Introduction for Students – This project report on Comparative Study Of ICICI Life Insurance & HDFC Standard Life Insurance provides an overview of the Indian life insurance industry, comparing industry leader Life Insurance Corporation of India (LIC) with major private players like ICICI Prudential and HDFC Life. As a student, you’ll gain insight into the history and workings of the life insurance sector in India.
What will You get in this Project File
The report begins by explaining fundamentals – what is insurance, how life insurance works, and background on regulation and market structure. Key players are then profiled, outlining their company history, products, distribution, and more. A methodology section details the research approach.
The heart of the report is the data analysis, looking at industry trends and metrics like market share, new business growth, premium income, etc. Performance and efficiency of companies is compared using ratios, statistical tests, and advanced techniques.
The conclusion sums up findings and learning. As a student you can utilize this framework to study any insurance company by updating financials, adding the latest products, and modifying the competitive analysis. Instructions are provided at the end for creating your own updated report.
You Can get Main Project File Pdf Below
By working through this project you will understand basics of life insurance and get hands-on experience analyzing real performance data – skills valuable for both corporate roles and entrepreneurship. Reach out in case any clarification is needed while modifying the report.
Brief Summary of the Project on “Comparative Study Of ICICI Life Insurance & HDFC Standard Life Insurance”
What is Insurance?
Insurance provides financial protection against losses from accidents, illness, death, disability, unemployment and other events. By paying relatively small periodic amounts called premiums, the insured transfers the risk of large potential financial losses to the insurer.
The insurer pools premiums and assets from many customers. This allows them to absorb losses across the collective pool. Insurers price products based on actuarial science, which analyzes statistical data to accurately quantify potential payouts.
Life insurance covers the risk of financial loss due to premature death. It pays out a predetermined amount to named beneficiaries upon the insured’s death. Policyholders select personalized death benefit amounts, premiums, and policy terms aligned to needs.
How Life Insurance Works
There are three key parties in a life insurance contract – the insurer, the policy owner, and the insured.
The insurer is the insurance company bearing the financial risk and providing coverage. In exchange for regular premium payments, they guarantee payment of the death benefit to beneficiaries upon the insured’s death.
The policy owner purchases the coverage and has control rights over the policy. They pay premiums and designate beneficiaries. Often the owner and insured individual are the same person. But someone else like a family member can also buy insurance on another’s life after proving financial interest.
The insured individual is the person whose death triggers the payout. Their health and lifestyle factors determine risk levels and pricing. Life insurance companies investigate the medical histories of proposed insureds before approving coverage. Higher risk individuals may be declined or charged extra premiums.
In the event of the insured’s death, beneficiaries receive death benefit funds directly from the insurer. This avoids the hassle and delays of estate settlement. Proceeds get paid in a lump sum or structured over time.
Life insurers price policies using actuarial science and statistical mortality data based on factors like age, gender, and tobacco use. The insurer invests premiums to fund future claims and earn investment income. The insurance policy is a binding legal contract governing the relationship between the parties.
Regulation of Indian Insurance Sector
The insurance industry in India was nationalized in 1956, consolidated under state-owned Life Insurance Corporation. The sector was reopened to private companies in 2000 under the Insurance Regulatory and Development Authority Act.
As an independent body, IRDA regulates insurance companies protecting policyholder interests. Foreign partners can hold up to 26% stake in Indian insurance joint ventures under the government rules.
Market Structure
The over 60% market share of LIC shows the dominant position of the state-owned insurer despite two decades of private sector competition. ICICI Prudential is the largest private life insurer with around 9% market share.
There are 24 life insurance companies in India as of 2022 offering an array of products across savings, protection, retirement, and health categories. While public and private players operate across segments, LIC continues to lead in protection policies while private companies have focused more on market-linked savings products.
HDFC Life – Company Profile
HDFC Life is one of the leading private insurers promoted by Housing Development Finance Corporation and UK’s Standard Life. It provides a diverse range of individual and group solutions spanning life, pension, health, savings, and investment plans.
HDFC Life has one of the largest networks amongst private players with over 300 branches servicing customers across India. As a long-term player with ethically managed and financially strong backers, it aims to be the most successful and admired life insurance company.
HDFC Life – Product Portfolio
HDFC Life offers comprehensive life, health and pension plans to suit the diverse needs of retail as well as corporate customers. Key products include:
– Endowment plan – Long term savings providing life cover
– Whole Life Plan – Protection plus savings for entire lifetime
– Pension Plan – Guaranteed retirement income
– Children’s plan – Secures child’s future goals
– Money back plan – Regular survival payouts plus protection
The company continues enhancing product range reflecting consumer needs across life stages.
ICICI Prudential Life Insurance – Company Profile
ICICI Prudential Life Insurance is a joint venture between ICICI Bank and UK’s Prudential Corporation. It commenced operations in 2001 after receiving regulatory approval and has quickly emerged amongst leading private insurers.
ICICI Bank holds a 74% stake in the JV. The rest is held by Prudential to leverage their preeminent expertise in life insurance and capital management.
As a pioneering force matching protection and long term savings to life cycle requirements, ICICI Pru Life offers retirement, health, and investment solutions for retail and corporate clients. It serves policyholders nationwide through an extensive network of advisors, corporate agents, and bancassurance partners.
The company aims to be India’s dominant life insurer renowned for world-class service, superior risk management, and sustainable stable returns for customers.
ICICI Pru Life – Product Portfolio
ICICI Prudential Life Insurance provides specialized offerings mapping to the diverse needs across life stages:
– Protection Plans – Term insurance, mortgage insurance, critical illness
– Savings & Wealth Plans – Endowment, money-back, retirement corpus
– Child Future Plans –Securing education milestones
– Pension & Annuity Plans – Retirement income
– Health Plans – Hospital cash, surgery, critical illness
– Group Insurance – Gratuity, leave encashment, term insurance
Multiple riders can be added to basic policies for enhanced customization. ICICI Pru Life strives to be at the forefront of understanding what Indian consumers seek.
Research Methodology
Research methodology provides the blueprint guiding how any study or analysis is conducted. It includes formulating the research question, data collection and measurement approaches, tools and techniques for scrutiny, and the framework for concluding.
The research statement here compares the Indian life insurance industry before and after private sector entry – analyzing relative performance of market leader LIC with top private players ICICI Life and HDFC Life along key metrics.
The study utilizes historical data on financial parameters, products, operations and efficiency from insurer financial statements and regulatory filings. Quantitative techniques help objectively assess performance improvements across public, private and consolidated industry.
Performance Analysis of Indian Life Insurers
Market Share of Premiums
Life insurance penetration and density have grown steadily in India aided by economic expansion, higher financial literacy and evolving consumer demand. Tax incentives have also helped channel household savings into long term insurance.
LIC has seen its market dominance decline since the advent of private competition, albeit from an overwhelming 98% levels. By 2021, the state-owned giant commanded a 63% share of overall premiums with the rest split amongst private companies, as per IRDAI data. Despite losing share, LIC continues to grow at healthy rates outpacing broader economic growth.
ICICI Life, SBI Life, HDFC Life and Max Life lead the private insurers with 7-9% market share each. This demonstrates the potential for large non-government insurance franchises catering to India’s huge underpenetrated population.
Market Share – New Business Growth
LICs share in new business has fallen even more sharply from 90% to around 55% as private insurers target the more profitable savings heavy segments. Market-linked Unit Linked Insurance Plans compose over 65% of private insurers’ new business premiums. ULIPs only account for 25% of LIC’s new premiums.
Profits and Surplus Growth Trends
LICs profits have grown more than four-fold over the past decade indicating financial strength despite market share declines. ICICI Life registered break-even around 2009/10 with steady improvement thereafter. The profitable growth of leading Indian private life insurers mirrors insurance sector growth in other emerging economies.
Product Portfolio Analysis
LICs product mix leans more heavily towards participating, non-linked traditional plans. Over 60% of its new business comes from protective term insurance plans compared to roughly 25% for private players. ULIPs, retirement, and child plans are key focus areas amongst private companies.
Analysis of Expense Management
Given the insurance business relies on customer trust and claim settlement ability, managing expenses is crucial for profitability.
LIC operates with best-in-class expense ratios given economies of scale and higher share of low-cost traditional plans. However, private players have also made steady progress lowering initial high costs as their volumes and productivity increases.
ICICI Life has done particularly well, reducing its expense ratio by nearly half over the past decade closer to best standards. Its use of bank tie-ups has provided a low-cost distribution channel. With growth, company maturity and tighter cost controls, India’s leading private life insurers are enhancing competitiveness.
Analysis using DEA and Statistical Tests
Evaluating business performance requires more sophisticated techniques like Data Envelopment Analysis (DEA) and ANOVA testing rather than just financial ratios.
DEA involves use of statistical modeling optimized to specific business contexts, assessing comparatives with best practice. The analysis reveals LIC has maintained highly efficient productivity levels over the study period. However, barring SBI Life, most private players remain inconsistent.
One-way ANOVA tests display significant heterogeneity in cost efficiency levels between LIC and private companies considered collectively. Statistically, LIC operates at higher efficiency levels than the industry average.
Though private life insurers have eaten into LIC’s market dominance, the public insurance giant continues to leverage scale, claim settlement trust, productivity and stringent expense management to retain leadership across key parameters.
Conclusion
Life insurance is still an underpenetrated concept in India relative to its population size, low penetration of institutionalized savings and retirement funding. This indicates massive growth potential for established players as well as new entrants.
While LIC continues as the market leader, private companies have gradually increased market share across both new business growth and absolute premiums. Their entry has expanded product choices for Indian consumers with better customization to varied needs.
HDFC Life and ICICI Life have emerged amongst the top private players. However LIC retains competitive advantages of scale, claim settlement trust and productivity efficiencies. Its profit growth outperforms private peers.
By offering wider capital access and global insurance expertise, foreign partners have aided growth of private Indian life insurers. Steady improvements in mortality experience, product mix and expense management helped them turn profitable over the past decade.
India’s life insurance demand is bound to take-off with rising incomes and financial literacy. Established insurers will gain provided they keep enhancing product relevance, service quality and productivity efficiencies in this high growth market full of potential.
Instructions for Updating Project Report
As a student you can utilize this life insurance company analysis framework for your projects:
- Select your target companies – one market leader and 1-2 competing insurance firms
- Update company profiles with latest information on financials, business lines, tie-ups, etc.
- Describe new products offered mapping to different consumer segments
- Collect and input latest years’ financial statements from annual reports
- Enhance quantitative analysis by adding extra years and competitors
- Compare product mix, operating metrics, profitability, efficiency, etc across players
- Modify conclusions based on updated data and trendlines
- Include your recommendations for players as part of concluding chapter
Approach your professor in case any guidance needed. Updating projects annually will build domain expertise and data analysis skill sets.
