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Home » MBA Articles » MBA Projects Articles » Overview of TATA AIG Life Insurance - Rajkot

Overview of TATA AIG Life Insurance - Rajkot

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The TATA group

TATA group is India's best-known industrial group in the private sector
with a turnover of around US $ 10.4 billion (equivalent to 2.4% of
India's GDP). It is India's most respected private business group. With
219000 employees across 94 major companies, it is also
India's largest employer in the private sector.

Founded by Jamsetji Tata in the 1860s,
the Tata group's early years were inspired by the spirit of
nationalism. The Tata group pioneered several firsts in
Indian industry: India's first private sector steel mill, first private
sector power utility, first luxury hotel chain and first international
airline, amongst others. In more
recent times, the Tata group's pioneering spirit
continues to be showcased by companies like Tata Consultancy Services
(TCS), today Asia's largest software and services company, and Tata
Engineering, the first car maker in a
developing country to design and produce a car from the
ground up.

The 5 core values of the Group

The Tata group has always sought to be a value-driven organization. These values continue to direct
the group's growth and businesses. The five core TATA values underpinning the way we do business are:


We must conduct our business fairly, with honesty and transparency. Everything we
do must stand the test of public scrutiny.


must be caring, show respect, compassion and humanity for our
colleagues and customers around the world and always work for the
of India.


must constantly strive to achieve the highest possible standards in our
day to day work and in the quality of the goods and services we


must work cohesively with our colleagues across the group and with our
customers and partners around the world, building strong relationships
based on tolerance, understanding and mutual cooperation.


must continue to be responsible, sensitive to the countries,
communities and environments in which we work, always ensuring that what
comes from the people goes back to the
people many times over.

Business Sectors

TATA Group operates business in seven key industry sectors. The chart
below illustrates how, in percentage terms, TATA companies in each of
these sectors contribute
to the overall makeup of the group. The table follows
the group's sector wise financial performance.

TATA Group figures:


Total turnover

Sales turnover

Value of assets

Gross block































Group Companies

There are 80 companies across seven sectors.

Some of them are:





    * Tata Motors
    * Tata Cummins
    * Telco

    * Tata steel
    * Tata Metaliks
    * Tata Refractoriness

    * Tata power

    * Tata Chemicals
    * Rallis India

Consumer products

Communication & IT



    * Tata Tea
    * Tata Tetley
    * Titan Industries

    * Tata Telecom
    * Tata Teleservices
    * Tata Consultancy
    * CMC


Tata brand is recognized as the largest homegrown brand in India and
the most respected brand
across consumer segments. The Tata Group's stable of
brands also include many national and some internationally renowned
product and service brands, including Tata Indica, Tata Indigo, Tata
Taj(Hotels, Resorts & Palaces), Voltas, Tata Tea,
Tata Sault, Titen, Tanishq, Westside and the largest addition, Tata

The Tata Group has always believed in returning wealth
to the society it serves. Thus, nearly two-third of the equity of Tata
sons, the Tata Group's promoter company, is held by philanthropic trusts
have created a host of national institutes in community
development, education and research centers, hospitals and scientific
and cultural establishments. The trusts also give substantial annual
grants and
endowments to deserving individuals and institution in
the areas of education, healthcare and social upliftment.

combining ethical values with business acumen, globalization with
national interests and core
business with emerging ones, the Tata Group aims to be
the largest and most respected global brand from India whilst fulfilling
its long-standing commitment to improving the quality of life of its


International Group, Inc. (AIG) is the world's leading international
insurance and financial
services organization, with operations in approximately
130 countries and jurisdiction. AIG member companies serve commercial,
institutional and individual customers through the most extensive world
wide property-casualty and life insurance networks of
any insurer.

In the United States, AIG is the
largest underwriter of commercial and industrial insurance and is one of

the top three life insurers. AIG's global businesses
also include financial services, retirement savings and asset
management. AIG's financial services businesses include aircraft
leasing, financial products,
trading and market making.

growing global consumer finance business is led in the United States by
American General
Finance. AIG also has one of the largest U.S. retirement
savings businesses through AIG Sun America and AIG VALIC, and is a
leader in asset management for the individual and institutional markets,
specialized investment management capabilities in
equities, fixed income, alternative investments and real estate. AIG's
common stock is listed in the New York Stock Exchange, as well as the
exchanges in London, Paris, Switzerland and Tokyo.

Business Publications' Views about AIG




# 1

Fortune : Property & Casualty Stock Insurance Organization in Revenues and profits


# 2

Fortune : Most Admired Property and Casualty Insurance Company


# 4

On Forbes super 500


# 9

On Fortune 500



India, the Indian arm of AIG, established its presence in India in
1994. AIG entered India in 1945,
prior to nationalization of the insurance sector, and
had offices n several Indian cities. On opening up of the insurance
sector to private insurance company's in2000, AIG and the Tata Group
formed a Joint venture, Tata AIG.

AIG and its
affiliate funds have invested approximately $450 m in private equity in
India. These direct investments have been made in telecommunication. And
toll roads & bridges in the e infrastructure
sector. Besides, investments have also been made in the
manufacturing, technology, pharmaceuticals and retailing sector. AIG
continues to look with interest for made direct investment opportunities
these sectors and in new emerging sectors like
biotechnology, IT-enabled services etc.


The non-life insurance arm, Tata AIG General Insurance
Company, which started its operation in India on Jan 22, 2001, offers
the complete range of insurance for automobile, home personal, accident,

travel, energy, marine, property and casualty, as well
as several specialized financial lines.

be the fastest growing Life Insurance Company in India, measured by
annualized premium growth,
procuring persistent business, delivering
first class customer service, adding shareholder value by 2007.

Our Business Divisions
  • Agency Agency


  • Alternate Channels
  • GMD
  • Pensions
  • Direct Marketing

Financial Results For the fiscal 03-04

  • Total Premium : Rs 254 cr (253 % growth)
  • First year Premium Income: Rs 180 cr
  • Agent strength : 18,000
  • Life cover sold : 1,62,000



The business of insurance is related to the protection of the  
economic values of assets. Every
asset has a value. The asset would have been created
through the efforts of the owner. The asset is valuable to the owner,
because he expects to get some benefits from it. The benefit may be an
or some thing else. It is a benefit because it meets
some of his needs. In the case of a factory or a cow, the product
generated by is sold and income generated. In the case of a motor car,
it provides
comfort and convenience in transportation. There is no
direct income.

2. Every asset is expected to
last for a certain period of time during which it will perform. After
the benefit may not be available. There is a life time
for a machine in a factory or a cow or a motor car. None of them will
last fro ever. The owner is aware of this and he can so manage his
affairs that
by the end of that period or life time, a substitute is
made available. Thus, he makes sure that the value or income is not
lost. However, the asset may get lost earlier. An accident or some other

unfortunate event may destroy it or make it
non-functional. In that case, the owner and those deriving benefits
there from, would be deprived of the benefit and the planned substitute
would not have been
ready. There is an adverse or unpleasant situation.
Insurance is a mechanism that helps to reduce the effect of such adverse


The business of insurance started with marine business.
Traders, who used to gather in the Lloyd's coffee house in London,
agreed to share the losses to their goods while being carried by ships.
losses used to occur because of pirates who robbed on
the high seas or because of bad weather spoiling the goods or sinking
the ship/ the first insurance policy was issued in 1583 in England. In
insurance began in 1870 with life insurance being
transacted by an English company was the Albert. The first Indian
insurance company was the Bombay Mutual Assurance Society Ltd, formed in
This was followed by the Oriental Life Assurance Co. 

Later, the Hindustan Cooperative was formed in Calcutta, the United
India in Madras, the Bombay
Life in Bombay, the National in Calcutta, the New India
in Bombay, the Jupiter in Bombay and the Lakshmi in New Delhi. These
were all Indian companies, started as a result of the swadeshi movement
in the early 1900s. By the year 1956, when the life
insurance business was nationalized and the Life Insurance Corporation
of India (LIC) was formed on 1st September 1956, there were 170
and 75 provident fund societies transacting life
insurance business in India. After the amendments to the relevant laws
in 1999, the L.I.C. did not have the exclusive privilege of doing life
insurance business
in India. By 31/3/2002, eleven new insures had been
registered and had begun to transact life insurance business in India.


Assets are insured, because they are likely to be
destroyed, through accidental occurrences. Such possible occurrences are
called perils. Fire, floods, breakdowns, lightning, earthquakes, etc,
are perils.
If such perils cab case damage it the asset, we say that
the asset is exposed to that risk. Perils are the events. Risks are the
consequential losses or damages. The risk to an owner of a building,
of the peril of an earthquake, may be a few lakhs or a
few crores of rupees, depending on the cost of the building and the
contents in it.

. The risk only means that there is a possibility of
loss or damage. The damage may or may not happen. Insurance is done
against the contingence that it may happen. There has to be an
about the risk. Insurance is relevant only if there are
uncertainties. If there is no uncertainty about the occurrence of an
event, it cannot be insured against. In the case of a human being, death
is certain,
but the time of death is uncertain. In the case of a
person who is terminally ill, the time of earth is not uncertain, though
not exactly known. He cannot be insured.

Insurance does not protect the asset. It does not
prevent its loss due to the peril. The peril cannot be avoided through
insurance. The peril can sometimes be avoided, through better safety and
control management. Insurance only tries to reduce the
impact of the risk on the owner of the asset and those who depend on
that asset. It only compensates the losses- and that too, not fully.

. Only economic consequences can be insured. If the loss
is not financial, insurance may not be possible. Examples of
non-economic losses are love and affection of parents, leadership of
sentimental attachments to family heirlooms, innovative
and creative abilities, etc.

9. The mechanism
of insurance is very simple. People who are exposed to the same risks
together and agree that, if any one of them suffers a
loss, the others will share the loss and make good to the person who
lost. All people who send goods by ship are exposed to these risks,
which are
related to water damage, ship sinking, piracy, etc.
Those owning factors are not exposed to these risks, but they are
exposed to different kinds of risks like, fire, hailstorms, earthquakes,
burglary, etc. Like this, different kinds of risks can
be identified and separate groups made, including those exposed to such
risks. By this method, the heavy loss that any one of them may suffer
(all of
them may such losses at the same time) is divided into
bearable small losses by all. In other words, the risk is spread among
the community and the likely big impact on one is reduced to smaller
manageable impacts on all.

10. If a Jumbo Jet
with more than 350 passenger's crashes, the loss would run into crores
of rupees. No airline would be able to bear such a loss. It is unlikely
that many Jumbo Jets will crash at the same
time. If 100 airline companies flying Jumbo Jets, come
together into an insurance pool, whenever one of the Jumbo Jets in the
pool crashes, the loss to be borne by each airline would come down to a
lakhs of rupees. Thus, insurance is a business of

11. There are certain principles,
which make it possible for insurance to remain a fair arrangement. The
first is that it is difficult for any one individual to
bear the consequences of the risks that he is exposed to. It will become
bearable when the community shares the burden. The second is that the
peril should
occur in an accidental manner. Nobody should be in a
position to make the risk happen. In other words, none in the group
should set fire to his assets and ask others to share the costs of
damage. This would
be taking unfair advantage of an arrangement put into
place to protect people from the risks they are exposed to. The
occurrence has to be random, accidental, and not the deliberate creation
of the insured person.

The manner in which the loss is to be shared can
be determined before-hand. It may be proportional to the risk that each
person is exposed to. This would be indicative of the benefit he
would receive if he the peril befell him. The share
could be collected from the members after the loss has occurred or the
likely shares may be collected in advance, at the time of admission to
the group.
Insurance companies collect in advance and create a fund
from which the losses are paid.

13. The
collection to be made from each person in advance is determined on
assumption. While it may
not be possible to tell beforehand, which person will
suffer, it may be possible to tell, on the basis of past experiences,
how many person, on an average,  may suffer losses.

Insurance as a security Tools

The United Nations
Declaration of human Rights 1948 provides that "Everyone has a right to a
standard of living adequate for the health and wellbeing of himself and
his family, including food, clothing,
housing and medical care and necessary social services
and the right to security the event of unemployment, sickness,
disability, widowhood or other lack of livelihood in circumstances
beyond the control."

When the bread winner dies, to that extent, the family's
income dies. The economic condition of the family is affected, unless
other arrangements come into being to restore the situation. Life
provides if this did not happen, another family would be
pushed into the lower strata creates a cost on society. The lower
strata create a cost on society. Poor people cost the nation by way of
and doles and so on. Poor people also cost by way of
larger growth in population, poor education and vagaries in behavior of
children. Life insurance tends to reduce such costs. In this sense life
business is complementary to the state's efforts in
social management.

Under a socialistic system the
responsibility of full security would be placed upon the state to find
resources for providing social security. In the
capitalistic society, provisions of security are largely left to the
individuals. The society provides instruments, which can be used in
security this aim. Insurance
is one of them. In a capitalistic society too, there is a
tendency to provide some social security by the state under some
schemes, where members are required to contribute e.g. Social Security
Schemes in U.K.

In India, social security finds a place in our
constitution. Article 41 requires state, within the limits of its
economic capacity and development, to make effective provisions for
security right to work, to
education and to provide public assistance incase of
unemployment, old age, sickness, and disablement and in other cases of
undeserved want. Part of the state's obligations to the poorer sections
is met
through the mechanism of life insurance.

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