04-01-2013, 01:11 PM
HDFC Standard LifeHDFC Standard Life Insurance Company Ltd
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Introduction
HDFC Standard Life, one of India's leading private life insurance companies, offers a range of individual and group insurance solutions. It is a joint venture between Housing Development Finance Corporation Limited (HDFC), India's leading housing finance institution and Standard Life plc, the leading provider of financial services in the United Kingdom.
HDFC Standard Life's Product portfolio comprises solutions, which meet various customer needs such as Protection, Pension, Savings, Investment, and Health. Customers have the added advantage of customizing the Plans, by adding optional benefits called riders, at a nominal price. The company currently has 25 retail and 4 group products in its portfolio, along with five optional rider benefits catering to the savings, investment, protection and retirement needs of customers.
HDFC Standard Life continues to have one of the widest reaches among new insurance companies through a network of 595 offices serving over 700 cities and towns across the country. The company has also increased its depth in existing markets with a strong base of more than 2,007,000 Financial Consultants.
Housing Development Finance Corporation Limited is India's leading housing finance institution with a customer base of over 3.3 million. Standard Life plc is a leading provider of financial services from the United Kingdom, with a worldwide customer base of over 6.5 million.
Both the promoters are well known for their ethical dealings and financial strength, and are both committed to the long term future of the Indian life insurance industry.
Range of Solutions
HDFC SL offers a range of flexible insurance solutions, including retail and corporate products that can be tailored to meet specific customer needs.
HDFC SL corporate solutions have been designed to offer complete flexibility, combined with a competitive charging structure. These corporate solutions include products such as Group Term Insurance, Gratuity, Leave Encashment and Superannuation. These affordable plans can provide valuable benefits for employees, while reducing long-term costs for the employer.
For retail customers, HDFC SL has a wide range of protection and investment products to choose from.
HDFC SL Fund Management / Investment Policy
Security of investment is critical in the insurance business, and this is even more pertinent for corporate business. HDFC SL follows a stringent three tier process for managing client's investments. An investment committee drafts and continuously reviews its investment policies. This committee is assisted and advised by the portfolio management services of HDFC Asset Management Company. This advice is based on comprehensive guidelines for the portfolio asset class of each fund. The investment committee reviews the recommendations of HDFC AMC and decides to invest or divest.
The HDFC SL investment committee has drafted policy guidelines, which focus on value investing, asset liability management, long term investment horizon and risk mapping. We focus on every client and individual member and his / her risk appetite and investment preferences.
HDFC SL has further adopted various best practices towards its investment strategies, keeping in mind the twin objective of wealth creation and safety of funds, in the best interest of policyholders. Regular internal and statutory audits ensure the efficacy and safety of processes being followed.
INVESTMENT PROCESS
Fund Management Structure
HDFC SL has a strong 16-member investment team with relevant experience in the areas of accounting, funds management and dealing. Work experience of the team ranges from 3 to 10 years. The investment team comprises individuals who are experts in managing areas of market research, dealing, back office and mid office functions. HDFC SL also has access to a panel of 40 top research and brokerage firms who assist HDFC SL with sector specific research and feedback.
HDFC SL has an Investment Committee that has drafted an investment policy in compliance with IRDA Investment Regulations. All investment decisions are made by this committee after due consideration of the overall policy and taking view of information provided by the in-house Research team.
HDFC SL follows a 3-tier process for managing the investments of its policyholders.
At the first level is the Investment Committee, which drafts and continuously reviews the Investment Policy. The Investment Committee is also responsible for HDFC SL's long term Investment Strategy, Key decisions on Strategic asset allocation, Decisions on overall Investment guidelines and setting performance benchmarks and limits.
The second level is the HDFC SL core investment team, which has been given the mandate to assist and advice the Investment Committee through detailed research and recommendations. Their recommendations are based on the comprehensive guidelines created for the portfolio asset classes for each fund. The HDFC SL Investment team also refers the Investment committee sector specific recommendations to a panel of 40 empanelled research and brokerage firms, from the equity and debt markets.
Special Investment Tools
Every client has its own risk appetite and investment preference. HDFC SL uses special investment tools that help every corporate on a group level to create a portfolio that they are comfortable with. One such tool is :
Liability Profiling - The age and salary data of the Client is studied in detail. Based on categorization of this data, an appropriate fund can be selected. This is based on the perceived risk that each category is capable of bearing according to their age profile. HDFC SL offers this service to the trustees on a group level.
Corporate Segment
Employee benefit packages provided by Indian companies can be broadly divided into insurance benefits, such as life or disability insurance, and retirement benefits, such as Gratuity, Provident and Superannuation. Gratuity and Provident Fund benefits are mandatory for all companies, but all other benefits are offered on a voluntary basis.
Indian companies are progressively moving towards providing more appropriate compensation packages and benefit programs for employees. Increasingly, companies are finding that life insurance and employer funded retirement benefits are on the wish list of every prospective employee. While life insurance companies are currently not permitted to manage Provident Fund arrangements in India, all other insurance and retirement benefit products are offered by HDFC SL.
market trend
Prior to the liberalization in 1999, the nationalized insurance companies dominated the industry. The life insurance company was concentrating on the retail savings related policies such as money back and endowment products while the most popular product by far in employee benefit insurance in India has been the Group Personal accident policy. This has been mainly because of the requirement of the Workmens compensation Act, which requires any company employing workmen to pay compensation in the eventuality of death or disability (permanent or temporary) due to an accident. This product also comes priced at significantly lower levels as this covers only the accidental risk.
With the advent of multinationals and other private companies, the trend started changing. People were taking up high-pressure jobs, which meant that health became a major concern in employee welfare. It was evident that death due to health reasons was becoming more prevalent and that this risk was not covered by something as basic as the accident policy. Also there was an increasing role played by insurance companies in managing providing for retirement benefits such as Gratuity & Superannuation, which were beginning to be seen as an integral part of the employee benefit package.
Broadly, the employee benefit solutions provided by Insurance companies can be divided into insurance benefits and retirement benefits. Of all these benefits, only Gratuity is a mandatory benefit and the Accident insurance is taken to cover for the Workmens Compensation Act. The rest are all voluntary benefits offered by organizations. Other than life Insurance, retirement benefits, such as Gratuity, Superannuation and Leave-encashment, are all provided by life insurance companies. Most of these schemes today are offered in a new platform called the unit-linked platform that enables trustees of these funds to generate more realistic market linked returns and also enjoy the transparency and flexibility of their investments.
Typical benefit plan
A typical benefit plan for a multinational in India would include Gratuity & PF, which are mandatory benefits, where benefits are defined as per the statute and other voluntary benefits such as encashment of leave, a Superannuation benefit where 15% of monthly wages are contributed into a fund for purchase of pension on retirement and a life cover that is typically 3 to 5 times the annual emoluments.