Market Strategy – ICICI Prudential Life Insurance

About ICICI Pru Life Insurance

ICICI Prudential Life Insurance Company is a joint venture between ICICI Bank - one of India's foremost
financial services companies-and Prudential plc - a leading international financial services group
headquartered in the United Kingdom. Total capital infusion stands at Rs. 47.80 billion, with ICICI Bank
holding a stake of 74% and Prudential plc holding 26%.
 
We began our operations in December 2000 after receiving approval from Insurance Regulatory
Development Authority (IRDA). Today, our nation-wide reach includes over 1,900 branches (inclusive of
1,074 micro-offices), over 210,000 advisors; and 7 bancassurance partners.
 
For three years in a row, ICICI Prudential has been voted as India's Most Trusted Private Life Insurer, by
The Economic Times - AC Nielsen ORG Marg survey of 'Most Trusted Brands'. As we grow our
distribution, product range and customer base, we continue to tirelessly uphold our commitment to deliver
world-class financial solutions to customers all over India.

Distribution

ICICI Prudential Life has one of the largest distribution networks amongst private life insurers in India. It
has a strong presence across India with over 1,900 branches (including 1,074 micro-offices) and an
advisor base of over 210,000 (as on March 31, 2010).
 
The company has 7 bancassurance partners having tie-ups with ICICI Bank, Ratanagiri District Central
Co-op Bank, Ballia Kshetriya Co-operative Bank, Renuka Nagrik Sahakari Bank, Bhandara Urban Co-
operative Bank, Balasinor Nagarik Sahakari Bank Limited, Arvind Co-op Bank.
 

 
Products

Insurance Solutions for Individuals

ICICI Prudential Life Insurance offers a range of innovative, customer-centric products that meet the
needs of customers at every life stage. Its products can be enhanced with up to 4 riders, to create a
customized solution for each policyholder.
 
 
Savings & Wealth Creation Solutions :
 
ICICI Pru Save 'n' Protect is an ideal plan for those who want to accumulate funds on a regular basis
while enjoying insurance protection.
 
ICICI Pru CashBak is a single policy that combines the triple benefit of protection, savings & periodic
liquidity.

Protection Solutions :
 
ICICI Pru iProtect is a term insurance plan that you can buy online at your convenience at affordable
premiums.
 
ICICI Pru Pure Protect is a flexible and affordable term product, with which you can ensure your life and
provide total security for your family in case of an unfortunate event.
ICICI Pru LifeGuard is a protection plan, which offers life cover at low cost. It is available in 2 options –
level term assurance with return of premium & single premium.

ICICI Pru HomeAssure is a mortgage reducing term assurance plan designed specifically to help
customers cover their home loans in a simple and cost-effective manner.
 
 
Child Plans :
 
ICICI Pru SmartKid Regular Premium is a fixed-term insurance plan that provides you with funds at
regular intervals.
 
Retirement Solutions :
 
ICICI Pru ForeverLife is a traditional retirement product that offers guaranteed returns for the first 4
years.

ICICI Pru Immediate Annuity is a single premium annuity product that guarantees income for life at the
time of retirement. It offers the benefit of 5 payout options.
 
Health Solutions :
 
ICICI Pru Hospital Care is a fixed benefit inpatient hospitalisation plan, covering various stages of
treatment with a daily allowance, ICU, procedures & recuperating allowance. It covers a range of medical
conditions (900 surgeries) and has a long term guaranteed coverage upto 20 years.

ICICI Pru Crisis Cover is a 360-degree product that will provide long-term coverage against 35 critical
illnesses, total and permanent disability, and death.

ICICI Pru MediAssure is a reimbursement inpatient hospitalization health insurance policy that provides
guaranteed insurability till age 75 years.
 
 
Group Insurance Solutions :
 
ICICI Prudential also offers Group Insurance Solutions for companies seeking to enhance benefits to
their employees.

Group Gratuity Plan: ICICI Prudential Life's group gratuity plan helps employers fund their statutory
gratuity obligation in a scientific manner and also avail of tax benefits as applicable to approved gratuity
funds.

Group Leave encashment Plan: ICICI Prudential Life’s Group offers a market linked and traditional
leave encashment plan designed to aid the employer to build a fund to meet their future leave
encashment liability. The contributions made will be invested as per the chosen investment plans and
will be available for payment of the benefit when it falls due. Additionally, the product also provides for
term cover for all the employees covered under the policy.

Group Immediate Annuities: ICICI Prudential Life realises the importance of prudent retirement
planning. With this in mind, it has developed a suite of life and joint life annuities which guarantee
periodic payment to annuitants upto death. Further there are options which return the purchase price on
death of annuitants. These annuity options are offered to our existing superannuation customers, and
also to superannuation funds not managed by us.

Group Term Plan: ICICI Prudential Life's flexible group term solution helps provide an affordable cover
to members of a group. The cover could be uniform or based on designation/rank or a multiple of salary.
The benefit under the policy is paid to the beneficiary nominated by the member on his/her death.
 
 
Flexible Rider Options :
 
ICICI Prudential Life offers flexible riders, which can be added to the basic policy at a marginal cost,
depending on the specific needs of the customer.
 

1. Accident & disability benefit: If death occurs as the result of an accident during the term of the
policy, the beneficiary receives an additional amount equal to the rider sum assured under the
policy. If an accident results in total and permanent disability, 10% of rider sum assured will be
paid each year, from the end of the 1st year after the disability date for the remainder of the base
policy term or 10 years, whichever is lesser.
2. Critical illness benefit: Critical Illness Benefit Rider provides protection against 9 critical
illnesses to the policyholder when attached to the basic plan.

 
 
About the Promoters

ICICI Bank 
About ICICI Bank: ICICI Bank Ltd (NYSE:IBN) is India's largest private sector bank and the second
largest bank in the country with consolidated total assets of over US$ 100 billion as of March 31, 2010.
ICICI Bank’s subsidiaries include India’s leading private sector insurance companies and among its
largest securities brokerage firms, mutual funds and private equity firms. ICICI Bank’s presence currently
spans 19 countries, including India.
 
Prudential Plc
Established in London in 1848, Prudential plc is an international retail financial services group with
significant operations in Asia, the US and the UK serving around 25 million customers, policyholder and
unit holders worldwide. The company has £290 billion of assets under management and it is one of the
best capitalised insurers in the world with an Insurance Groups Directive (IGD) capital surplus estimated
at £3.4 billion (at 31 December 2009). Prudential is a leading life insurer in Asia with a presence in 12
markets and have the top three position in seven key locations of Hong Kong, India, Indonesia,
Malaysia, Singapore, the Philippines and Vietnam.
 
 

Time was, if you wanted to buy a life insurance policy, you called a Life Insurance Corporation agent
referred to you by a friend or a relative. And as you sat him down in your drawing room one Sunday
morning (and your wife went away to make him some tea), he would pull out a sheaf of papers, rattle off
details for a variety of schemes, and calculate the premium from a small white book. And since that''s the
way the whole country bought insurance, you bought one too.
Marketing Strategy

These days, you don''t have to go in search of an agent. He comes after you. Shopped at any of
the Westside stores recently or stopped by at a Bharat Petroleum to tank up? If yes, expect a call
from one of the direct marketers selling ICICI Prudential Life Insurance pension policy or child
solutions. Using what it calls 'alliance marketing' ICICI Pru mines databases of retail chains and
credit card companies to identify potential customers.

Such aggressive selling strategies are beginning to pay off for ICICI Pru and the 11 other new
private life insurers. In the two years since life insurance was opened up, the new players have
grabbed nearly 9 per cent of the total insurance market in terms of premium income and nearly 33
per cent of the pension products market. ICICI Pru is the leaderhaving sold 3.5 lakh policies till
date. Last fiscal, it raked in Rs 365 crore in premium income-a 200 per cent jump over the previous
year. Not too far behind is Birla Sun Life, with premium income of Rs 170 crore in 2002-03, and HDFC
Standard Life at Rs 133 crore. Put the numbers of the dozen players together, and you are looking at a
new life insurance market (in terms of total premium) of Rs 1,021 crore last year alone.

So what explains the quick rise of the new comers? 'There is a clear shift from the one-size-fits-all
strategy of yore to a more flexible, customer-centric one that we have adopted,' says Shikha Sharma,
CEO, ICICI Pru. Until the new players came along, what passed in the name of life insurance was a tax-
saver tool with insurance wrapped around it. But a true insurance product, experts say, must offer an
optimal balance between protection and savings. And that''s a formula, like ICICI Pru, the new insurers
have cottoned on to. On offer from them is an array of products ranging from traditional term endowments
and money back policies to contemporary whole life and pension plans. Max New York Life, for instance,
has 11 products and nine riders that can be customised to make more than 250 different combinations,
and Tata-AIG has eight products with six riders. Says Ian Watts, CEO, Tata-AIG: 'The customer has the
option of combining base products with a number of riders.'

The idea behind product flexibility is to cover as many customers as possible. At ICICI Pru, marketing
involves doing a life-stage segmentation so that opportunities to up-sell products can be tapped. Consider
a situation where a 20-something takes a Rs 5 lakh cover, and on becoming a parent takes a child cover
as well. As the child turns into an adolescent, the now middle-aged customer may want to reduce risk
cover and instead buy a retirement plan. For ICICI Pru (and others who do need-based analysis), it is
possible to sell him a product at every stage of his life. Others like Birla Sun Life focussed early on unit-
linked insurance instead of 'me-too' products such as term assurance. The unit-linked products, where the
premium is demarcated between insurance and investment, come with minimum guaranteed returns. The
customer is given three investment options, which carry various levels of risk. (Thus far, the returns in
unit-linked plans have ranged from 7.61 per cent in the case of low-risk products to 11.56 per cent for
high-risk products.) HDFC Standard Life, on the other hand, gets almost half of its business from term
assurance plans, where the sum assured is large but premiums are low. Says Deepak Satwalekar, the
company''s CEO: 'We believe insurance is all about protection and then savings and investment. It''s a
tough market in which to sell term assurance.' Why? At the end of the day, the customer wants to know
the returns. Points out Anuroop 'Tony' Singh, CEO, Max New York Life: 'Whole life policies offer the right
balance between protection and savings.'

Crucial to the customer-insurer relationship is servicing. As customers become more discerning,

CHINTAMANI, the mascot of the middle class, has become a household name. Even kids are
demanding toys modelled around his scraggly old figure. Thanks to him, ICICI Prudential now
enjoys a brand recall of 92 per cent next to LIC's 97 per cent, according to AC Nielsen's
Brandtrack 7 study out last year. Insurance brand building has certainly come a long way.
Financial services advertising has traditionally been tactical. It usually just imparts information,
given the complexity of the products.

With the liberalisation of the insurance market in 2000, building a separate insurance brand with a
towering public sector unit like LIC that held 100 per cent of the market share proved to be an urgent as
well as a daunting task. Awareness of the brand was the first goal that had to be met. Rohit Mull, Vice-
President (Marketing), Tata AIG, says, "Insurance buying involves a high degree of involvement. At the
outset, people were not aware that Tata had forayed into the insurance business. Awareness had to be
driven to a level where it culminates in a transaction. It is unlike some FMCG companies like Coke and
Pepsi where marketing has to be driven only to the extent of preference."

Insurance agents demanded that the companies support them by advertising. People they are selling to
should at the very least know that the brand they are selling really exists. Initially, all advertising by private
insurers ended up reinforcing the LIC brand image as the PSU was still synonymous with life insurance.

Historically, print was the traditional choice for the medium of advertising. The break with tradition came
when ICICI Prudential arguably became the first private insurance company to recognise and harness the
power of TV advertising, with its `Sindoor' campaign in 2001. Then came its retirement solutions
campaign with the tagline `Retire from work, not life.'

The second campaign saw ICICI Prudential getting into product-specific advertising. With Chintamani,
insurance advertising got a new treatment. Sujit Ganguli, Head (Marketing), ICICI Prudential, says,
"Chintamani is a very interesting character. The claymation (clay animation), particularly, breaks from the
clutter. To add to it, the jingle is also very catchy."

Now, most private players have 50-70 per cent of their ad spend skewed in favour of television. Marketing
budgets have been soaring for the past three years. Reportedly, on a budget of Rs 5.8 crore for February
2005 alone, ICICI Prudential's `Retirement solutions campaign' was the highest spending brand, pipping
several HLL brands to the post. The fact that insurance selling activity reaches a peak around March also
needs to be taken into account.

The advertising has been spread across mass as well as niche TV channels. S.Muralidharan, Chief
Marketing Officer, SBI Life, says, "We have advertised in 10 languages. We chose TV because its
footprint is quite large. The visual is always more effective and more universal. Print advertising is a two-
level abstraction, in terms of language and in terms of the thought.

Explains Asuthosh Bishnoi, Marketing Chief, OM Kotak: 'Term by itself is not a hugely popular product
and innovative features like this one help in getting immediate attention.'

Anytime Insurance

Doing the talking to consumers is still the agent, but information technology has helped arm both
the agent and the consumer with instant information, anywhere, anytime. ICICI Pru''s website
offers not just product information, but delivers quotations online. It allows the channel partners
to manage their whole business on the web through premium alerts, client diary, and premium
calculator. The customer can access policy and payment details, send in the premium online.
Apparently, at least a quarter of ICICI Pru''s 18,000-odd agents log on to the website at least 15
times a month. And given that the industry still relies on agents to do the selling, the players are
investing in a lot of training

But the distribution strategy is also a function of the player''s own strengths. SBI Life, for example, is
piggy-backing on the parent bank to sell its products. It is selling insurance products to SBI''s deposit
holders at Rs 25 a month for a Rs 1 lakh cover, and has tapped 3.5 lakh account holders so far. For
villagers, the premium is Rs 10 per month for a Rs 25,000 cover. Says R Krishnamurthy, the company''s
CEO: 'Our strategy is to weave life on the back of bank products as a quick way to penetrate and avoid
adverse selection.' Similarly, Aviva (formerly Dabur-CGU) has combined Easylife Plus (an endowment
policy) with the treasure account (a savings account for children) offered by ABN Amro to launch a
bundled product called Treasure Plus.

A relatively new entrant, amp Sanmar picks its customers differently. It sees its differentiation in the fact
that it is targeting sec B and C centres, where awareness about insurance is low and marketing begins
with educating the customers. In several of such centres, amp Sanmar has been the first private insurer
to enter. For example, P. Murgesan, an insurance advisor with the company, makes a special trip to
Ootamalai, a village in Hoganekal (Tamil Nadu) with a population of 500. He can only access the village
by hitching a ride on a coracle, but that doesn''t stop him from visiting this hamlet once every 10 days.
Says amp Sanmar Vice Chairman S.V. Mony: 'We see this as a big opportunity.'

The point that the insurers are veering round to: 'Products can be cloned, but not the customer
experience,' says Saugata Gupta, Chief of Marketing, ICICI Pru. About a year ago, the company
launched a six sigma initiative to help understand and fulfill customer needs better, set industry
benchmarks, and make its operations scalable, with focus on customers and costs. The result has been a
reduction in the length of forms, use of technology like SMS for contest announcement and advisor
communication, improved advisory section on its website and greater convenience in payment of
premium.

All the sweat is aimed at producing one thing: a greater number of customers. And as things stand today,
the forecast is optimistic. Says Singh of Max New York Life: 'I expect the private life insurance companies
to grow at the rate of 75 to 100 per cent CAGR over the next five years.' ICICI Pru, while not in favour of
reckless geographic expansion, plans to grow from 27 towns at present to 100. Birla Sun Life is adding 11
branches by June to its existing 22, and intends to sell 1.8 lakh policies in the current year with a premium
income of Rs 450 crore. In a market largely underinsured, everybody else is talking of growth as well.
Notes Watts of Tata-AIG: 'A bundle of innovative products and an efficient delivery system are the two
aspects that have to be developed to penetrate the market.' No doubt.

But some questions about the Great Indian Insurance Race are already cropping up. For example, is
market share the real parameter of growth for insurance companies? Not everybody thinks so. 'If you are
a long-term player, you will not kill yourself for market share,' says Satwalekar of HDFC Standard.

Translated, that means the composition of policies sold and risk assumed on balance sheets of these
companies will be crucial. Points out Ashvin Parekh, Executive Director, Deloitte Touche: 'The crunch will
come to the core when companies will have to manage policy-holder perceptions about guaranteed
returns and bonuses in a falling interest rate regime.'

No doubt these are issues the new jockeys on the track will grapple with as they push ahead. But don''t
expect the Great Indian Insurance Race to lose steam. At least not anytime soon.
Market Share

ICICI Prudential Life Insurance has increased its market share among private life insurers to
nearly 40%, from 33% as of end-December. The company''s first-year premium income in the
April-January period stood at Rs 464.6 crore, accounting for 39.3% of the Rs 1,364 crore premium
booked by all private life insurers together.

Considering the entire life market, including the Rs 9,780 crore booked by Life Insurance Corporation,
ICICI Pru''s market share works out to around 4.17%. The life insurance market continues to be
dominated by LIC which has about 87.8% share. This is only a marginal dip from its 88.2% share in end-
December. These comparisons are only for first year or new business premium. If renewal premium were
to be taken into account, LIC''s share would increase further to over 96%.

According to business figures brought out by the Insurance Regulatory and Development Authority
(IRDA), the first-year premium mobilised by ICICI Prudential Life Insurance in the first ten months of `03-
04 amounted to Rs 464.4. This is more than twice the premium income generated by its closest rival Birla
Sun Life which raised Rs 195 crore during the same period.

HDFC Standard Life and Tata AIG have retained their third and fourth positions. Interestingly, there are
three companies that are neck-and-neck in the battle to be among the top five with a marketshare of close
to 7% - Allianz Bajaj, Max New York Life and SBI Life Insurance.

In the group insurance market, LIC''s share in the country is around 93%. Among the private companies,
SBI Life, Birla Sun Life and HDFC Standard Life dominate the group insurance segment. SBI Life, with its
group policies for mortgage loan protection and depositor insurance, has close to 45.8% of the group
market among private companies. Birla Sun Life has a 23.4% share, followed by HDFC Standard Life
which has a 18.4% share. Except these three companies, other players have a negligible presence in the
group market.

But, with over a month to go for the close of financial year, the rankings could still change dramatically.
More so, because insurance companies, particularly LIC, go into an overdrive in mobilising new business.