
insurance company.
·Safeguards one’s assets.
·Peace of mind-in case of financial loss.
·Encourage saving.
·Tax rebate.
·Protection from the claim made by creditors.
·Security against a personal loan, housing loan or other types of loan.
Role of General Insurance in growth of economy
The General Insurance Industry has an enviable track record among
public sector units. It has a consistent profit and dividend paying record
accompanied by a steady growth in its financial resources. Through investments
in the Government sector and socially- oriented sectors the Industry has
contributed immensely to the nation's development. The industry is recognized
as one of the largest financial Institutions in the country. The ventures initiated by
the industry in the areas of Mutual Fund, Housing Finance has done exceedingly
well in recent years. To protect the country's foreign exchange reserves, the
reinsurance arrangement are so organized that maximum retention is made
possible within the country while at the same time protecting interests of the
policy holders. The GIC’S inwards reinsurance wing, called the SWIFT,
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5. IFFCO-TOKIO GENERAL INSURANCE CO.LTD
maximizes the foreign exchange balance by acting as an international insurer
accepting risks from all over the globe.
India vs. Global Market
India's insurance penetration is low at 1.95 per cent and ranks 51 in the world. In
premium collection the record is better, at 23rd position. The ratio of premium
collected to gross domestic product is a mere 0.58 per cent. Compared with an
average of 7.1 percent in most industrialized countries. India is still at a very
nascent stage with an $8-9 (Rs.400-450) per capita expenditure on insurance,
out of which $2 to $2.5(Rs.100-150) will be on general insurance. This was
primarily because in India non-life insurance is not considered important and
people perceive it as an unnecessary expenditure. Non-life insurance premium at
a percentage of GDP is estimated at 2.70 for Japan, 2.55 for South Korea, 1.89
for Malaysia, 1.62 for Singapore, 1.38 for Taiwan, 1.23 for Thailand, 0.86 for the
Philippines, 0.68 for China, 0.66 for Indonesia, and 0.51 for Pakistan.
Regions/
Country USD (billions) Percentage
North America 689.2 32.7
Latin America 653.0 31.0
Europe 32.9 1.6
Asia 647.1 30.7
India 3.0 0.15
World 2,105.8 100.0
Future of General Insurance
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The Indian insurance sector will register a high growth rate in the future
years to come, says the report prepared by Fitch Ratings. This will be due to the
innovative products, better distribution network, better services coupled with
other never-before changes that have taken place in the insurance sector. The
report laid stress on branding, customer service and tailor made products that will
assume importance besides information technology that will become vital to bring
down costs in the future. Also data warehousing, ensuring effective cross selling
will grown in importance to exploit the largely unexploited market.
Regulations
In India Insurance is a federal subject. The primary legislation that deals
with insurance business in India is:
Insurance Regulatory Authority
On the recommendation of Malhotra Committee, an Insurance Regulatory
Development Act (IRDA) passed by Indian Parliament in 1993. Its main aim was
to activate an insurance regulatory apparatus essential for proper monitoring and
control of the Insurance industry. Due to this Act several Indian private
companies have entered into the insurance market, and some companies have
joined with foreign partners. In economic reform process, the Insurance
Companies has given boost to the socio-economic development process. The
huge amount of funds that are at the disposal of Insurance Companies are
directed as desired avenues like housing, safe drinking water, electricity, primary
education and infrastructure. Above all the policyholders gets better pricing of
products from competitive insurance companies.
Liberalization
The opening up of Insurance sector was a part of the ongoing
liberalization in the financial sector of India. The domain of State-run insurance
companies was thrown open to private enterprise on December 7, 1999, with the
introduction of the Insurance Regulatory and Development Authority (IRDA) Bill.
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The opening up of the sector gave way to the world known names in the industry
to enter the Indian market through tie-ups with the eminent business houses.
What was once a quiet business is becoming one of the hottest businesses
today.
Post liberalization
The changing face of financial sector and the entry of several companies
in the field of non-life Insurance segment are one of the key results of these
liberalization efforts. Insurance business by way of generating premium income
adds significantly to the GDP. Despite the fact that the market is vast in India for
the Insurance business, the coverage is far less compared with the international
standards. Estimates show that a meager 35-40 million, out of a population of
950 million, have come so far under the umbrella of the insurance industry. The
potential market is so huge that it can grow by 15 to 17 per cent per annum. With
the entry of private players, the Indian Insurance Market may finally be able to
make deeper penetration in to newer segments and expand the market size
manifold. The quality of service will also improve and there will be wide range of
product catering to the needs of different customers. The pace for claims
settlement is also expected to improve due to increased competition. The general
insurance market in India is likely to be risky in the initial stages, but this will
improve in the next three to five years Therefore, it may be advantageous to be a
second-round entrant. In the general insurance market the need to build trust
over time is less important than in the life market because the risk assessment
systems and data that are the key to success in the general insurance market
are significantly underdeveloped in India even today
Market Players
General Insurers:
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Presently there are 13 general insurance companies with 4 public sector
companies and 9 private insurers. Although the public sector companies still
dominate the general insurance business, the private players are slowly gaining
a foothold. A brief description of various players is given below
·General Insurance Corporation of India (GIC) (with effect from Dec'2000,
a National Reinsurer)
GIC had four subsidiary companies, namely (with effect from Dec'2000, these
subsidiaries have been de-linked from the parent company and made as
independent insurance companies.
1.The Oriental Insurance Company Limited
2.The New India Assurance Company Limited,
3.National Insurance Company Limited
4.United India Insurance Company Limited.
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9. IFFCO-TOKIO GENERAL INSURANCE CO.LTD
Private players
Yr: 2000-2001 : ( From 2nd April '2000 to 31st December'2001)
S.No.Registration
Number
Date of
Registration
Name of the Company
1 102 23.10.2000 Royal Sundaram
Alliance Insurance
Company Limited
2 103 23.10.2000 Reliance General
Insurance Company
Limited.
3 106 04.12.2000 IFFCO Tokio General
Insurance Co. Ltd
4 108 22.01.2001 TATA AIG General
Insurance Company
Ltd.
5 113 02.05.2001 Bajaj Allianz General
Insurance Company
Limited
6 115 03.08.2001 ICICI Lombard General
Insurance Company
Limited.
Yr: 2001- 2002 : ( From 1st Jan 2001 to Dec. 2002)
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S.No. Registration
Number
Date of
Registration
Name of the Company
1 123 15.07.2002 Cholamandalam General
Insurance Company Ltd.
2. 124 27.08.2002 Export Credit Guarantee
Corporation Ltd.
3. 125 27.08.2002 HDFC-Chubb General
Insurance Co. Ltd.
IFFCO Tokio General Insurance Co. Ltd
IFFCO-TOKIO General Insurance Company limited(itgi) is a joint venture
between IFFCO (Indian Farmer Fertilizer Cooperative Limited), KRIBHCO
(Krishak Bharti Cooperative Limited), IPL (Indian Potash Limited) & the Japanese
insurance giant Tokio Marine & Fire Insurance Co.Ltd.
ICICI Lombard General Insurance
ICICI Lombard General Insurance Company Limited (ICICI Lombard) is a
74:26 venture between ICICI Bank Limited, India's largest private sector bank
and Lombard Canada Limited, one of the oldest property and casualty insurance
companies in Canada. ICICI Lombard commenced business in September 2001
and is today operational in 40 cities across India.
TATA AIG Insurance Company Ltd
IT is a joint venture between the Tata group; India's most trusted industrial
house and American International Group, Inc. (AIG), the leading U.S. based
international insurance and financial service organization.
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Bajaj Allianz
Bajaj Allianz General Insurance Company Limited is a joint venture
between Bajaj Auto Limited and Allianz AG of Germany. Both enjoy a reputation
of expertise, stability and strength. The venture Bajaj Auto holds 74 per cent of
the paid up equity capital of Rs 110 crore, while the remaining 26 per cent is held
by Allianz.
HDFC Chubb General Insurance
HDFC holds 74 percent and Chubb 26 percent in the new joint venture
company, HDFC Chubb General Insurance Ltd, was initially capitalized at Rs.100
crore.
Reliance General Insurance Company Limited
Reliance Industries has around Rs.300 Crores into its insurance venture
through its financial arm Reliance Capital Ltd.It is the first Indian private company
without any foreign insurance tie-up.
Royal Sundaram
Royal Sundaram, a joint venture between Sundaram Finance of Chennai,
India and Royal & SunAlliance of UK, is built upon values of truth, trust,
teamwork, people commitment and professionalism.
Cholamandalam MS General Insurance Company Limited
Cholamandalam MS General Insurance Company Limited (Chola-MS) is a
joint venture of the Murugappa Group & Mitsui Sumitomo. Chola-MS commenced
operations in October 2002 and has issued more than 1.4 lakh policies in its first
calendar year of operations.
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12. IFFCO-TOKIO GENERAL INSURANCE CO.LTD
MILESTONES OF INSURANCE REGULATIONS IN THE 20TH CENTURY
YEAR SIGNNIFICANT REGULATORY
1912 The Indian Life Insurance Company Act
1938 The Insurance Act: Comprehensive Act to regulate insurance business
in India
1956 Nationalization of life insurance business in India
1972 Nationalization of general insurance business in India
1993 Setting up of Malhotra Committee
1994 Recommendations of Malhotra Committee
1995 Setting up of Mukherjee Committee
1996 Setting up of (interim) Insurance Regulatory Authority
(IRA)Recommendations of the IRA
1997 Mukherjee Committee Report submitted but not made public
1997 The Government gives greater autonomy to LIC, GIC and its
subsidiaries with regard to the restructuring of boards and flexibility in
investment norms aimed at channeling funds to the infrastructure
sector
1998 The cabinet decides to allow 40% foreign equity in private insurance
companies-26% to foreign companies and 14% to NRI’s, OCB’s and
FII’s
1999 The Standing Committee headed by Murali Deora decides that foreign
equity inprivate insurance should be limited to 26%. The IRA bill is
renamed the
Insurance Regulatory and Development Authority (IRDA) Bill
1999 Cabinet clears IRDA Bill
2000 President gives Assent to the IRDA Bill
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13. IFFCO-TOKIO GENERAL INSURANCE CO.LTD
Introduction Of Company
IFFCO-Tokio General Insurance Co. Ltd. (ITGI) is a joint venture
between IFFCO and The Tokio Marine and Fire Insurance Co. Ltd, Japan.
Incorporated on 4th December 2000 and within this short span we have become
a leading Insurance Company in India. ITGI is also the pioneer in launching
innovative products like "Sankat Haran Policy" for farmers. With the Corporate
office in Gurgaon and operating offices in 26 offices, ITGI is looking at expanding
the market base of general insurance in India by opening Offices in most major
cities in India. We believe in educating the general masses about insurance and
bringing to the market simple and customized insurance policies. With a claim
process as simple and friendly as can be, we promise to give our policyholders
"The Life They Deserve". To be approachable from all places, ITGI has also
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opened up call centers with a universal toll-free number that can be accessed
throughout India.
Indian Farmers Fertilizers Co-operative Limited (IFFCO) is well known as
a pioneer in large-scale fertilizer manufacturing and is the leading fertilizer
producer in the country. IFFCO has a membership of about 35,000 Co-
operatives at State, District and Primary level spread in 22 States and 2 Union
Territories. The manufacturing plants are at Kalol, Kandla, Phulpur and Aonla
which have been consistently operating at a capacity utilization of more than
100% for the past several years.
The Tokio Marine & Fire Insurance Co.Ltd. has over one hundred and
twenty years of experience in general insurance business and is the largest and
oldest general insurance company of Japan. It is a member of the large and
highly diversified Mitsubishi group comprising of over 1500 companies. The
company is rated 'AA' (strong financial security characteristics) by the
international rating agency Standard & Poor's. Tokio Marine has been
continuously serving as one of the important reinsurance companies to the
nationalized Indian Insurance market. Main aim of the company are as follows.
·To win the TRUST of Individuals, Trade, Industry and Commerce
and protect Citizens, Corporates, Cooperatives and International
Investors in India.
·To be the INDUSTRY LEADER by
·Building customer satisfaction through Fairness, Transparency and
Quick Response;
·Providing Innovative Products and Service to suit every Customer's
need;
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·Being Technology Driven, Cost Conscious and Price Competitive;
·Creating a niche in the Rural Segment
Paid up capital of different partners
Current Paid Up Capital Rs. In Million
Indian Farmers Fertilizers Co-op Ltd.510
Tokio-Marine Group (Millea Asia) 260
Krishak Bharati Co-op Ltd. 200
Indian Potash Ltd. 30
Total 1000
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Indian partners:
·INDIAN FARMERS FERTILIZERS CO-OP LTD.
During mid- sixties the Co-operative sector in India was responsible for
distribution of 70 per cent of fertilizers consumed in the country. This Sector had
adequate infrastructure to distribute fertilizers but had no production facilities of
its own and hence dependent on public/private Sectors for supplies. To
overcome this lacuna and to bridge the demand supply gap in the country, a new
cooperative society was conceived to specifically cater to the requirements of
farmers. It was a unique venture in which the farmers of the country through their
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own Co-operative Societies created this new institution to safeguard their
interests. The number of co-operative societies associated with IFFCO has risen
from 57 in 1967 to more than 36,000 now.
·KRISHAK BHARATI COOPERATIVE LIMITED
Krishak Bharati Cooperative Limited (KRIBHCO), a premier Cooperative
Society for manufacture of fertilizer, registered under Multi-State Cooperative
Societies Act-1985, was promoted by the Govt. of India, IFFCO, NCDC and other
agricultural co-operative societies spread all over the country.
KRIBHCO has setup a Fertilizer Complex to manufacture Urea, Ammonia
& Bio-fertilizers at Hazira in the State of Gujarat, on the bank of river Tapti, 15
Kms from Surat city on Surat - Hazira State Highway.
·INDIAN POTASH LIMITED
The company was incorporated in 1995 as a consortium of importers of
Muriate of Potash (MOP) who are primarily in the private sector. The company
started in a small way in south India but very soon expanded their marketing
network to the whole of India.
On the recommendations of National Commission on Agriculture, the
Government of India expanded the equity base of the company with majority of
equity holding and Board seats with cooperative and Public Sector Fertilizer
companies.
Today, Cooperative and State/Central Public Sector Companies hold
more than 90 per cent equity with IFFCO as the largest shareholder with 33.98
per cent.
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18. IFFCO-TOKIO GENERAL INSURANCE CO.LTD
Indian Potash Limited (IPL) remained as the sole agency for import,
handling, distribution and sales promotion of Potassic Fertilizers in the country
from 1970 to 1992 when import of Potassic Fertilizers was decontrolled and
decanalised. However, the company continues to be one of the three state
Trading Enterprises and is also entrusted with the responsibility of maintaining
buffer stocks on behalf of Ministry of Chemicals & Fertilizers for decontrolled
fertilizers.
IPL is registered as a Public Limited Company under the Companies Act
1956 and has its own Memorandum and Articles of Association. Its annual
turnover is USD 330 million (approx.) and it has an uninterrupted record of
making profit and paying dividend to the shareholders except for one year in its
history.
Foreign Partners:
·MILLEA ASIA:
As a part of Tokio Marine Group vision which is to provide the customer
with a new total Risk Management service, Millea Asia Pte. Ltd has come into
existence with a concrete plan to provide maximum value to customers and
share holders by concentrating on the strengths of each company and form a
new insurance group which integrates with life, property & causality business
under the integrated management.
Millea Asia Pte. Ltd considers the Asian market as top priority area and
has assumed the role of regional management head quarters and as a technical
support center for the Asian subsidiaries / affiliates like ITGI. Management skills
and insurance technical knowledge is centered at this management entity and
shared with and transferred to ITGI for the betterment in all respects.
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·TOKIO MARINE GROUP:
Headquartered in Tokyo, Japan, Tokio Marine has a worldwide network in
41 countries or regions to meet our customers' various demands. Over 3,400
employees, with different nationalities, backgrounds and languages work within a
total of 35 subsidiaries and affiliated companies forming the Tokio Marine Group,
in order to support our customers.
·IFFCO-TOKIO Insurance Services Limited (ITIS)
IFFCO-TOKIO General Insurance Company Limited (ITGI) has recently
formed a wholly owned subsidiary called IFFCO-TOKIO Insurance Services
Limited (ITIS) for the purpose of marketing and distribution of insurance products.
To begin with it shall sell the General Insurance Products of ITGI and from there,
grow on to become a one-stop financial solutions provider.
The company would comprise of well-trained marketing professionals. The
objective is to offer world-class services to the clients. Such a model has been
implemented to great success by Tokio Marine and Fire Insurance, which have
operations in 41 countries across the world. The elite channel of marketing
professionals are set to redefine the way financial services are offered to
customers.
ITIS, while consolidating marketing through the conventional channels
would also develop and implement models of insurance distribution with
alternative channels like cooperatives, associations etc. It is envisaged that the
new outfit shall bring the spread and reach for ITGI while at the same time ITGI
can have a more focused approach on the higher end of general insurance
business. The focus would be on the retail and the SME sector.
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ITIS would, to its marketing team offer an excellent pathway and a fast
track growth by rewarding the high performers and thus stimulating growth.
The products under the Retail Lines cater to the insurance needs where
the insured is an individual or small/medium unit.
Examples of insurances, which a individual may require to undertake:
·Motor Vehicle Insurance
·Travel Overseas Insurance
·Home
Examples of insurances Small and medium units may require:
·Trade Protector
·Office Protector
·Small & Medium Enterprises Package Policy
·In addition to the above the products offered are:
·Health (for Group)
·Critical Illness
·Surgery Protector
·Personal Accident
Mission:
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To win the trust of individuals, trade, industry and commerce and protect
citizens, corporates, cooperatives and international investors in India.
Vision:
To be the industry leader by building customer satisfaction through
fairness, transparency and quick response.
Products:
·All risk
·Critical illness
·Directors and officers liability
·Group medishield
·Group personal accident
·Home and family protector
·Individual personal accident
·Industry protector
·Motor commercial
·Motor cycle/ scooter
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22. IFFCO-TOKIO GENERAL INSURANCE CO.LTD
·Motor private car
·Office protector
·Professional indemnity
·Surgery protector
·Trade protector
·Sankat haran bima yojna (PA)
Performance of the company
Fire Marine Misc. Total

Year ended
31.3.03
Year ended
31.3.02
Year ended
31.3.03
Year ended
31.3.02
Year ended
31.3.03
Year ended
31.3.02
Year ended
31.3.03
Year
ended
31.3.02
Gross
Written
Premium
103.52 36.14 18.42 3.34 91.39 31.02 213.33 70.51
Net
Premium
16.86 2.07 8.52 1.53 44.65 9.53 70.03 13.13
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Earned
Premium
9.67 0.94 3.66 0.02 26.17 2.79 39.50 3.75
Interest0.52 0.18 0.56 0.03 1.89 0.38 2.97 0.59
Total 10.19 1.122 4.22 0.05 28.06 3.17 42.47 4.34
Year ended
31.3.2003
Year ended
31.3.2002
Underwriting Profit/(Loss)(0.23) (8.22)
Interest 9.81 10.12
Other Expenses (0.21) (0.17)
Profit Before Tax 9.37 1.73
Provision for Tax 3.01 6.00
Profit after Tax 6.36 1.67
Proposed Dividend 2.26 -
Balance transferred to
Reserves
4.10 1.67
·Business growth
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24. IFFCO-TOKIO GENERAL INSURANCE CO.LTD
For ITGI, business in fire policy premium was Rs. 103.52 Crores in 02-03
as compared to Rs. 36.14 Crores in 01-02, business in marine policy premium
was Rs. 18.42 Crores in 02-03 as compared to Rs. 3.34 Crores in 01-02, in misc.
policy premium was Rs. 91.39 Crores in 02-03 as compared to Rs. 31.02 in 01-
02.
·Share of product mix in ITGI in 02-03:
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25. IFFCO-TOKIO GENERAL INSURANCE CO.LTD
SHAPE \* MERGEFORMAT
In major income of ITGI was fire premium policy is 48.53%, and
engineering was 12.79%, motor was 12.02%, health was 4.63%, marine hull
2.13%, marine cargo 6.51%, liability 0.15%, and others 13.24%.
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26. IFFCO-TOKIO GENERAL INSURANCE CO.LTD
·Number of Policies Issued:
Revenue Head 02-03 01-02
Fire 10,829 2,074
Marine 26,228 5,161
Motor 25,484 2,659
Other Miscellaneous 107,214 18,489
Total 169,755 28,383
WHY IFFCO-TOKIO AS YOUR INSURER ?
·UNDERWRITING:
1. IFFCO-TOKIO is having the best team of professionals. We provide risk
management Solutions to our customers. We analyze all the risk
exposures of our customers and measure their impact on a matrix of
frequency & severity. Based upon this analysis, we advise the customer to
transfer necessary exposure to the insurance company at an optimum
cost.
2. We ensure that best insurance products are designed at optimum cost to
ensure full protection to valued assets, balance sheet and various related
intangible factors.
3. We ensure constant touch with our clients so that all additions, deletions
and modifications are inserted in the policy without any time gap to ensure
its relevancy at the time of claim.
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27. IFFCO-TOKIO GENERAL INSURANCE CO.LTD
4. We take care of all renewals well in advance by providing necessary
inputs as an insurance advisor.
5. We ensure that receipt & policy copy with suitable endorsements reaches
to our customers within 48 hours.
6. Our Pricing strategy for Non-tariff covers is very competitive thereby
endeavoring to give maximum benefit to the insured.
·CLAIMS :
1. The service of an insurance company is tested in the event of a claim. We
at ITGI are committed to settle any claim within a maximum period of 10
days from the date of receipt of the final survey report (irrespective of the
amount).
2. We enter into a written MOU for binding our commitment for the prompt
settlement of the claim into a legal contract. This MOU binds us legally to
abide by our commitment.
3. We carry out simulation testing for surveyors to ensure that there time and
quality is as per our expectations
4. In case of disagreement about the quantum of loss or pending finalization
of final assessment / reinstatement of the damaged property, ON
ACCOUNT payment is promptly released.
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28. IFFCO-TOKIO GENERAL INSURANCE CO.LTD
5. We are a company which is totally IT driven. Our all offices in the country
are connected by WAN and each office has the accessibility of the policy
underwritten by any of the offices in the entire country. This is very helpful
in servicing in case the accident/loss takes place in the city other than
where the underwriting office is situated. Hence all your motor/ marine
claims can be settled then & there only in case the accident takes place
outside city & you so desire.
6. We are having a unique concept of CALL CENTRE. The call center shall
be accessible from any part of the country through a toll free number. The
product related information’s, claims intimations, claims progress & other
insurance related information’s could be had through it.
We believe in a concept of total transparency and honesty in claims settlement.
No claim shall be finally assessed without your concurrence and satisfaction.
About the Product
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29. IFFCO-TOKIO GENERAL INSURANCE CO.LTD
·Definition:
"Insurance is a contract between two parties whereby one party called
insurer undertakes in exchange for a fixed sum called premiums, to pay the
other party called insured a fixed amount of money on the happening of a
certain event."
Insurance is a protection against financial loss arising on the happening
of an unexpected event. Insurance companies collect premiums to provide for
this protection. A loss is paid out of the premiums collected from the insuring
public and the Insurance Companies act as trustees to the amount collected.
For Example, in a Life Policy, by paying a premium to the Insurer, the
family of the insured person receives a fixed compensation on the death of the
insured.
Similarly, in car insurance, in the event of the car meeting with an
accident, the insured receives the compensation to the extent of damage. It is
a system by which the losses suffered by a few are spread over many,
exposed to similar risks.
·Why should you take Insurance?
Insurance is desired to safeguard oneself and one's family against
possible losses on account of risks and perils. It provides financial
compensation for the losses suffered due to the happening of any unforeseen
events.
By taking life insurance a person can have peace of mind and need not
worry about the financial consequences in case of any untimely death.
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30. IFFCO-TOKIO GENERAL INSURANCE CO.LTD
Certain Insurance contracts are also made compulsory by legislation.
For example, Motor Vehicles Act 1988 stipulates that a person driving a
vehicle in a public place should hold a valid insurance policy covering "Act"
risks. Another example of compulsory insurance pertains to the Environmental
Protection Act, wherein a person using or carrying hazardous substances (as
defined in the Act) must hold a valid public liability (Act) policy.
·Who provides Insurance?
In India, prior to liberalization Insurance protection was made available
through Public sector Insurance Companies, namely, Life Insurance
Corporation of India (LIC) and the four subsidiaries of General Insurance
Corporation of India (GIC).
By the passing of the IRDA Bill, the Insurance sector has been opened
up for private companies to carry on Insurance business. Click on the following
link for the list of insurance companies operating in India.
·INSURANCE BUSINEES :
General Insurance business is mainly divided into following classes:
1) Motor Insurance, 2) Fire Insurance, 3) Marine Insurance and 4) Miscellaneous
Insurance.
MOTOR VEHICLE INSURANCE
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31. IFFCO-TOKIO GENERAL INSURANCE CO.LTD
Motor Insurance is a Tariff Business as per Motor Vehicle Act, 1988. The Act
was repealed in the year 1988 and has some amendments in November 1994 &
later on premium was revised in July, 2002.
It is advisable for vehicle owners to take comprehensive policy, which covers the
risk of vehicle, third party liability as well as personal accident of driver, driver-
owner and passengers.
Motor policies are divided into two sections :
1.Loss or damage to the insured vehicle, and
2.Liability to Third Party Liability for personal injury, death or property
damage.
Perils covered under Private Car Comprehensive Policy :
a)Accidental External means
b)Fire
c)External explosion
d)Self-ignition
e)Frost
f)Burglary, House-breaking
g)Earthquake perils
h)Flood etc. perils
i)Riot, Strike, Malicious Damage and Terrorist act damage.
Exclusions :
a)Indirect or consequential losses
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32. IFFCO-TOKIO GENERAL INSURANCE CO.LTD
b)Depreciation or wear & tear
c)Mechanical/ electrical breakdown
d)Loss or damage to tyres only.
Two-wheeler Comprehensive Policy :
The cover under this policy is similar to the cover under Private Car Policy. But
the following losses are not covered :
a)Loss or damage to the motorcycle and its accessories by frost.
b)Loss or damage by theft or burglary of accessories only.
General
a)Towing charges from place of accident are payable under aforesaid
comprehensive policies.
b)Insured is also allowed to get temporary repairs done to the damaged
vehicle
c)Limit is fixed between Rs. 500/- to the maximum of Rs. 1500/-
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33. IFFCO-TOKIO GENERAL INSURANCE CO.LTD
STANDARD FIRE & SPECIAL PERILS
Fire insurance policy is suitable for the owner of property/ financial interest
who holds the property (movable or immovable) such as building, plant &
machinery, furniture, fixture & fittings and other contents, stock & stock in
process along with goods held in trust or in commission including stocks at
suppliers/ customer’s premises, machinery temporarily removed from the
premises for repair.
Perils covered
Fire
Lightning
Explosion/ Implosion
Aircraft damage
Riot, Strike, Malicious Damage
Storm, Tempest, Hurricane, Tornado, Flood & Inundation
Impact damage
Subsidence & Landslide including Rockslide
Bursting & Overflowing of Water Tanks, apparatus and Pipes.
Missile Testing operations
Leakage from Automatic Sprinkler Installation
Bush Fire.
Additional Covers
Architects, Surveyors, Consulting Engineers fee (in excess of 3% of
claim amount)
Debris removal (in excess of 1% of claim amount)
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34. IFFCO-TOKIO GENERAL INSURANCE CO.LTD
Deterioration of stock in cold storage due to power failures following
damage to an insured peril.
Deterioration of stock in cold storage premises due to change in
temperature arising out of loss or damage to the cold storage,
machinery (ies) in the insured’s premises due to operation of insured
peril.
Forest fire
Impact damage due to insured’s own vehicles, Fork lifts, Cranes,
Stackers and the like.
Spontaneous Combustion.
Omission to insure addition alterations & extensions.
Earthquake (Fire & Shock)
Spoilage Material Damage cover.
Leakage & Contamination cover.
Temporary Removal of stocks.
Loss of Rent Clause.
Insurance of additional expenses of rent for an Alternative
Accomodation.
Start-up expenses
Level of Coverage :
Sum Insured option on either Market Value (i.e. new replacement cost
less depreciation for wear & tear & use) or Reinstatement Value basis
(i.e. Local Authority Clause for covering additional cost to comply with
regulations affecting immovable property).
It is also necessary to keep the Sum Insured on building, machinery,
etc. at right levels and for this there is a provision of Escalation Clause
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35. IFFCO-TOKIO GENERAL INSURANCE CO.LTD
whereby the Sum Insured can be indexed against inflation at a specific
percentage chosen by proposer, on payment of necessary additional
premium.
In respect of stocks, you can opt for various alternative Clauses to take
care of fluctuating stocks at one place or at different places and also
for seasonal variations of stocks by way of Floater Policy, Declaration
Policy or Floater Declaration Policy which considerably reduces your
premium outgo while providing full protection level.
Exclusions :
Fire due to own fermentation, natural heating or spontaneous
combustion of the stocks or by their undergoing any heating or drying
process.
Burning by order of any Public Authority.
Explosion of boilers or steam generating vessels & machinery subject
to centrifugal force by its own explosion/ implosion.
Pressure waves generated by aircraft.
Total or partial cessation of work/ retarding/ interruption of any process
or operations arising out of riot, strike, malicious damage.
Burglary, house breaking, theft, larceny arising out of riot, strike,
malicious damage.
Impact damages by rail/ road vehicle/ animal belonging to the insured
or employee or any occupier of the premises.
Normal cracking, settlement, bedding down, up heaving of land/
structures, coastal or river erosion, defective design, workmanship or
use of defective material.
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36. IFFCO-TOKIO GENERAL INSURANCE CO.LTD
Destruction or damage caused by forest fire.
Loss, damage or destruction due to war & warlike operations, ionizing
radiations, radioactivity, pollution, contamination, etc.
Loss or damage by pollution or contamination except due insured peril.
Loss or damage to the electrical machine/ apparatus, which is the
source of fire i.e. overrunning, excessive pressure, short circuiting,
leakage of electricity, etc.
Loss or damage to stocks in cold storage caused by change of
temperature.
Any consequential loss.
Excess :
EXCESS DESCRIPTION
5% of each claim or Rs. 10,000/-
whichever is higher.
If loss due to operation of lightning,
subsidence & landslide, earthquake-fire
& shock, storm/ tempest/ flood/
inundation, etc.
A flat rate of Rs. 10,000/- If loss happened due to perils, other
those mentioned above, covered under
the policy.
A flat excess of Rs. 10,000/- In case loss, destruction or damage to
bullion, unset precious stones, curious,
work of art (unless specifically covered)
due to insured perils.
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37. IFFCO-TOKIO GENERAL INSURANCE CO.LTD
Miscellaneous Insurance.
1 )BURGLARY & HOUSE BREAKING
This policy is specially meant for those individuals or organizations who
own valuable items or properties such as stock-in-trade, goods held in trust or on
commission, furniture, fixture, fittings, money in locked safe and any other item or
equipment.
Perils Covered :
ITGI policy provides protection against loss or damage to insured property due to
burglary and housebreaking, i.e,
Theft following upon an actual, forcible and violent entry to or exit from the
insured premises, and
Also damage to the premises themselves by burglars during such
incidents.
Level of Coverage :
The Sum Insured should be fixed on current market prices for stocks.
Other items such as furniture, fixture, equipments, etc, it can be fixed
either on Market Value (i.e. new replacement cost less depreciation), or on
Reinstatement Value basis.
To cover the fluctuating stocks at one place or at many places or
variations due to seasonality, options are from Floater, Declaration or
Floater Declaration Polices.
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38. IFFCO-TOKIO GENERAL INSURANCE CO.LTD
Option for First Loss Policy where Sum Insured chosen is a percentage of
the full value of property in respect of stocks of bulk nature, where it is
impossible for the entire stocks/ contents to be burgled at one time.
Exclusions :
When insured’s family member or staff is a principal or accessory in an
incident.
Act of persons lawfully on the insured premises.
Act consequent to fire, explosion, riot, strike, convulsions of nature like
earthquake, etc.
War and nuclear risks.
Premises left unoccupied and unattended for over seven days.
Loss of cash from safe using duplicate key, unless the key is obtained by
threat or force.
Any consequential loss.
2) HOME SUVIDHA POLICY
Home Suvidha (a Package Policy) has been designed keeping in mind the
varying needs of the customers & gives protection to their home against a wide
range of risks and perils. It’s a simple policy wherein there are various
categories of Sum Insured and one can opt for the category most suitable
depending upon the extent of risk.
Coverage & perils under Home Suvidha :
Section 1 : Fire & Allied Perils (Contents)
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39. IFFCO-TOKIO GENERAL INSURANCE CO.LTD
Contents of premises are covered against fire, explosion,
bursting/ overflowing of water tanks, riots, strike & malicious
damage, earthquake, flood, cyclone, landslide, etc.
Exclusions : As per fire policy.
Section 2 : Burglary & Other Perils (Contents)
Contents are covered against housebreaking, burglary,
robbery or dacoity and also against impact damages by
falling trees/ electric poles/ lamp posts, breakage or collapse
of television or radio aerials/ satellite dishes and damage by
civic authorities in the prevention of fire.
Exclusions : As per Burglary & House Breaking Policy
except premises left unoccupied or unattended for more than
60 days in continuation.
Section 3 : Television/ Video Equipment
This section covers loss or damage to TV/ video Equipment
against fire, theft, accidental damage and breakdown.
Exclusions :
1.Faults/ Defects existing at the commencement of this
insurance and well known to insured or any of family
member and any willful act or negligence of the same.
2.Continuous influence of operation e.g. wear & tear,
cavitation, erosion, corrosion, incrustation.
3.Any cost incurred in connection with elimination of
functional failures unless caused by perils covered.
4.Any manufacturer or supplier default or any amount
recoverable under the terms of Maintenance
Agreement.
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40. IFFCO-TOKIO GENERAL INSURANCE CO.LTD
5.Damage to rented or hired equipments for which
owner is responsible either by law or under lease and/
or Maintenance Agreement.
6.Cost incurred/ time involved in the movement of
equipment and/or other property/ personnel outside
Geographical Limits, other than cost of delivery for
equipment parts Damaged.
7.Damage arising through fitting, adjustment, repair or
dismantling of any part of said equipment/ installation
other than by an authorised representative of an
Electronic Equipment manufacturer, dealer or that of
a reputed repairer
8.Damage to external antenna, dishes, masts & fittings
by theft.
9.Damage to consumable items like picture tube/ tape
due to use of the tape/ tube contrary to instruction of
manufacturer.
10. Any cost required for alteration, improvement or
overhaul or for making drawings, patterns and core
boxes.
Excess :
5% of claim amount or Rs. 500 /- whichever is
higher for each & every claim.
Section 4 : Personal Accident
This covers insured and their family members against
accidental bodily injury leading to death or disablement
[either permanent total permanent partial].
Exclusions :
1.Compensation under more than one of the table-
benefits in respect of the same period of disablement.
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41. IFFCO-TOKIO GENERAL INSURANCE CO.LTD
2.Any other payment after a claim under any of the
benefits.
3.Any payment in case of more than one claim under
this section during any one policy period.
4.Payment of compensation in respect of death or injury
as a direct consequence of :
a)Committing or attempting suicide or intentional
self-injury.
b)Being under the influence of intoxicating liquor or
drugs.
c)Engaging in aviation other than traveling as a
bonafide passenger in any licensed standard type
of aircraft anywhere in the world.
d)Pregnancy or childbirth.
e)Venereal disease or insanity.
f)Contracting any illness directly or indirectly arising
from or attributable to HIV and/ or any HIV related
illness including AIDS and/ or any mutant
derivative or variation HIV or AIDS.
g)Committing any breach of law with criminal intent.
Section 5 :Fire & Allied Perils (Building)
Covers residential building against perils mentioned under
Section 1 above.
Exclusions : Same as in Section 1 above.
Section 6 :Personal Computer
Coverage against loss or damage to personal computer
insured due to fire, theft, accidental damage and breakdown.
Exclusions : Same as in Section 3 above.
Excess :
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42. IFFCO-TOKIO GENERAL INSURANCE CO.LTD
5% of claim amount subject to a minimum of Rs.
2500/- in respect of each & every claim.
3)TRADE SUVIDHA POLICY
ITGI’s Trade Suvidha Insurance Policy gives complete protection to the
insured’s business against a wide range of risks and perils. It is a simple policy
wherein there are various categories of Sum Insured and you may opt for the
category most suitable depending upon the extent of risk. This simplified
package policy saves the tedious process of remembering and calculating minute
details of the assets of your business.
Coverage under Trade Suvidha :
Section 1 : Fire & Allied Perils (Contents)
Contents of premises are covered against fire, explosion,
riots, strike & malicious damage, earthquake, flood, cyclone,
landslide, impact damage by rail/ road vehicle or animal, etc.
Premium Rating : Rs. 2.25 per mille on the Sum Insured.
Exclusions : As per fire policy.
Excess :
5% of claim or Rs. 25,000/- in respect of each &
every loss arising out of “Act of God” perils such
as lightning, storm, tempest, flood, inundation,
subsidence, landslide & rockslide, earthquake, fire
and/ or shock covered under the policy.
Rs. 10,000/- for each & every damage arising out
of perils (other than above) covered under the
policy
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43. IFFCO-TOKIO GENERAL INSURANCE CO.LTD
Section 2 : Burglary & Other Perils (Contents)
Contents are covered against housebreaking, burglary,
robbery or dacoity and also against impact damages by
falling trees/ electric poles/ lamp posts, breakage or collapse
of television or radio aerials/ satellite dishes and damage by
civic authorities in the prevention of fire.
Premium Rating : Rs. 1.25 per mille on the Sum Insured
Exclusions : As per Burglary & House Breaking Policy.
Section 3 : Money
Covers loss to Money. Money shall mean & include cash,
bank drafts, bank & currency notes, current coins, cheques,
postal orders, money orders and current postage stamps
which must be in the personal custody of the insured or his/
her authorised representatives and is being carried for
business purpose.
Premium Rating :
Rs. 5 per mille on the Sum Insured.
Coverage :
Loss of Money due to accident or misfortune whilst in
direct transit
1)from or to insured premises.
2)Between any collection/ payment centre and Bank.
Loss of Money due to house breaking, robbery,
dacoity, hold-up whilst in
1)Insured premises during business hours.
2)Locked safe or strong room, locked steel almirah/
standard cash box inside the insured premises
outside business hours.
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44. IFFCO-TOKIO GENERAL INSURANCE CO.LTD
Exclusions :
Shortage of money due to error or omission.
Loss of money entrusted to any person other than the
Insured or authorised representatives.
Loss from any unattended vehicle, transits outside the
limits of the city/ town where the insured premises are
located, etc.
Section 4 : Personal Accident
This covers insured and their partners, directors or
permanent employees aged between 18-70 against
accidental bodily injury leading to death or disablement
[either permanent total permanent partial].
Premium Rating : Rs. 0.85 per mille on the Sum Insured.
Exclusions :
Compensation under more than one of the table-
benefits in respect of the same period of disablement.
Any other payment after a claim under any of the
benefits.
Any payment in case of more than one claim under
this section during any one policy period.
Payment of compensation in respect of death or injury
as a direct consequence of :
i.Committing or attempting suicide or intentional
self-injury.
ii.Being under the influence of intoxicating liquor
or drugs.
iii.Engaging in aviation other than traveling as a
bonafide passenger in any licensed standard
type of aircraft anywhere in the world.
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45. IFFCO-TOKIO GENERAL INSURANCE CO.LTD
iv.Pregnancy or childbirth.
v.Venereal disease or insanity.
vi.Contracting any illness directly or indirectly
arising from or attributable to HIV and/ or any
HIV related illness including AIDS and/ or any
mutant derivative or variation HIV or AIDS.
vii.Committing any breach of law with criminal
intent.
Section 5 :Fidelity Guarantee
Coverage against direct pecuniary loss to the insured
caused by any act of fraud or dishonesty committed by any
salaried employee of the insured up to amount stated in the
schedule.
Premium Rating : Rs. 5 per mille on the Sum Insured
Provision : The loss shall have occurred in connection with
occupation and duties of the employee during the
uninterrupted continuance of his/ her employment and be
discovered within six months after the death, resignation,
dismissal or retirement of such person or six months after
this policy shall have ceased to exit, whichever of these
events shall happen first.
Exclusions :
Not more than one claim is payable in respect of
any one insured employee.
Any act or default of any insured employee done
or omitted to be done after the discovery by the
insured.
Any sum payable or due to him by the insured
shall be deducted from the amount payable under
the policy.
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46. IFFCO-TOKIO GENERAL INSURANCE CO.LTD
Section 6 :Electronic Equipment
Covers loss or damage to computer, fax machine and their
parts/ accessories as well as data carrying material which
may be damaged by any cause other those excluded under
this section. Computer would include the entire system
consisting of CPU, keyboard, printer, monitor, stabilizer,
UPS, etc.
Premium Rating : Rs. 10 per mille on the Sum Insured.
Coverage :
Cost of dismantling and re-erection for purpose of
repairs.
Ordinary freight to & from repair shop.
Custom duties and other dues.
Cost of repairs and replacement.
The coverage is applicable after successful completion of
performance and acceptance test of the equipment and
when such equipments are at work, at rest or being
dismantled for the purpose of cleaning, overhauling and/ or
in aforesaid operation or while being shifted within the
premises.
Exclusions :
Damage due to faults/ defects existing at the
commencement of this insurance and known to
the insured, the insured’s directors, partners,
employees.
Willful act or negligence of the insured or insured’s
employees, directors, partners, representative.
Continuous influence of operation e.g. wear &
tear, cavitations, erosion, corrosion, incrustation.
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47. IFFCO-TOKIO GENERAL INSURANCE CO.LTD
Any cost incurred in connection with elimination of
functional failures unless caused by perils
covered.
Any manufacturer or supplier default or any
amount recoverable under the terms of
Maintenance Agreement.
Damage to rented or hired equipments for which
owner is responsible either by law or under lease
and/ or Maintenance Agreement.
Cost incurred/ time involved in the movement of
equipment and/or other property/ personnel
outside Geographical Limits, other than cost of
delivery for equipment parts Damaged.
Damage arising through fitting, adjustment, repair
or dismantling of any part of said equipment/
installation other than by an authorised
representative of an Electronic Equipment
manufacturer, dealer or that of a reputed repairer
Damage to consumable items like bulbs, valves,
tubes, ribbons, fuses, seals, belts, wires, chains,
rubber tyres, objects made of glass, etc. unless
such parts are affected by an indemnifiable.
Damage to the insured item itself.
Any cost required for alteration, improvement or
overhaul.
Any cost of making drawings, patterns and
coreboxes/
Any extra cost for overtime, night-work, works on
public holiday, express freight, etc. for repairs or
replacement.
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48. IFFCO-TOKIO GENERAL INSURANCE CO.LTD
Excess :
S.NODESCRIPTION EXCESS
1. Personal Computer 5 % of each claim amount or Rs. 2500/-
Whichever is higher.
2. Electronic Equipment other
than Winchester Drive
5 % of each claim amount or Rs. 1000/-
Whichever is higher.
3. Electronic Equipment –
Winchester Drive
10 % of each claim amount or Rs.
2500/- Whichever is higher.
4) MEDI – SHIELD POLICY
Medi- shield is a group health insurance policy which is available to a
group/ association/ Institution/ Corporate body. It covers reinstatement of
Hospitalization/ Domiciliary hospitalization expenses for illness/ disease or injury
sustained by the insured person within India only.
SCOPE OF COVER:
a)Room Rent, Boarding Expenses as provided by the Hospital/ Nursing
Home.
b)Nursing Expenses.
c)Surgeon, Anesthetist Medical Practitioner, Consultants, Specialist fees.
d)Anesthesia, Blood, Oxygen, Operation Theatre charges, Surgical
Appliances, Medicines & Drug charges, Diagnostic Materials and X-ray,
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49. IFFCO-TOKIO GENERAL INSURANCE CO.LTD
Dialysis, Chemotherapy, Radiotherapy, Cost of Pacemaker, Artificial
Limbs and Cost of organs and similar expense.
LIMIT OF LIABILITY
The liability of the company in respect of all claims admitted during the
period of Insurance shall not exceed the Sum Insured per Insured person as
mentioned in the Schedule.
EXCLUSIONS:
THE company shall not be liable to make any payment under this policy in
respect of any expended whatsoever incurred by any Insured Person in
connection with or in respect of:-
a)All diseases injuries which are in pre- existing condition when the cover
incepts for the first time.
b)Any disease other than those stated in clause c) below, contracted by the
insured person during the first 30 days from the commencement date of
the policy. This exclusion shall not however, apply in the opinion of panel
of medical practitioners constituted by the company for the purpose, the
insured person could not have known of the existence of the disease or
any symptoms or complaints thereof at the time of making the proposal for
insurance to the company. This condition shall not however apply in case
of the insured person having been covered under this scheme or group
insurance scheme with any of the Indian insurance companies for a
continuous period of preceding 12 months without any break.
c)During the first year of the operation of the policy, the expenses on
treatment of diseases such as Cataract, Benign Prostetic Hyperthrophy,
Hysterectomy for Menorrahagia or Fibromyoma, Hemia, Hydrocele,
Congenital Internal Disesase, Fistuainanus, piles, Sinusitis and related
disorders are not payable. If these diseases are pre- existing at the time of
proposal they will not be covered even during subsequent period of
renewal too.
d)War and Nuclear Risks:
e)Circumcision unless necessary for treatment of a diseases nt excluded
hereunder or as may be necessitated due to an accident, Vaccination or
inoculation or change of life or cosmetic or aesthetic treatment of any
description, plastic surgery other than as may be necessitated due to an
accident or as a part of any illness.
f)The cost of spectacles and contact lenses, hearing aids.
g)Dental treatment or surgery of any kind unless requiring hospitalization.
h)Convalescence, general debility, Run- down condition or rest cure,
congenital external disease or defects or anomalies, sterility, venereal
disease, internal self- injury and use of intoxicating drugs/ alcohol.
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50. IFFCO-TOKIO GENERAL INSURANCE CO.LTD
i)All expenses arising out of any condition directly or indirectly cause to or
associated with Human T- Cell Lymphotropic Virus Type III ( ITILB-III) or
Lymphadinopathy Associated Virus (LAV) or the Mutants Derivative or
variation Deficiency Syndrome or any Syndrome or condition of a similar
kind commonly referred to as AIDS.
j)Charges incurred at Hospital or Nursing Home primarily for diagnostic, X-
ray or laboratory examinations or other diagnostic studies not consistent
with or incidental to the diagnosis and treatment of the positive existence
or presence of that ailment, sickness or injury, for which confinement is
required at a Hospital/ Nursing Home or at home under Domiciliary
Hospitalization as defined.
k)Expenses on vitamins and tonics unless forming part of treatment of injury
or disease as certified by the attending Physician.
l)Treatment arising from or traceable to pregnancy, childbirth including
caesarean section.
m)Voluntary medical termination of pregnancy during the first 12 weeks from
the date of conception.
n)Naturopathy Treatment.
Note: Acupuncture/ Magnetic treatments are not covered.
AGE LIMIT 5 TO 80 YEARS:
This insurance is available to persons between the age of 5 years and 80
years. Children between the age of 3 months and 5 years of age can be covered
provided one or both parents are covered concurrently.
Persons above 75 years have to be avoided if they want coverage on stand
alone basis.
Coverage to persons about 75 years of age are to be granted only if they are
cases of renewals and have been covered with us for period of at least 3 years.
EXTENSION OF POLICY PERIOD:
In case the insured Person who is covered under Medi- shield Policy has
to go abroad for 15 days and accordingly he buys an Overseas Mediclaim Policy
for that 15 days and submits the proof of Overseas MEDISHIELD Policy to the
company. In that event the period of Insurance in respect of that insured Pesron
will be extended by 15 days. Alternatively if the Insured person is part of family
and / or Group and the period of Insurance is to be same for everyone in the
family, then in that case the pro-rata premium for the period when he was abroad
will be available as Refund credit to that Insured Peron and it can be adjusted
against next years renewal premium. However, there will not be Cash refund of
the Premium.
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10. GROUP DISCOUNT:
Total No. of members Group Discounts
25 to 100 15%
Upto 300 18%
Upto 500 19%
Upto 1000 22%
Upto 5000 28%
Upto 10000 32%
Upto 20000 33%
Upto 25000 37%
Upto 50000 40%
Beyond 50000 To be decided by the Corporate
Office
BONUS/MALUS:
LOW CLAIM RATIO DISCOUNT(BONUS):
Incurred Claim ratio under the Medi-
shield policy
Discount %
Not exceeding 60% 5
Not exceeding 50% 15
Not exceeding 40% 25
Not exceeding 30% 35
Not exceeding 25% 40
HIGH CLAIM RATIO LOADING (MALUS):
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52. IFFCO-TOKIO GENERAL INSURANCE CO.LTD
Incurred Claims Ratio under the
Medi- shield Loading
Between 80% and 100% 25
Between 101% and 125% 55
Between 126% and 150% 90
Between 151% and 175% 120
Between 176% and 200% 150
Over 200% Cover to be reviewed
1. EXTENSION UNDER MEDI-SHIELD POLICY
The policy can be extended to cover the education cost of the Insured Person.
i)Any Tuition fees for repeating the academic year/ semester/class.
ii)Any examination fees.
iii)Any fixed monthly boarding/ loading Expenses not exceeding
0.5% of the Sum Insured for School Education and 1.0% of
Insured in Case of University, College Education.
iv)Other necessary incidental cost subject ot proof being submitted
by you.
a) MAXIMUM AMOUNT PAYABLE:
The maximum amount payable is Rs. 60000/-.
b) INDEMNITY PERIOD:
The maximum period for which policy pay is 12 months.
RATE:1) Rs. 100 per school going Student
2) Rs. 200 for College going student.
2. AMBULANCE CHARGES :- Rs 1000/-
RATE: This benefit is payable at the rate of Rs. 5/- per Insured Person.
3. COST OF TRAVEL
a)Cost of Travel for any relation, friend, colleague or any other
nominated person: the Maximum liability would be restricted to Rs.
15,000/- or actual expenses whichever is lower in any one period of
Insurance. The prescribed rate would be Rs. 30/- per Insured person.
b) Cost of Travel for Insured Person: The maximum liability of the
Company would be restricted to Rs. 7500/- or actual Expenses whichever
is lower in any one period of insurance. The prescribed rate would be Rs.
15 per person.
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4. COST OF SUPPORTING ITEMS: The company’s maximum liability would be
limited to Rs. 10,000/- or actual expenses whichever is lower in addition to Sum
Insured. The prescribed rate would be Rs. 25/- per Insured Person. Supporting
item includes stretchers, wheel chairs, intra-ocular lens, spectacles or any other
item which in the opinion of registered medical practitioner is necessary for
insured person.
5. Discounts for Reducing Pre and Post Hospitalization Period:
Accordingly for every reduction in this Pre Hospitalization period by 1 week, the
discount would be 0.5% of the premium and it can be done pro- rata basis of
remaining days thereof. For the post Hospitalization period, the reduction in the
period by every week would entitle the Insured to earn the discount of 1% at the
rate of per week and pro- rata of 1% for remaining days thereof.
6. Hospital Daily Cash:
Overall sum insured chosen by insured can be apportioned for No. of days and a
hospital daily cash cover can be granted.

Discount available

In the Premium
If the overall Sum Insured is apportioned for 30 days- 25%
If the overall Sum Insured is apportioned for 45 days- 35%
If the overall Sum Insured is apportioned for 60 days- 50%
8. ADDITIONAL OPTIONAL COVER OF BOARDING & LODGING EXPENSES:
Rs. 1500/- per week for one of the family members or next of kin who
accompanies the insured person during the period of hospitalization. This weekly
compensation will not be available for more than 8 weeks.
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Objective of Project
·To present work which I have done during my training period.
·To have the basic knowledge of general insurance and general detail
about various policies
·Working on this project enabled me to come into contact with important
authorities and individual who will be helpful to me in future.
·The project is prepared for the partial fulfillment of the M.B.A programme
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Methodology of the Project
It is very important to have proper methodology for conducting any project
work. By presenting project in a proper way one can a very good impression on
the reader.
This project includes general detail about insurance industry, company details
different player in the market, product detail, & some detail of IRDA bill which has
been covered in the first part.
Now in second part I m presenting the different marketing channel & how they
can be integrated to have good results for the company.
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56. IFFCO-TOKIO GENERAL INSURANCE CO.LTD
Finding and analysis:
As we know that every product & service has to be marketed properly to
have the desired results. In general we have general marketing channel is as
follows:
Manufacturer- Whole seller – Dealer -Retailer
These channels preferable for product only in service industry we have
make our own lobby of marketing channel. As we are in phase of revolution there
are no of new option are available to market our services. As insurance &
banking industry play the major role in service industry & support the whole
economy to prosper. I have presented my finding & analysis, which is as follow in
context to insurance & banking industry
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Channel of Distribution:
Till few years back, the only mode of distribution of insurance products
was through Agents. While agents continue to be the predominant distribution
channel, today a number of innovative alternative channels are being offered to
consumers. A substantial shift in the distribution of insurance in India is expected.
Many of these changes will echo international trends. Worldwide, Insurance
products move along a continuum from pure service products to pure commodity
products initially, insurance is seen as a complex product with a high advice and
service component. Buyers prefer a face-to-face interaction and place a high
premium on brand names and reliability. As products become simpler and
awareness increases, they become off-the-shelf, commodity products. Sellers
move to remote channels such as the telephone or direct mail. Insurance is sold
by various intermediaries, not necessarily insurance companies. Some of them
are brokers, the internet and direct marketing. Banks and finance companies will
emerge as an attractive distribution channel for insurance. This trend will be led
by two factors which already apply in other world markets. First, banking,
insurance, fund management and other financial services will all form a set of
services rather than disparate ones.
Second, banks and finance companies are being driven to increase their
profitability and provide maximum value to their customers. Therefore, they are
themselves looking for a range of products to distribute. Though it is too early to
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predict, the wide spread of bank branch network in India could lead to
bancassurance emerging as a significant distribution mechanism.Insurers in
India should also explore distribution through non-financial organizations. For
example, insurance for consumer items such as refrigerators can be offered at
the point of sale. This piggybacks on an existing distribution channel and
increases the likelihood of insurance sales. Alliances with manufacturers or
retailers of consumer goods will be possible. With Increasing competition, they
are wooing customers with various incentives, of which insurance can be one.
Another potential channel that reduces the need for an owned distribution
network is worksite marketing. Insurers will be able to market pensions, health
insurance and even other general covers through employers to their employees.
These products may be purchased by the employer or simply marketed at the
workplace with the employer’s co-operation. Pricing India is a very price sensitive
market. However, 65 per cent of the business is in tariff, where pricing is still
determined by the government, which decides the rates, terms & conditions for
various businesses like Fire, Motor, Engineering, Workmen compensation
insurance etc. It is going to change over the next few years. In non-tariff products
like personal accident, Burglary, Cash-in-transit, marine transit etc. There is a lot
of pressure on pricing. Although the insurers are free to quote the rates,
companies will have to be reasonable while determining a pricing structure
because, across the globe, there are instances of companies going bust while
playing the game of undercutting state-run companies.
One of the most significant changes in the financial services sector over
the past few years has been the growth and development of bank & insurance.
Banking institutions and insurance companies have found bank & insurance to
be an attractive and profitable complement to their existing activities. The
successes demonstrated by various bank & insurance operations particularly in
Europe have triggered an avalanche of mergers and acquisitions across
continents and efforts are on to replicate the early success of bank & insurance
in other parts of the world as well.
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Distribution is the key issue in bank & insurance and is closely linked to
the regulatory climate of the country. Over the years, regulatory barriers between
banking and insurance have diminished and have created a climate increasingly
friendly to bank & insurance. The passage of Gramm-Leach Bliley Act of 1999 in
US and IRDA Bill in India in 2000 have stimulated the growth of bank &
insurance by allowing use of multiple distribution channels by banks and
insurance companies.
bank & insurance experience in Europe as well as in other select countries offers
valuable guidance for those interested in insurance distribution through the
banking channel in developing markets. Many banks and insurers are looking
with great interest at building new revenue through bank & insurance - including
large, traditional companies that wouldn't have considered such an approach
about a decade ago. Of particular interest, many believe, is the potential for bank
& insurance in developing economies such as those of Latin America and
Southeast Asia.
Distribution channels in bank & insurance
Traditionally, insurance products have been promoted and sold principally
through agency systems in most countries. With new developments in
consumers’ behaviours, evolution of technology and deregulation, new
distribution channels have been developed successfully and rapidly in recent
years. bank & insurance make use of various distribution channels:
-Career Agents
-Special Advisers
-Salaried Agents
-Bank Employees / Platform Banking
-Corporate Agencies and Brokerage Firms
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-Direct Response
-Internet
-e-Brokerage
-Outside Lead Generating Techniques

The main characteristics of each of these channels are:
Career Agents:
Career Agents are full-time commissioned sales personnel holding an
agency contract. They are generally considered to be independent contractors.
Consequently an insurance company can exercise control only over the activities
of the agent which are specified in his contract. Despite this limitation on control,
career agents with suitable training, supervision and motivation can be highly
productive and cost effective. Moreover their level of customer service is usually
very high due to the renewal commissions, policy persistency bonuses, or other
customer service-related awards paid to them.
Many bank & insurance, however avoid this channel, believing that agents
might oversell out of their interest in quantity and not quality. Such problems with
career agents usually arise, not due to the nature of this channel, but rather due
to the use of improperly designed remuneration and/or incentive packages
.
Special Advisers:
Special Advisers are highly trained employees usually belonging to the
insurance partner, who distribute insurance products to the bank's corporate
clients. Banks refer complex insurance requirements to these advisors. The
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Clients mostly include affluent population who require personalised and high
quality service. Usually Special advisors are paid on a salary basis and they
receive incentive compensation based on their sales.
Salaried Agents:
Having Salaried Agents has the advantages of them being fully under the
control and supervision of bank & insurance. These agents share the mission
and objectives of the bank & insurance. Salaried Agents in bank & insurance are
similar to their counterparts in traditional insurance companies and have the
same characteristics as career agents. The only difference in terms of their
remuneration is that they are paid on a salary basis and career agents receive
incentive compensation based on their sales. Some bank & insurance,
concerned at the bad publicity which they have received as a result of their
career agents concentrating heavily on sales at the expense of customer service,
have changed their sales forces to salaried agent status.
Platform Bankers:
Platform Bankers are bank employees who spot the leads in the banks
and gently suggest the customer to walk over and speak with appropriate
representative within the bank. The platform banker may be a teller or a personal
loan assistant and the representative being referred to may be a tarined bank
employee or a representative from the partner insurance company.
Platform Bankers can usually sell simple products. However, the time
which they can devote to insurance sales is limited, e.g. due to limited opening
hours and to the need to perform other banking duties. A further restriction on the
effectiveness of bank employees in generating insurance business is that they
have a limited target market, i.e. those customers who actually visit the branch
during the opening hours.
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In many set-ups, the bank employees are assisted by the bank's financial
advisers. In both cases, the bank employee establishes the contact to the client
and usually sells the simple product whilst the more affluent clients are attended
by the financial advisers of the bank which are in a position to sell the more
complex products. The financial advisers either sell in the branch but some
banks have also established mobile sales forces.
If bank employees only act as "passive" insurance sales staff (or do not
actively generate leads), then the bank & insurance potential can be severely
impeded. However, if bank employees are used as "active" centres of influence
to refer warm leads to salaried agents, career agents or special advisers,
production volumes can be very high and profitable to bank & insurance.
Set-up / Acquisition of agencies or brokerage firms:
In the US, quite a number of banks cooperate with independent agencies
or brokerage firms whilst in Japan or South Korea banks have founded corporate
agencies. The advantage of such arrangements is the availability of specialists
needed for complex insurance matters and -in the case of brokerage firms - the
opportunity for the bank clients to receive offers not only from one insurance
company but from a variety of companies. In addition, these sales channels are
more conceived to serve the affluent bank client.
Direct Response:
In this channel no salesperson visits the customer to induce a sale and no
face-to-face contact between consumer and seller occurs. The consumer
purchases products directly from the bank & insurance by responding to the
company's advertisement, mailing or telephone offers. This channel can be used
for simple packaged products which can be easily understood by the consumer
without explanation.
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Internet:
Internet banking is already securely established as an effective and
profitable basis for conducting banking operations. The reasonable expectation is
that personal banking services will increasingly be delivered by Internet banking.
bank & insurance can also feel confident that Internet banking will also prove an
efficient vehicle for cross selling of insurance savings and protection products. It
seems likely that a growing proportion of the affluent population, everyone's
target market, will find banks with household name brands and proven skills in e-
business a very acceptable source of non-banking products.
There is now the Internet, which looms large as an effective source of
information for financial product sales. Banks are well advised to make their new
websites as interactive as possible, providing more than mere standard bank
data and current rates. Functions requiring user input (check ordering, what-if
calculations, credit and account applications) should be immediately added with
links to the insurer. Such an arrangement can also provide a vehicle for
insurance sales, service and leads.
E-Brokerage:
Banks can open or acquire an e-Brokerage arm and sell insurance
products from multiple insurers. The changed legislative climate across the world
should help migration of bank & insurance in this direction. The advantage of this
medium is scale of operation, strong brands, easy distribution and excellent
synergy with the internet capabilities.
Outside Lead Generating Techniques:
One last method for developing bank & insurance eyes involves "outside"
lead generating techniques, such as seminars, direct mail and statement inserts.
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Seminars in particular can be very effective because in a non-threatening
atmosphere the insurance counselor can make a presentation to a small group of
business people (such as the local chamber of commerce), field questions on the
topic, then collect business cards. Adding this technique to his/her lead
generation repertoire, an insurance counselor often cannot help but be
successful.
To make the overall sales effort pay anticipated benefits, insurers need to
also help their bank partners determine what the “hot buttons” will be for
attracting the attention of the reader of both direct and e-mail. Great opportunities
await bank & insurance partners today and, in most cases, success or failure
depends on precisely how the process is developed and managed inside each
financial institution. This includes the large regional bank and the small one-unit
community bank.
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65. IFFCO-TOKIO GENERAL INSURANCE CO.LTD
Suggestions and Conclusion
It is not possible to market insurance on sole marketing channel we should
integrated different channel & business model to become successful in insurance
business. Following are some suggestions to achieve that.
Distribution Models
Bank & insurance have developed three basic distribution models:
Integrative, Specialist and Financial Planning model.
Integrative / Generalist Model:
The integrative model distributes products through existing bank channels,
and in its most well-known European version, branch bankers themselves sell
insurance products to customers. Theoretically, this offers “One Stop Banking”
and requires extensive training to branch staff. Bank staff are supposed to know
the details of all the insurance products on offer. Telemarketing and direct mail
are also examples of integrative approaches.
Specialist Model:
The specialist model distributes investment or other complex insurance
products through product experts who are generally employees or
representatives of the insurance company. Platform bankers help identify
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prospects who are then contacted by an insurance professional. This process
requires less training bur requires higher compensation to support the referral
process. This model may not meet all of customers’ needs since it lengthens the
process of sale of even a simple insurance product which can otherwise be sold
across the counter.
Financial Planning Model:
The “financial planning” model is the only “team” approach. This method
offers each customer and prospect a full financial planning package addressing
all of the individual's financial concerns, risk tolerances and location in the cycle
of life. This process is beneficial for the customer, the bank and the insurer, as
the customer is viewed “outside the numbers”. bank & insurance convey the
message that they want to know all about the customer in relation to their current
and future financial needs and want to assist them on all those aspects of their
life.
To move a bank in the direction of becoming an effective user of the
financial planning model, the bank’s sales force first has to be taught how to
qualify prospects and make referrals and properly approach the
customer/prospect. This process will include and actively involve the bank &
insurance’s project in charge who is best acquainted with pertinent federal and
state regulations for the bank’s geographic market area.
Insurers' bank partners must then learn how to spot existingdepositors
/borrowers' “life triggers,” i.e., milestones in a life that represent insurance
opportunities. Although bank representatives have always done this in
conjunction with bank products, it is new to them to apply this concept to
insurance products as well. For example, a younger depositor mentions he is
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withdrawing part of his savings to purchase his first car. Knowledgeable bank
representatives or platform bankers would immediately understand the
requirement for the car insurance and may be personal accident insurance.
These bank staff functioning now as financial services representatives can
provide such sound practical advice, i.e., an insurance product to fit customer
current and future needs.
In general, a well-trained sales person can always count on certain “life
triggers” -birth, death, divorce, career change or other catastrophic event—to
lead his or her regular bank customers to new insurance products. If the bank’s
personnel are shown how to capitalize upon these triggers using insurance
products, they will automatically provide referrals to the insurance group and
insurance sales will follow.
Either of these distribution models works under the right circumstances.
What's most important is whether the model is compatible with the bank's
customer base and the insurance company's strategic objectives. European bank
& insurance experience shows that the Financial Planning Model is an extremely
productive way to reach a large number of bank customers.
Key Value Drivers
Which distribution model to use is a tactical decision secondary to more
basic strategic concerns. bank & insurance strategies should be driven by
markets and channels, encompass a broad range of tactics and practices, and
leverage the competencies of the bank and the insurer. They should identify and
build upon a discrete set of value drivers, those factors of such fundamental
importance that to ignore any one of them could be fatal to the success of the
project. The following four value drivers should be considered in a bank &
insurance strategy:
Brand equity.
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The strategy should leverage the bank's brand equity with consumers.
Consumers throughout the world rate bankers higher than insurance agents in
terms of such criteria as objectivity of advice and product knowledge. A
rationalized bank & insurance strategy will build on the superior brand equity of
banks by integrating insurance into the bank product portfolio and distribution
infrastructure. For many customers, banks can become the primary providers of
financial services by supplying personal risk management along with more
traditional banking services. Lloyds TSB has been using its own brand name for
a long time and have only recently indicated rebranding after acquiring Scottish
Widow. Halifax and Abbey National continue to use their own brand names
despite acquiring Clerical Medical and Scottish Mutual.
Distribution. The distribution model should accomplish the following objectives:
1) It should cater to all segments of the banking population
2) It should work as a single shop for all financial requirements for the bank
customer
3) It should effectively utilize the existing branch banking platform
4) It should take advantage of the multiple sales opportunities afforded by the
bank's other distribution channels
5)It should strive for congruence between product characteristics and channel.
One of the key economic advantages of bank & insurance is the savings
achieved through efficient utilization of the bank's existing distribution channels.
At some point in the development of a bank & insurance operation, the marginal
cost of adding one more customer becomes negligible. bank & insurance can
reduce significantly the costs of agent recruitment, selection and conservation.
These savings can be passed on to consumers through lower premiums, or the
bank can maintain the premiums at market level in order to increase profitability.
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Because the lower and middle segments of the life market are not price-
sensitive, the second option is often more desirable.
Technology.
Bank & insurance should plan a technological infrastructure that will
exploit customer information found in the bank's database to uncover sales
opportunities and produce transactional simplicity for insurance customers.
The information banks have about their customers' buying habits,
economic status and money management practices constitutes a valuable asset
often unrecognized even by large, sophisticated banking institutions. Using
technology to order information about the economic behaviour of customer
segments can provide valuable insights about insurance-selling opportunities.
For instance, customers buying a home through a bank mortgage can be
approached for a variety of insurance products. With a traditional insurer,
behavioural information about policyholders is usually unavailable, but even
when known, can only be employed by agents (who have an economic interest in
thwarting a direct relationship between the company and the client).
Bank & insurance should use technology to simplify the insurance
purchase as much as possible, thereby making the purchase an easier, more
pleasant experience and further differentiating themselves in the process. Buying
insurance in the traditional way means dealing with agents and the complications
of the underwriting process, which bank & insurance can eliminate. Branch
customers are usually in a hurry and don't want to wait, so banks will serve them
best by simplification. With point-of-sale technology, customers should be able to
buy policies in a short time and leave the bank with coverage in hand.
Particularly with an intangible such as an insurance policy, the buying experience
itself is a key part of the purchase. bank & insurance should make the experience
as positive as possible, and technology can contribute greatly to this effort.
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Culture.
An effective bank & insurance strategy acknowledges the fundamental
cultural conflict between the bank and the insurance company by aligning the
bank's interests with those of the insurance company. Without the bank's total
commitment to the insurance strategy, any bank & insurance program is doomed
to fail. One of the more effective ways to achieve this commitment is for the bank
to have an equity interest in the insurance company. With a stake in the financial
results of the insurance operation, the bank has a powerful in-centive to support
the insurance strategy. The alternative approach, buying "shelf space" in the
bank to sell insurance products, will rarely be as effective.
In any given situation, one of the four value drivers may greatly outweigh the
importance of the others. In some cases, solving the cultural problem may loom
especially large, while in others building an effective technology platform may be
paramount. bank & insurance will need to consider all four, however, to achieve
successful balance.
Trends in Mature Markets
Bank & insurance has blossomed across Europe with penetration rates
ranging from 20 percent of pensions and life premiums in Germany to 73 percent
in spain, according to Data monitor. In the UK, around 10 percent of life
insurance premium income is generated regularly through bank & insurance
channel.
The success of bank & insurance in European countries to date and its
projected future growth are eagerly trumpeted by investment bankers, particularly
to clients considering entering the market. In their view, bank & insurance is one
of the primary beneficiaries of the global movement toward liberalization and
subsequent integration of financial services. Clearly, the concept of one-stop
shopping, or allfinanz, is more advanced in some European markets where the
process of integration of financial services is further along.
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European experience shows that tax-advantaged insurance products with
an emphasis on savings accumulation can be successful in the banking channel
under certain circumstances. Protection products, such as pure term insurance,
are rarely promoted, and the big sellers are investment products with an
insurance wrapper. These products tend to compete with banking or investment
products rather than other insurance products.
In some countries, such as France and Spain, favourable tax treatment
affords bank & insurance products competitive advantages. On certain pension
products sold in Europe through banks, the tax advantages are substantial,
sometimes even including deductible premiums. In the United States, where
bank & insurance has achieved more modest success, it is openly acknowledged
that the market for annuities sold through banks and insurance agents would
evaporate if the government withdrew the favourable tax treatment of these
products. However, annuities continue to enjoy tax advantages, and the market
for these products through the bank channel is booming.
Distribution Strategies in an Emerging Market
The business model for bank & insurance in Europe does not necessarily
transfer to the regulatory and economic environment of a developing market. To
succeed in emerging markets, bank marketers will have to develop unique
strategies consistently attuned to local customer expectations and consistent with
bank distribution capabilities. The biggest challenge is determining how to reach
the middle and lower-middle economic classes, which comprise the largest group
of bank customers in such countries.
A frequent mistake made by many bankers and insurers is their failure to
develop unique strategies specifically for bank & insurance. Instead, they simply
extend their traditional agency distribution approach, because they view bank &
insurance as just another means of reaching their existing market of affluent
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consumers. Agents typically target the affluent because the average revenue per
customer is sufficient to support the fixed and variable costs of the distribution
system. The agency channel thus perpetuates itself: commissioned agents sell to
affluent customers because they generate enough revenue to make it profitable
to sell to other affluent customers. Because agents are the insurance company's
true customers, insurers provide them with products suitable for sale to the
affluent.
In developing markets, affluent populations are much smaller than their
counterparts in North America or Europe. Although distribution models geared to
wealthier bank customers exist, bank & insurance who pursue this segment of
the market are forced to compete directly with traditional insurers. In a
developing market, a strategy focused solely on affluent customers ignores the
largest group of bank customers.
A successful bank & insurance strategy focused on middle and lower-
middle income segments of the bank marketplace requires insurers to rethink
assumptions. To fully exploit the potential of the mass-market banking channel,
insurers need new types of distribution, underwriting, administration, policy issue
and delivery, premium collection procedures, customer service strategies and
sales approaches. In bank & insurance, technology must be combined with
fundamental knowledge of insurance to develop processes unique to the banking
environment.
Distribution Channels and Product Complexity
The design and implementation of the distribution model is as important, if
not more so, than product design in bank & insurance (except for the few clients
who require customized product solutions for individual financial planning needs).
If an insurance or investment product offers basic protection or the promise of
reasonable return at a fair price, consumers will buy it if the product, the
distribution system and the channel are compatible. Low penetration of insurance
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in emerging markets is not a failure of product design, but a failure of the
distribution system.
The diagram below demonstrates that products at varying levels of
complexity require different distribution channels and cost structures. As products
become more customized, the complexity of the product and the cost of
distribution (expressed as the cost-per-customer contact) increases. As a result,
the product and distribution system must also change. Complicated estate or
retirement planning cannot succeed via direct mail, and it's not economically
feasible to sell only accidental death through an external agency force. In a
traditional sales environment, neither the company nor the agent can earn
adequate profits selling a low-premium product (such as accidental death)
because costs are too high. Conversely, a direct mail company can be
enormously successful selling an accident product with an average premium of
only $100 because the cost per solicitation can be kept low
To be successful, the components of a distribution model must work
together; product features and benefits, distribution costs and marketing
channels all should complement each other. Bancassurers can tap all the
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channels identified in the model: direct mail, telemarketing, platform bankers,
Internet, in-house specialists, Career Agents or professional financial advisors.
The most effective bancassurance strategies will be driven by customers and
channels, not products, and will leverage the bank's competitive strengths.
A customer and channel driven bank & insurance strategy finds and
engages buyers where they are found. No attempt is made to impose a
preconceived product driven strategy. Traditional life insurers are often trapped:
they create a product with features attractive to agents (such as high
commissions), and then let the agents find appropriate target markets. This is a
type of "top-down" product development approach. However, the bank channel
requires an analysis of the market that starts at the bottom, with the customers,
and works up.
A "bottoms-up" approach in bank & insurance works differently. A
customer and channel-driven strategy capitalizes on the existing relationship of
trust and familiarity between the banker and branch customer and the frequency
of branch visits. In emerging markets, the lower-income customers found in bank
branches are usually wage-earners or small-business owners - the same type of
customers ignored by most insurance agents.
Visiting local branches frequently, these customers often develop close
relationships with branch managers or tellers. (Relatively few insurance agents
achieve similar levels of trust with their customers.) Even in the United States,
where Internet banking and automatic teller machines (ATMs) are omnipresent,
50 percent of bank customers have monthly contact with their local bank branch.
In developing markets, these contacts are more frequent and personal and often
come in the form of visits to a branch to perform simple transactions such as
funds deposits or withdrawals.
The type of distribution channels that a company uses affects the design
and pricing of its products, as well as the way in which the products are promoted
and perceived in the marketplace. Some bank & insurance started out by selling
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simple products which could be sold in large volumes but which usually had low
margins to cover expenses and profits. If we compare how products and
distribution are related to the profits of an organization, we will come to the
conclusion that the more complex the products sold are, the higher the required
margins will need to be.
Many banks entered bank & insurance with a defensive strategy in their
attempt to avoid market share erosion by insurance companies. Very soon,
though, they realized that they could gain market share if they expanded their
product range, developed a sales culture within their organizations, created a
multi-channel distribution structure and exploited the potential of the customer
information that can enable the identification of customer needs.
Cultural Issues in Distribution
The managers of banks and of life insurance companies can come from
quite different cultures. There may be differences in the way of thinking and
business approaches of bankers and managers of insurance companies. These
differences create a communication and implementation problem in bank &
insurance operations. Banks are traditionally demand-driven organizations with a
reactive selling philosophy. Life insurance organizations are usually need-driven
and have an aggressive selling philosophy.
It has been observed that this friction at the level of bank employees and
life insurance salespeople arises from differing philosophies towards selling, the
jealousies of bank employees regarding remuneration of life sales staff and fears
of "cannibalization" of deposits, e.g. the bank employee fears that the
salesperson encourages withdrawal of bank deposits, putting the bank
employee's job in greater jeopardy. As a result the team spirit is negatively
influenced and, since this is a crucial factor for the success of any operation, it
has to be confronted.
Cultural differences between the banking and the insurance industries
must be understood, respected and lived with in order for the bank & insurance
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venture to succeed. The development of a single culture is another possible
solution but this requires a very strong commitment from the top management.
This commitment must be continuously conveyed to all bank employees and life
insurance agents. One way of achieving this is to develop a "statement of
mission" for the new organization and to get the staff to commit to fulfilling this
statement. This can help to ensure that there is a common path for the bank and
the life insurer.
Integration of Various Distribution Channels
It seems very difficult for a single distribution channel to successfully reach
the bank & insurance 's goals and specific target markets. Many bank &
insurance are using multiple distribution channels. This way they avoid becoming
locked into one channel and they can offer services to a greater number of target
markets. Multiple distribution channels provide another valuable feature. They
enable the enterprise to offer customers multiple options for access. Therefore, if
a customer wants to see someone about a particular service on one day but
wants to transfer funds at a later date, e.g. on a Sunday night, the availability of
both branch office and 24-hour telephone access increase the service value to
that customer.
However, conflicts may arise among the various channels and also within
channels under a multi-channel system. To avoid this it is necessary to ensure
the following:
1) Colleagues within a channel are motivated to cooperate
2) There is communication of the importance of every link in the distribution
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3) Cultural differences are communicated and respected
4) The goals of every partner in the distribution process can be fulfilled by the
process
5) The specific role and performance expectations of each channel member are
clearly stated, understood and accepted
6) Communication between channels is encouraged
7)Channel leadership is strong and committed to success.
By completely integrating their distribution channels in accordance with an
established model, companies can achieve substantial cost savings, improve
productivity and ensure that all stakeholders, shareholders, customers and staff
are satisfied.
The future of integrated distribution calls for the customer to be placed at
the heart of the distribution network. The call centre and the agency no longer
operate as separate channels. Rather a synergy is realised through realignment
of roles and responsibilities and the creation of a new sales integrated sales
process, maximising lead generation activity. Whatever the combination of
distribution channels, the financial services company must seek to always
improve the customer experience and deliver the service more cost effectively.
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Bibliography
·www.itgi.org
·www.irdaindia.org
·www.indiainfoline.com
·S. Balachandran, IC 34 General Insurance. Mumbai
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