CONSUMER BEHAVIOUR AND INVESTMENT PATTERN IN INSURANCE SECTOR WITH REFERENCE TO HDFC

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CONSUMER BEHAVIOUR AND INVESTMENT PATTERN IN INSURANCE SECTOR WITH REFERENCE TO HDFC STANDARD LIFE
IN PARTIAL FULFILLMENT FOR THE REQUIRMENT OF THE AWARD OF THE DEGREE OF MASTER OF BUSINESS ADMINISTRATION (2007-2009)

SUBMITTED TO
THE DIRECTOR OF DISTANCE EDUCATION ANNAMALAI UNIVERSITY GUIDED BY: DEAN OF NIS ACADEMY M.B.A. 2ND YEAR CHANDIGARH ENROLL.NO. - 4740700529 SUBMITTED BY: AMIT BHALLA

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STUDENT’S DECLARATION
I hereby declare that the project report conducted on ‘CONSUMER PATTREN IN BEHAVIOUR INSURANCE AND INVESTMENT WITH SECTOR

REFERENCE TO HDFC STANDARD LIFE’ is submitted in the partial fulfillment of the requirements for the award of the MASTER OF BUSINESS ADMINISTRATION IN APPLIED MANAGEMENT.

The project was undertaken as a part of the course of M.B.A. in Applied Management Programme in NIS ACADEMY under ANNAMALAI UNIVERSITY.

This is my original work and the same has not been submitted prizes. for the award of any other Degree/Diploma/Fellowship or other similar titles or

Place: Chandigarh Date: 30-03-09 Signature: Amit Bhalla

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ACKNOWLEDGEMENT
I would like to avail this opportunity to express my deep sense of gratitude to all those who have helped and encouraged me towards the successful completion of this project.

I am very grateful to Mr.Harpreet Singh Bhatia for his valuable suggestions, guidance and solving the problems throughout the project. Also, without his help, I would not have got a chance to undertake this work of study.

I would also like to thanks the following people who shared their precious knowledge and experience with me and provided me necessary guidance and help whenever required:

DR. PRIYANKA ROY MR. RAJESH

AMIT BHALLA

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CERTIFICATE

This is to certify that the project report is an original work Of Mr. Amit Bhalla and has not been submitted earlier to any other University or Institute.

Date: 15 March’2009

Signature & seal Mr.Harpreet Singh Bhatia

SYSTEMA-SHYAM TELESERVICES Ltd. New Delhi

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SYNOPSIS
CONSUMER BEHAVIOUR AND INVESTMENT PATTREN IN INSURANCE SECTOR WITH REFERENCE TO HDFC STANDARD LIFE INTRODUCTION: HDFC Standard Life in the insurance the world. is It is the is oldest the life

insurance world. In

company India,

largest life

insurer in the UK and is the 28th largest company in the company marketing insurance products and unit linked investment plans. From my research at HDFC SLIC, I found that the company has a lot of competition from other private insurers like ICICI, Aviva, Birla Sun Life and Tata AIG. It also faces competition from LIC. To compete and effectively more HDFC SLIC could with launch small

cheaper

reasonable

products

premiums and short policy terms (the number of year’s premium is to be paid). The ideal premium would be between Rs. 5000 – Rs. 25000 and an ideal policy term

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would be 10 – 20 years. Family responsibilities and high returns are the two main reasons people invest in insurance. Optimum returns of 16 – 20 % must be provided to consumers to keep them interested in purchasing insurance. WHAT IS LIFE INSURANCE? Life insurance is a form a of contract who between gets the

insurance company

and

person

his life

assured, for the payment of a sum of money on the unfortunate happening of an event. The payment is made to the insurer on the date of maturity or at a specific date, at different death. period Under to the risk intervals terms or of at the Life an unfortunate the earlier the

contract a person who gets his life assured has to pay premium is periodically universally insurance. to be and insurance investment acknowledged

which

eliminates

substituting

certainty for uncertainty and comes to the timely aid of the family in unfortunate event of death. PROJECT OBJECTIVE: The insurance industry has never been in such lime light as it is now. It is witnessing an unprecedented boom. The massive upheaval in insurance sector has
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opened gates for private insurance as well. The Indian market of life insurance is flooded with private companies vying with each other to create a niche for themselves. Thus project undertaken is a market survey pertaining to mind set and inclination towards the life insurance. PROBLEMS: So though the study aims to achieve the above

mentioned Objective in full earnest and accuracy, it may be hampered due to certain problems. Some of the problems are as follows: • To cover the various section for the society. • Respondents may not be at home and may have to re-contacted or replaced by others. • Getting accurate response from the respondents due to their inherent problem is difficult. • Limited response from client. There is a time limitation it is not possible to study whole thing I covered some special aspect as well as some topics METHODOLOGY:

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Marketing research is a systematic and objective study of problems pertaining to the marketing of goods and services. Market research specifies the information required to address these issues; designs the method of collecting information; manages and implements the data collection process; analysis the results and communicates the findings and their implications. For the survey a sample size of 100 was taken. The questionnaire was designed in such manner that it is self explanatory, and the data thus collected has been very comprehensive one. Then a task of tabulating the whole data, editing the whole data and finally analyzing the data was done to come out with certain conclusion. The questionnaire consisted of 12 questions regarding the awareness of insurance and private insurance companies. The criteria for a sample were: ? Age : 25-60 years ? Sex : Male/ female of income : Salaried class,

? Source

Businessmen , Self employed ? Income Group : Middle income group

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CONCLUSION: Over the past four years, around 40 companies have expressed foreign interest and in entering the sector have and many Indian companies arranged

anticipatory alliances. The threat of new players taking over the market has been overplayed. As is witnessed in other countries where liberalization took place in recent year we can safely conclude that nationalized players will continue there to be hold strong market for share new positions, but enough business

entrants to be profitable. Opening products, explore up the sector will and and certainly improved marketing mean new

better new

packaging

customer channels.

service. Both new and existing players will have to distribution Potential buyers for most of this insurance lie in the middle class. New insurers must segment the market carefully to arrive at appropriate products and pricing. Recognizing the potential, in the past three years, the nationalized insurers have already begun to target niches like pensions, women or children. There should be efforts made by different Insurance Companies to increase awareness among general public. This can be done by doing advertising through various Medias.
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INTRODUCTION OF HDFC STANDARD LIFE

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INTRODUCTION
There are only two broad classifications of insurance companies: ? Life insurance ? Non-life insurance WHAT IS LIFE INSURANCE? Life insurance is a form of contract between the insurance company and a person who gets his life assured, for the payment of a sum of money on the unfortunate happening of an event. The payment is made to the insurer on the date of maturity or at a specific date, at different period intervals or at unfortunate earlier death. Under the terms of the contract a person who gets his life assured has to pay the premium periodically to the insurance. Life insurance is universally acknowledged to be an investment which eliminates risk and substituting certainty for uncertainty and comes to the timely aid of the family in unfortunate event of death.
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WHY LIFE INSURANCE? Life insurance has come a long way from the earlier days when it was originally conceived as a risk covering medium for short periods of time, covering temporary risk situations. As life insurance become more established it was realized what a useful tool it was for a number of situations. These are: 1. Temporary needs 2. Regular savings 3. Investment 4. Retirement 1. Temporary Needs: The original purpose of life insurance remains an important element, namely providing for replacement of income on death etc. 2. long Regular savings: term exercise(through
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Providing for one’s family and oneself as a medium to a series of a regular

payment of a premium).This has become more relevant in recent times as people seek financial independence for their family. 3. Put Investment: simply saving the from where building the the are up of of savings inflation. makes a lump one while Unlike sum off ravages

safeguarding regular payment. 4. investments

products

traditionally

individual

Retirement: for latter years becomes increasingly

Provision

necessary, especially in a changing culture and social environment. One can buy a suitable insurance policy which will provide periodical payment in one’s old age. No one likes to think about dying especially when they are young but everyday people die in car accidents, of illness like cancer, aids, fire or other accidents. If something like this happens to you what would happen to your family? Would they have enough money to pay for? : ? Your funeral cost ? Debts you owe like credit bills car payments mortgage on your home.

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? Child care ? Your children’s education The most important reason to buy life insurance policy is to protect your family by making sure that they have enough money if something happens to you. One type of insurance called “Permanent insurance” can also help you to save money for retirement or get collateral for a loan.

HDFC STANDARD LIFE
THE PARTNERSHIP: HDFC and Standard possible joint Life first to came together for a the life insurance

venture,

enter

market, in January 1995. It was clear from the outset that both companies shared similar values and beliefs and a strong relationship quickly formed. In October 1995 the companies signed a three year joint venture agreement. Around this time Standard Life purchased a 5% stake in HDFC, further strengthen the relationship.

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The next three year were filled with uncertainty, due to changes in government and ongoing delays in getting the IRDA (Insurance Regulatory and Development authority) Act passed in parliament. Despite this both remained firmly committed to the venture. In October this 1998, time the joint venture Life agreement made 2% was of Ltd.

renewed Around (IDFC).

and

additional

resource Finance

available.

Standard

purchased

Infrastructure

Development

Company

Standard Life also started to use the services of HDFC Treasury department to advise them upon their investments in India. Towards the end of 1999, the opening of the market looked very promising and both companies agreed the time was right to move the operation to the next level. Therefore, in January 2000 an expert team from HDFC to form the core project team, based in Mumbai. Around this time Standard Life purchased a further 5% stake in HDFC and a 5% stake in HDFC Bank. In a further in development the Asset Standard Life agreed to participate Management Company

promoted by HDFC to enter the Mutual Fund market. The Mutual Fund was launched on 20th July 2000.
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INCORPORATION: Incorporation of HDFC Standard Life Insurance

Company Limited: The company was incorporated on 14th August 2000 under the name of HDFC Standard Life Insurance Company Ltd. Our ambition from as far as October 1995 was to be the first private company to re-enter the life insurance market in India. On the 23rd of October 2000, this ambition was realized when HDFC Standard Life was the only life company to be granted a certificate of registration. HDFC are the main shareholders in HDFC Standard Life, with 81.4%, while Standard Life owns 18.6%. Given Standard Life’s existing investment in the HDFC Group, this is the maximum investment allowed under current regulations.HDFC and Standard Life have a long and close relationship built upon shared values and trust. The ambition of HDFC Standard Life is to mirror the success of the parent companies and be the yardstick by which all other insurance company’s in India are measured.

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MISSION: We aim to be top new life insurance company in the market. This does not just mean being the largest or the most productive company in the market, rather it is a combination of several things like? Customer service of the highest order ? Value of money for customer ? Professionalism in carrying out business ? Innovative products to cater to different needs of different customer ? Use of technology to improve service standards ? Increasing market share VALUES: Security: Providing long term financial security to our policy holders will be our constant endeavor. We will be do this by offering life insurance and pension products.

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Trust:

We appreciate the trust placed by our policy

holders in us. Hence, we will aim to manage their investments very carefully and live up to this trust. Innovation: Recognizing the different needs of our customers, we will be offering a range innovative product to meet these needs. Our mission is to the best new life insurance company in India and these are the values that will guide us in this.

BELOW ARE FEW OF THE PLANS THAT ARE OFFERED BY HDFC STANDARDS LIFE INSURANCE INSURANCE PLANS AVAILABLE

Individual Products:
We at HDFC Standard Life realize that not everyone has the same kind of needs. Keeping this in mind, we have a varied range of Products that you can choose from to suit all your needs. These will help secure your future as well as the future of your family. Protection Plans You can protect your family against the loss of your income or the burden of a loan in the event of your unfortunate demise, disability or sickness. These

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plans offer valuable peace of mind at a small price. Our Protection range includes our Term Assurance Plan & Loan Cover Term Assurance Plan.

Investment Plans Our Single Premium Whole Of Life plan is well suited to meet your long term investment needs. We provide you with attractive long term returns through regular bonuses. Pension Plans Our Pension Plans help you secure your financial independence even after retirement. Our Pension range includes our Personal Pension

Plan, Unit Linked Pension, Unit Linked Pension Plus Savings Plans Our Savings Plans offer you flexible options to build savings for your future needs such as buying a dream home or fulfilling your children immediate and future needs. Our Savings range includes Endowment Assurance Plan, Unit Linked Endowment, Unit Linked

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Endowment Plus, Unit Linked Endowment Plus II, Back, Plus II. Children’s, Unit Linked Young Star, Unit Linked Young Star Plus, Unit Linked Young Star

Group Products
One-stop shop for employee-benefit solutions HDFC Standard Life has the most comprehensive list of products solutions for to progressive their employers We who offer wish to provide the best and most innovative employee benefit employees. different products for different needs of employers ranging from term insurance plans for pure protection to voluntary plans such as superannuation and leave encashment. We now offer the following group products to our esteemed corporate clients: Group Group Group An Term Insurance Variable Term Insurance Unit-Linked Plan investment solution that

provides

funding

vehicle to manage corpuses with Gratuity, Defined Benefit or Defined Contribution Superannuation or Leave Encashment schemes of your company Also suitable for other employee benefit schemes
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such

as

salary

saving

schemes

and

wealth

management schemes

SOCIAL PRODUCT Development Insurance Plan
Development Insurance plan is an insurance plan which provides life cover to members of a Development Agency for a term of one year. On the death of any member of the group insured during the year of cover, a lump sum is paid to those member beneficiaries to help meet some of the immediate financial needs following their loss. Eligibility Members of the development agency and their spouses with: - Minimum age at the start of the policy 18 years last birthday - Maximum age at the start of policy 50 years last birthday Employees of the Development Agency are not eligible to join the group. The group to be covered is only eligible if it contains more than 500 members.

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Premium Payments The premium to be paid will be quoted per member in the group and will be the same for all members of the group. The premium can only be paid by the Development Agency as a single lump sum that includes all premiums for the group to be covered. Cover will not start until the premium and all the member information in our specified format has been received. The premium rate is Rs. 25 per Rs. 10,000 of lump sum, per member. Benefits On the death of each member covered by the policy during the year of cover a lump sum equal to the sum assured will be paid to their beneficiaries or legal heirs. Where the death is as a result of an accident, an additional lump sum will be paid equal to half the sum assured. There are no benefits paid at the end of the year of cover and there is no surrender value available at any time. The role of the Development Agency Due to the nature of the groups covered, HDFC Standard Life will be passing certain administrative tasks onto

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the Development Agency. By passing on these tasks the premium charged can be lower. These tasks would include: Submission of member data in a specified computer format Collection of premiums from group members Recording changes in the details of group members Disbursement of claim payments and the mortality rebate (if any) to group members These tasks would be in addition to the usual duties of a policyholder such as: Payment of premiums Reporting of claims Keeping policy holder information up to date Training and support will be available to give guidance on how to complete Agency, the the tasks appropriately. Agency may Since these additional tasks will impose a burden on the Development Development charge a Rs. 10 administration fee to their members.

Prohibition of rebates

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Section 41 of the Insurance Act, 1938 states No person shall allow or offer to allow, either directly or indirectly, as an inducement to any person to take out or renew or continue an insurance in respect of any kind of risk relating to lives or property in India, any rebate of the whole or part of the commission payable or any rebate of the premium shown on the policy, nor shall any person taking out or renewing or continuing a policy accept any rebate, except such rebate as may be allowed in accordance with the published prospectus or tables of the insurer If any person fails to comply with sub regulation

(previous point) above, he shall be liable to payment of a fine which may extend to rupees five hundred

Tax Benefits

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INCOME SECTION

TAX GROSS ANNUAL HOW SALARY

MUCH HDFC

STANDARD

TAX CAN YOU LIFE PLANS SAVE?

Sec. 80C

Across All income Slabs

Upto Rs. 33,990 saved on investment of Rs. 1,00,000.

All the life insurance plans.

Sec. 80 CCC

Across all income slabs.

Upto Rs. 33,990 saved on Investment of Rs.1,00,000.

All the pension plans.

Sec. 80 D*

Across all income slabs

Upto Rs. 3,399 saved on Investment of Rs. 10,000.

All the health insurance riders available with the conventional plans.
Rs37,389

TOTAL SAVINGS POSSIBLE **

Rs. 33,990 under Sec. 80C and under Sec. 80 CCC , Rs.3,399 under Sec. 80 D, calculated for a male with gross annual income exceeding Rs. 10,00,000. Under Sec. 10(10D), the benefits you receive are completely tax-free, subject to the conditions laid down therein.

Sec. 10 (10)D

S.W.O.T ANALYSIS OF HDFC

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STRENGTHS • Strong tie up • Brand Equity • Strong Network
•

WEAKNESSES • Low Customer awareness • Less promotion

Huge Customer Database

• Strong Financial Base

OPPORTUNITIES
•

THREATS • Government policies • Cut throat competition • Low customer awareness rural

Large uninsured population

• Network Building • Targeting segment the

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MARKETING MIX POLICIES
Different companies can choose to position themselves differently and hence the Marketing Mix is different. However, there are certain common characteristics that one can cull out from the possible strategies that companies adopt.

PRODUCT: The development of flexible products to suit individual requirements insurance is what will not differentiate standardized the winners insurance from the also-rans. The key to success is in providing solutions, products. The concept of riders/optional benefits has already been a huge innovation brought about by the new players, for which has led to customization of products individual needs. However, companies

may differentiate themselves on the basis of product segments that they choose to focus on and excel in.

PLACE: Different channel companies options are may however agency choose force, different corporate

channels and different geographies to focus on. The tied agents and brokers and this is an area where different
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companies

will

make

different

choices.

Many

companies like HDFC Standard Life are focusing on all channels whereas companies like Max New York Life are focusing on the tied agency force only. Customer interface will be a key challenge for life insurance companies and includes every that interaction that the customer has with the company, such as sales, new business underwriting, policy servicing, premium payments, claim processing and so on. Technology can play a crucial role in delivering the highest standards of service set by the company and it will be imperative for any serious player to excel in all of these.

PRICE: Price is a relevant differentiator only in two segments - pure term insurance and in pure annuities. Here too, service delivery and financial strength will need to be present at a minimum acceptable level for price to be a relevant products, differentiator. long-term In case of savings oriented more returns generated are

relevant than just the price of the product. A focus on generating good investment performance and keeping a tight control on costs help in generating good longterm maturity value for customers. Norms have been laid down on all of these by IRDA and adhering to these while delivering good returns will be a challenge.
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PROMOTION AND ADVERTISING: The level of demand is latent and will have to be activated considerably. The market needs to be developed. Greater awareness of insurance and the need to have it as a protection tool rather than as a tax planning measure needs to be appreciated by the Indian people. Various direct all this communication marketing and different tools and including shows take advertising, contribute to road companies

different approaches on these.

PROCESS: Cashless settlement: One of the most defining and customer-friendly changes that we’ve seen in recent years relates to the way claims settlements are made. The advent has of the third-party the administrator to the (TPA) hugely regime facilitated transition

convenient era of cashless settlement of health and auto insurance claims. TPAs are entities who process claims on behalf of insurers: the IRDA licenses them after it is satisfied that they have the financial strength, the trained manpower, the infrastructure and the skills to undertake this activity.

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Likewise, with auto insurance, the TPA ties up with garages and authorized service centers for cashless settlement of auto insurance claims.

Lower premiums: The spirit of competition and the broadening of the risk experience of insurance companies have contributed to a fall in premiums over the years. That’s because, other things being equal, an insurer who covers the lives just of 10 people bears a higher risk than an insurer who covers the lives of, say, 100 people. Further, a broader base will provide greater efficiencies and experience, on costs A such broad as distribution, of the the insurers management mortality claims. basing

therefore,

gives

elbowroom to compete by lowering premiums, and that trend is expected to continue.

Premium payment flexibility: Insurers have imparted certain flexibility to premium payment options in order to address this concern. For instance, one now have the option to pay your premiums upfront, which is then carried forward for the tenure of the policy. The yearly premiums are drawn from the initial corpus. Insurers have also introduced the concept of ‘automatic cover maintenance’ to protect your policy from lapsing owing to your omission to pay your premium on time. Under
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this, in the event of your not paying the premium, the insurer dips into your investment account to the extent of the premium. Of course, this comes with an in-built drawback: your investment portion diminishes year on year to the extent of the amount paid to cover your risk.

Physical Evidence: This can play a significant role for marketing in the Indian scenario. Since Internet users are comparatively lesser than countries such as US, the offline mode will be preferred in India. Although the distribution model is largely agent-based, wherever the customer is in contact with the company, this factor can play a significant role in luring the customer.

People: The most important factor that materializes sales and maintains customer relationships on a long-term basis is this factor. No matter what distribution strategy a company adopts, customer relationship has to be taken care of in order to maintain the customer base on a long-term basis.

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GROUP COMPANIES
HDFC LIMITED: HDFC home was incorporated by an in 1977 with the primary to was

objective of meeting a social need – that of promoting ownership for with HDFC providing housing share a initial is long-term needs. capital finance HDFC of households promoted million. their

Rs.100 managed

professionally

organization with a board of directors consisting of eminent persons who represent various fields including finance, taxation, construction and urban policy and development. HDFC BANK LIMITED: The Housing Development Finance Corporation Limited (HDFC) was amongst the first to receive an ‘inprinciple’ approval from the Reserve Bank of India (RBI) to set up a bank in the private sector, as part of the RBI’s liberalization of the Indian Banking Industry in 1994. The bank was incorporated in August 1994 in the name of ‘HDFC Bank Limited’, with its registered office in Mumbai, India.

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Bank’s across

aim

is

to

build

sound so

customer as to

franchises sound

distinct

businesses

build

customer franchises across distinct businesses so as to be the preferred provider of banking services in the segments that healthy growth the in bank operates in profitability, and to achieve with the consistent

bank’s risk appetite. HDFC ASSET MANAGEMENT COMPANY LIMITED: A mutual fund is a common pool of money in to which investors with common investment objective place their contributions that are to be in accordance with the stated from investment the investor objective in to of the that scheme. are The / investment manager would invest the money collected assets defined permitted by the stated objective of the scheme. For example, an equity fund would invest equity and equity related instruments and a debt fund would invest in bonds, debentures, with gilts the etc. most The mission is to provide customers useful investment

guidance and investment-related services available in the country. It is a one-stop solution for all investment needs, one that will help you get the most out of your money.

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HDFC SECURITIES LIMITED: HDFC sec is a brand brought by HDFC Securities Ltd, which has been promoted by the HDFC Bank & HDFC with the objective of providing the diverse customer base of the HDFC Group and other investors a capability to transact in the Stock Exchanges & other financial market transactions. HDFC sec, will equip with the necessary tools to allocate, select and manage investments wisely, and also support it with the highest standards of service, convenience and hasslefree trading tools. HDFC REALITY LIMITED: HDFC realty.com is a real estate site that aims to bring credibility realty.com and one trust can to property dealers. At HDFC meet Customer Relationship

Manager for any assistance one may require at various stages of property dealing.

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HDFC CHUBB GENERAL INSURANCE COMPANY LIMITED: It’s a partnership that leverages the strengths of two financial powerhouses-combining the trust and local experiences expertise of Chubb. Individually, you can count on specialized products that cover not only you and your family (Personal Accident, Travel and Health Insurance) but also your possessions (Motor and Home Insurance). For businesses, there’s a range of innovative Commercial and Specialty Insurance offerings that can be custom designed to peace of mind to your employees and superior value to your organization. of HDFC, with the one years’ proven

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INSURANCE SECTOR IN INDIA

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THE INSURANCE INDUSTRY IN INDIA
AN OVERVIEW

With the largest number of life insurance policies in force in the world, Insurance happens to be a mega opportunity in India. It’s a business growing at the rate of 15-20 per cent annually and presently is of the order of Rs 1560.41 billion (for the financial year 2006 – 2007). Together with banking services, it adds about 7% to the country’s Gross Domestic Product (GDP). The gross premium collection is nearly 2% of GDP and funds available with LIC for investments are 8% of the GDP. Even so nearly 65% of the Indian population is without life insurance cover while health insurance and nonlife insurance A continues large part to of be our below international is also standards. population

subject to weak social security and pension systems with hardly any old age income security. This in itself is an indicator that growth potential for the insurance sector in India is immense. A well-developed funds for and evolved insurance sector is and

needed for economic development as it provides long term infrastructure development strengthens the risk taking ability of individuals. It is estimated that over the next ten years India would
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require investments of the order of one trillion US dollars. The Insurance in sector, to some extent, can to enable investments www.indiacore.com) HISTORICAL PERSPECTIVE The history of life insurance in India dates back to 1818 when it was conceived as a means to provide for English Widows. Interestingly in those days a higher premium was charged for Indian lives than the non Indian lives, as Indian lives were considered more risky to cover. The Bombay Mutual Life Insurance infrastructure development

sustain the economic growth of the country. (Source:

Society started its business in 1870. It was the first company to charge the same premium for both Indian and non-Indian lives. The Oriental Assurance Company was established in 1880. The General insurance business in India, on the other hand, can trace its roots to Triton Insurance Company Limited, the first general insurance company established in the year 1850 in Calcutta by the British. Till the end of the nineteenth century insurance business was almost entirely in the hands of overseas companies.

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Insurance regulation formally began in India with the passing of the Life Insurance Companies Act of 1912 and the Provident Fund Act of 1912. Several frauds during the 1920's and 1930's sullied insurance business in India. By 1938 there were 176 insurance companies. The State first comprehensive over Indian the grew legislation insurance at a was introduced The after their

with the Insurance Act of 1938 that provided strict Control business. pace insurance business faster

independence.

companies

strengthened

hold on this business but despite the growth that was witnessed, insurance remained an urban phenomenon. The Government of India in 1956, brought together over 240 private life insurers and provident societies under one nationalized monopoly corporation and Life Insurance Corporation (LIC) was born. Nationalization was justified on the grounds that it would create the much needed funds for rapid industrialization. This was in conformity with the Government's chosen path of State led planning and development. The non-life insurance business continued to thrive with the private sector till 1972. Their operations were restricted in 1972. to organized this, trade nearly
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and

industry

in

large were

cities. The general insurance industry was nationalized With 107 insurers

amalgamated National Company,

and

grouped Company, Insurance

into New

four India

companiesAssurance and United

Insurance Oriental

Company

India Insurance Company. These were subsidiaries of the General Insurance Company (GIC).

KEY MILESTONES
1912: enacted The as Indian the Life Assurance to Companies the Act life

first

statute

regulate

insurance business. 1928: The Indian Insurance Companies Act enacted to enable the government to collect statistical information about both life and non-life insurance businesses. 1938: Earlier legislation consolidated and amended by the Insurance Act with the objective of protecting the interests of the insuring public. 1956: 245 Indian societies and were LIC foreign taken Act insurers over 1956by with along the a with

provident Act of

central capital

government and nationalized. LIC was formed by an Parliamentcontribution of Rs. 5 crore from the Government of India.
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INDUSTRY REFORMS

Reforms in the Insurance sector were initiated with the passage of the IRDA Bill in Parliament in December 1999. The IRDA since its incorporation as a statutory body in April 2000 has fastidiously stuck to its schedule of framing regulations and registering the private sector insurance companies. Since being set up as an independent statutory body the IRDA has put in a framework of globally compatible regulations. The other decision taken simultaneously to provide the supporting systems to the insurance sector and in particular the life insurance companies was the launch of the IRDA online service for issue and renewal of licenses to agents. The approval of institutions for imparting training to agents has also ensured that the insurance companies would have a trained workforce of insurance agents in place to sell their products.

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PRESENT SCENARIO - LIFE INSURANCE INDUSTRY IN INDIA
The life insurance 47.38%, billion fiscal industry with the in India year grew by at an Rs.

impressive 1560.41 the last

premium fiscal

income

during year

2006-2007. to the

Though the total volume of LIC's business increased in (2006-2007) compared previous one, its market share came down from 85.75% to 81.91%. The 17 private insurers increased their market share from about 15% to about 19% in a year's time. The figures for the first two months of the fiscal year 2007-08 also speak of the growing share of the private insurers. The share of LIC for this period has further come down to 75 percent, while the private players have grabbed over 24 percent. With the opening up of the insurance industry in India many foreign players have entered the market. The restriction on these companies is that they are not allowed to have more than a 26% stake in a company’s ownership.

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Since the opening up of the insurance sector in 1999, foreign investments of Rs. 8.7 billion have poured into the Indian market and 19 private life insurance companies have been granted licenses. Innovative products, smart marketing, and aggressive distribution have enabled fledgling private insurance companies to sign up Indian customers faster than anyone expected. Indians, who had always seen life insurance as a tax saving device, are now suddenly turning to the private sector and snapping up the new innovative products on offer. Some of these products include plans, plans. investment pension plans with insurance and and good back returns (unit linked plans), multi – purpose insurance plans, child plans money

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COMPANIES

INDIAN PROMOTER ICICI HDFC Aditya Birla Group Kotak Mahindra Finance Max India TATA Group Vyasa Bank Bajaj Auto Reliance Group Dabur India State Bank of India J & K Bank, Pallonji & Co. Sahara LIC

FOREIGN PROMOTER Prudential PLC, UK Standard Life, UK Sunlife Financial, Canada Old Mutual Plc, South Africa New York Life, USA American International Group,USA ING Group, Nether Land Allianz AG None AVIVA PLC Cardiff, France Metropolitan Life Insurance None None

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MAX NEW YORK LIFE INSURANCE
Max New York Life Insurance Company Limited is a joint venture that brings together two large forces Max expert India in Limited, life a multi-business The very corporate, of our together with New York Life International, a global insurance. nature business makes us highly customer-sensitized at Max New York Life. They believe in building relationships with the people we serve, so that our customers enjoy the highest quality of service in life insurance. This fact comes alive from our defining qualities, all of which are outlined below. They are experts in life insurance: New York Life has over 160 years of experience in the life insurance business. It is a Fortune 100 company that has been trusted by millions worldwide, across generations. Their existence is rooted integrity in and our commitment to We financial strength, responsibility.

have increased our capitalization requirement to Rs. 527 crore from the initial Rs.100 crore that has been

51

stipulated

by

the

Insurance

Regulatory

and

Development Authority (IRDA). Our investments are confined only to debt instruments and we meet both Indian and US reporting norms. Max New York Life also deposits one per cent of the premium income with the RBI, towards Contingency Funds. They have the best Agent Advisors in the business. Backed by the best training and infrastructure, our expert Agent Advisor will spend time evaluating your needs rather than just selling. They are professionals who will thoroughly understand your needs before recommending the policy tailored to meet them. They offer the best products with Flexibility as our cornerstone, so you can buy just what you need. With our various Products and Riders, you have more than 400 product combinations to choose from. Transparency is the bedrock of the way we do business. This is why they customize a Personal Insurance Plan, which gives you a broad overview of the details of your policy along with a year-on-year summary, even before you buy. And with the policy review period option you even have the unconditional right to return
52

the policy, if you so wish, within 15 days of receiving it. They offer you multiple bonus options, which includes options such as annual bonus, bonus accumulated and paid on maturity, bonus used to offset premiums, bonus utilized to buy Paid up additions and bonus used to buy one-year term insurance. So, you can decide how you want to use your bonus payments.

They have a national presence with a network of 57 offices in 37 cities across India. They are always there when you need us. Their Customer Helpline and Their branch office network will ensure that you can get in touch with them whenever you want.

ICICI Prudential Life Insurance Company
ICICI Prudential Life Insurance Company is a joint venture between ICICI Bank, a premier financial powerhouse and Prudential plc, a leading international financial services group headquartered in the United Kingdom. ICICI Prudential was amongst the first private sector insurance companies to begin operations

53

in

December

2000

after

receiving

approval

from

Insurance Regulatory Development Authority (IRDA). ICICI Prudential's equity base stands at Rs. 11.85

billion with ICICI Bank and Prudential plc holding 74% and 26% stake respectively. In the financial year ended March 31, 2005, the company garnered Rs 1584 crore of new business premium for a total sum assured of Rs 13,780 crore and wrote nearly 615,000 policies. The company has a network of about 56,000 advisors; as well as 7 banc assurance and 150 corporate agent tie-ups. For the past four years, ICICI Prudential has retained its position as the No. 1 private life insurer in the country, with a wide range of flexible products that meet the needs of the Indian customer at every step in life.

Tata AIG Life Insurance Company
Tata AIG Life Insurance Company Ltd. "Tata AIG Life" offers a broad array of life insurance products to individuals, associations and businesses of all sizes, with a wide variety of additional coverage to ensure their customers can find an insurance product to meet their needs.

54

Tata AIG is a joint venture of the Tata Group and American International Group, Inc. (AIG).

THE TATA GROUP
The Tata Group (www.tata.com) is one of India's bestknown industrial groups with an estimated turnover of around India's US $14.25 With the billion more (approximately than sector. in Indian 220,000 The 2.6% of GDP). in employees Tata Group firsts,

across 91 major companies, it is also India's largest employer pioneered private firsts several industry

including: India's first private sector steel mill, first private sector power utility, first luxury hotel chain and first international by companies airline, such as amongst Tata others. Recently, the Tata Group's pioneering spirit has been showcased Consultancy Services (TCS), Asia's largest software and Services Company, and Tata Motors, the first car maker in a developing country to design and produce a car from the ground up.

AIG
American International with Group, Inc. in is more the world's 130 leading international insurance and financial services organization, operations than

55

countries serve customers

and

jurisdictions. the

AIG

member and

companies individual worldwide

commercial, through

institutional most

extensive

property-casualty and life insurance networks of any insurer. In the United States, AIG companies are the largest insurer. retirement underwriters AIG's of commercial businesses and also and industrial include asset businesses insurance and AIG American General is a top-ranked global services, AIG's financial financial services, services

management.

include aircraft leasing, financial products, trading and market making. American General Finance leads AIG s growing global consumer finance business in the United States. AIG also has one of the largest U.S. retirement savings businesses through AIG SunAmerica and AIG VALIC, and is a leader in asset management for the individual and institutional management markets, with in specialized investment capabilities

equities, fixed income, alternative investments and real estate. AIG's common stock is listed in the New York Stock Exchange and ArcaEx, as well as the stock exchanges in London, Paris, Switzerland and Tokyo.

Life Insurance of India
Life Insurance in its modern form came to India from England in the year 1818. Oriental Life Insurance

56

Company started by Europeans in Calcutta was the first life insurance company on Indian Soil. Bombay Mutual Life Assurance Society heralded the birth of first Indian life insurance company in the year 1870, and covered Indian lives at normal rates. Starting as Indian enterprise with highly patriotic motives, insurance companies came into existence to carry the message of insurance and social security through insurance to various sectors of society. Bharat Insurance Company (1896) was also one of such companies inspired by nationalism. In the year 1912, the Life Insurance Companies Act, and the Provident Fund Act were passed. The Life Insurance Companies Act, 1912 made it necessary that the premium rate tables and periodical valuations of companies should be certified by an actuary. But the Act discriminated between foreign and Indian companies on many accounts, putting the Indian companies at a disadvantage.

The first two decades of the twentieth century saw lot of growth in insurance business. From 44 companies with total business-in-force as Rs.22.44 crore, it rose to 176 companies crore in with total During many business-in-force the mushrooming financially as of Rs.298 1938.

insurance

companies

unsound

concerns were also floated which failed miserably. The

57

Insurance Act 1938 was the first legislation governing not only life insurance but also non-life insurance to provide strict state control over insurance business. The demand was for nationalization repeatedly 1938 was in of life insurance but in it the industry Life made Act the past

gathered momentum in 1944 when a bill to amend the Insurance introduced Legislative Assembly. However, it was much later on the 19th of January, 1956, that life insurance in India was nationalized. About 154 Indian insurance companies, 16 non-Indian companies and 75 provident were operating in India at the time of nationalization. Nationalization over by means of was of India accomplished an Ordinance, passed of India the was in and Life two stages; the initially the management of the companies was taken later, ownership too by means of a comprehensive bill. The Parliament Insurance Insurance on 1st Corporation Act on the 19th of June 1956, and the Life Corporation created September, 1956, with the objective of spreading life insurance much more widely and in particular to the rural areas with a view to reach all insurable persons in the country, providing them adequate financial cover at a reasonable cost. LIC had 5 zonal offices, 33 divisional offices and 212 branch offices, apart from its corporate office in the

58

year 1956. Since life insurance contracts are long term contracts and during the currency of the policy it requires a variety of services need was felt in the later years to expand the operations and place a branch office at each district headquarter. Re-organization of LIC took place and large numbers of new branch offices were opened. As a result of re-organization servicing functions were transferred to the branches, and branches were made accounting units. It worked wonders with the performance of the corporation. It may be seen that from about 200.00 crores of New Business in 1957 the corporation crossed 1000.00 crores only in the year 1969-70, and it took another 10 years for LIC to cross 2000.00 crore mark of new business. But with re-organization happening in the early eighties, by 1985-86 LIC had already crossed 7000.00 crore Sum Assured on new policies. Today LIC functions with 2048 fully computerized

branch offices, 100 divisional offices, 7 zonal offices and the Corporate office. LIC’s Wide Area Network covers 100 divisional offices and connects all the branches through a Metro Area Network. LIC has tied up with some Banks and Service providers to offer online premium collection facility in selected cities. LIC’s ECS and ATM premium payment facility is an addition to customer convenience. Apart from on-line

59

Kiosks

and

IVRS, at

Info

Centers Ahmedabad,

have

been

commissioned

Mumbai,

Bangalore,

Chennai, Hyderabad, Kolkata, New Delhi, Pune and many other cities. With a vision of providing easy access to its policyholders, LIC has launched its SATELLITE SAMPARK offices. The satellite offices are smaller, leaner and closer to the customer. The digitalized facilitate records anywhere of the satellite and offices many will other servicing

conveniences in the future. LIC continues to be the dominant life insurer even in the own liberalized past scenario LIC of has Indian issued insurance over one and is moving fast on a new growth trajectory surpassing its records. crore policies during the current year. It has crossed the milestone of issuing 1,01,32,955 new policies by 15th Oct, 2005, posting a healthy growth rate of 16.67% over the corresponding period of the previous year. From then to now, LIC has crossed many milestones and has set unprecedented inspired performance forefathers records to in various aspects of life insurance business. The same motives which our bring insurance into existence in this country inspire us at LIC to take this message of protection to light the

60

lamps of security in as many homes as possible and to help the people in providing security to their families.

Birla Sun Life Insurance
Birla Sun Life Insurance pioneered the unique Unit Linked Life Insurance Solutions in India. Within 4 years of its launch, BSLI has cemented its position as a leading player in the Private Life Insurance Industry .There has been focus on Investment Linked Insurance Products, maintain supported leadership with in protection products to product innovation. Multi

Distribution Channels- Direct Sales Force, Alternate Channels and Group offering convenient channels of purchase over the to customers.Web-enabled IT systems and a for high superior customer services.First to have issued policies Internet.Corporate to have governance an degree of transparency in all business practices and procedures.First Continuity Plan. operational Business

ING Vysya Life Insurance
ING Vysya Life Insurance Company Private Limited (the Company) entered the private life insurance industry in India in September 2001, and in a short span of 4 years has established itself as a distinctive

61

life insurance brand with an innovative, attractive and customer friendly product portfolio and a professional advisor sales force. It has a dedicated and committed advisor sales force of over 11,000 people, working from 80 branches located in 70 major cities across the country and over 2,600 employees. It also distributes products in close cooperation with the ING Vysya Bank network. The Company has a customer base of over 3,00,000 & is headquartered at Bangalore. In 2005, ING Vysya Life earned a total income in excess of Rs. 400 crore and also has a share capital of Rs. 440 crore. The Company aims to make customers look at life insurance afresh, not just as a tax saving device but as a means to add protection to life. The one thing we hold in highest esteem is 'life' itself. They believe in enhancing the very quality of life, in addition to safeguarding an individual's security. Their core values are therefore defined as Professional, Entrepreneurial, Trustworthy, Approachable and Caring. The Company’s portfolio offers products that cater to every financial requirement, at any life stage. They believe in continuously developing customer-driven products and services and value being accessible and responsive to the needs of their customers.
62

In fact, the company has developed the Life Maker TM. A simple method which can be used to choose a plan most suitable to a specific customer based on his needs, requirements and current life stage. This tool helps you build a complete financial plan for life, whether the requirements is Protection, Savings or Investment, Retirement.

Om Kotak Mahindra Life Insurance

Kotak Mahindra Old Mutual Life Insurance Ltd. is a joint venture between Kotak Mahindra Bank Ltd. (KMBL), and Old Mutual plc. At Kotak Life Insurance, They aim to help customers take important financial decisions at every stage in life by offering them a wide range of innovative life insurance products, to make them financially independent.

Bajaj Allianz Life Insurance
Bajaj Allianz Life Insurance Co. Ltd. is a joint venture between two leading conglomerates- Allianz AG, one of the world's largest insurance companies, and Bajaj Auto, one of the biggest 2 and 3 wheeler manufacturers in the world. Bajaj has a Guinness’s record of selling highest number of two wheelers in the world. One very
63

interesting thing about this company is that it is very high advertisement spending company and the advertisements of Allianz can be seen on top of cars participating in formula I racing championship around the globe. This high advertising spending and a very aggressive selling and marketing is bearing good results for the company.

Aviva Life Insurance
Aviva is the world's 6th largest insurance group, the biggest in the UK, and a leading provider of life, health and pensions products to markets across Europe. Its main activities are long-term savings, fund management and general insurance, with a premium income of USD60 billion and USD524 billion in assets under management. The group has 60,000 employees and 30 million customers worldwide. In Hong Kong, They provide and innovative financial our

solutions to meet the increasing needs for protection, savings, Adviser investment (IFA) and retirement through bancassurance partnership, Independent Financial Financial Solutions

International

(IFS) channels. With Their expertise and track record, they aim to become a leading long-term savings and wealth management provider.

64

They strive to bring their customers superior services that meet their financial needs and are backed by their four corporate values: Integrity, Progressiveness, Performance and Team Power.

SBI Life Insurance

SBI Life Insurance is a joint venture between the State Bank of India and Cardiff SA of France. SBI Life Insurance is registered with an authorized capital of Rs 500 crore and a paid up capital of Rs 350 crores. SBI owns 74% of the total capital and Cardiff the remaining 26%. State Bank of India enjoys the largest banking

franchise in India. Along with its 7 Associate Banks, SBI Group has the unrivalled strength of over 14,000 branches across the country, the largest in the world. Cardiff is a wholly owned subsidiary of BNP Paribas, which is The Euro Zone’s leading Bank. BNP is one of the oldest foreign banks with a presence in India dating back to 1860. It has 9 branches in the metros and other major towns in the country. Cardiff is a vibrant insurance company specializing in personal lines such as long-term savings, protection products and creditor insurance. Cardiff has also been

65

a

pioneer

in

the

art

of banks

selling in

insurance and

products 29 more

through

commercial

France

countries. SBI Life Insurance’s mission is to emerge as the

leading company offering a comprehensive range of Life Insurance and pension products at competitive prices, ensuring high standards of customer service and world class operating efficiency. The company plans to make the insurance buying process quick, simple and based on well-informed judgment. In 2004, SBI Life Insurance became the first company amongst private insurance players to cover 30 lakh lives. The company expects to carve a niche in the Indian insurance market through extensive product innovation and aims to provide the highest standards of customer service through a technological interface. To facilitate this, call centre’s have been already installed and help lines will be installed and customers will have access to their accounts through the Internet or through SBI branches. The company proposes to make available ready

liquidity to its Life Insurance policies by way of loans at SBI counters. This will make Life Insurance a liquid asset in the financial portfolio of households.

66

SBI Life Insurance is uniquely placed as a pioneer to usher banc assurance into India. The company hopes to extensively utilize the SBI Group as a platform for cross-selling insurance products along with its numerous banking product packages such as housing loans, personal loans and credit cards. SBI’s access to over 100 million accounts provides a vibrant base to build insurance selling across every region and economic strata in the country.

Sahara Life Insurance Company

The Sahara Pariwar’s latest foray is in the field of Life Insurance. The Pariwar’s life insurance company – Sahara India Life Insurance Company Ltd. - has been granted license by the insurance regulator – the IRDA on 6th February 2004. With this approval Sahara India Life Insurance Company Ltd. becomes the first wholly and purely Indian company, without any foreign collaboration to enter the Indian Life insurance market. The launch is with an initial paid up capital of 157 crores. The Chairman of the company is Shri Subrata Roy Sahara who is also the Chairman of Sahara Pariwar.

67

RESEARCH METHODOLOGY

68

RESEARCH METHODOLOGY

TITLE: To determine customer behavior and investment pattern with a focus on market segmentation for HDFC Standard Life Insurance.
•

TITLE JUSTIFICATION:

The above title is self explanatory. The study deals mainly with studying the buying insurance industry with a special Standard Life pattern in the focus on HDFC

Insurance. The various segments of the

markets divided in terms of Insurance Needs, Age groups , Satisfaction levels etc will also studied. OBJECTIVE Objective One • To determine reasons behind opting for an

insurance. • To provide the company with information of

customer's Insurance policy if they have any and reasons for opting for that particular policies.
69

? To know the most preferred policy. Objective Two • To determine customers perception towards private insurance companies and their expectation form private insurance companies. • To determine the feedback on services provided by any other insurance agent. • To study the types of benefits provided by

insurance services. • To determine the use of Internet for valuable

information and decision-making process.

SCOPE OF THE STUDY A big boom has been witnessed in Insurance Industry in recent times. A large number of new players have entered the market and are vying to gain market share in this rapidly improving market. The study deals with HDFC Standard Life in focus and the various segments that it caters to. The study then goes on to evaluate and analyse the findings so as to present a clear picture of trends in the Insurance sector.

70

SIGNIFICANCE OF THE STUDY

SIGNIFICANCE TO THE INDUSTRY : This is a limited study which takes into consideration the responses of 100 people. This data can be explorated to take in the trends across the industry. The significance for the industry lies in studying these trends that emerge from the study. It is a rapidly changing and evolving sector. People are only beginning to wake up to it’s vast possibilities. A study like this can attempt to guide the future of the industry based on current trends.

SIGNIFICANE FOR THE RESEARCHER: To facilitate and provide all the useful information of the study, the company, the insurance industry and also provide marketing ways,methods of HDFC Standard Life insurance. RESEARCH DESIGN • NON-PROBABILITY • EXPLORATORY & DISCRIPTIVE

EXPERIMENTAL RESEARCH

71

The research is primarily both exploratory as well as descriptive in nature. The sources of information are both primary & secondary. A well-structured interviews questionnaire were was prepared to collect and the

personal

conducted

customer’s perception and buying behavior, through this questionnaire.

SAMPLING METHODOLOGY Sampling Technique: Initially, a rough draft was

prepared keeping in mind the objective of the research. A pilot study was done in order to know the accuracy of the Questionnaire. sampling The final to Questionnaire be judgmental was and arrived only after certain important changes were done. Thus my came out convenient

Sampling Unit: The respondents who were asked to fill out

questionnaires are the sampling units. These comprise of employees of MNCs, Govt. Employees, and Self Employed etc.

72

Sample size: The sample size was restricted to only 100, which comprised of mainly peoples from different sector of Chandigarh due to time constraints. Sampling Area: The area of the research was CHANDIGARH, INDIA.

LIMITATIONS OF THE RESEARCH

1. The research is confined to a certain parts of Chandigarh and does not necessarily shows a pattern applicable to all of Country.

2.

Some

respondents

were

reluctant

to

divulge

personal information which can affect the validity of all responses.

3. In a rapidly changing industry, analysis on one day or in one segment can change very quickly. The environmental changes are vital to be considered in order to assimilate the findings.

73

FACTS & FINDINGS

74

FACTS/FINDINGS

1.As the people think that insurance is a tool to protect their family & a tax saving device. They are aware of the fact & realizing to expand its, importance. The company should India. 2. Company should come up with its branch in Chennai. With the objective and goals to meet the demands & expectations of the public. Because the entrance of private players will increase the competition and it would be a tough task to secure a good position in market. 3.Since HDFC STANDARD LIFE INSURANCE LTD is leading with several companies’ policies it should be easy for them to penetrate into the market and secure a good position if they pay greater attention to the service part provided to their customer and thereby forming a long and trusted relationship. 4. As seen from the survey that at present 70% of the customer are having insurance policy out of which try & build up its infrastructure

because there is a large potential for insurance in

75

87.5%

of

the

customer

are

planning

for

new

investments. So it can be a good potential for the company and they should make an attempt to trap these customers. 5.43% of the it. and customer But intend is even ready to go for good try to

insurance if a service provider away from their home is providing products they should provide should services. The company

convince these customers and get them in its favor.

76

DATA ANALYSIS & INTERPRETATION

77

DATA ANALYSIS & INTERPRETATION
? DATA GIVES PREFERENCE INSURANCE COMPANIES OF RESPONDENTS OF

COMPANY’S NAME
L.I.C. HDFC ICICI PRUDENTIAL SBI LIFE RELIANCE LIFE INSURANCE TOTAL

NO.OF RESPONDENT
78

SHARE (%)
78

2
10 7 3 100

2
10 7 3 100

78

INTERPRETATION
?

78% of the people contacted prefer LIC policy to any other and therefore it is ranked no.1 by that percent of respondents.

? DATA GIVES BENEFITS OF INSURANCE PERCEIVED BY RESPONDENTS
BENEFITS Cover Future Uncertainty Tax Deductions Future Investment
TOTAL

NO.OF RESPONDENTS
55 20 25 100

SHARE (%)
55 20 25 100

79

INTERPRETATION ? 55% future of the respondents is the believe biggest that covering of an

uncertainty

benefit

insurance policy. ? Whereas, 20% and 25% of them believe that the other benefits are Tax deduction and future investments respectively

? DATA PROVIDES FEATURES OF INSURANCE THAT ATTRACTED RESPONDENTS
FEATURE Money Back Guarantee Larger Risk Coverance Easy Access to Agents Low Premium Company’s Reputation TOTAL NO.OF RESPONDENTS 15 37 7 30 11 100

POLICY

SHARE (%) 15 37 7 30 11 100

80

INTERPRETATION
?

Majority of the respondent (37%) found larger risk coverance as the most attracted feature of t h e all.

?

DATA PROVIDES NUMBER OF INSURANCE POLICY

TYPE RESPONDENTS
POLICY TYPE LIFE POLICY NON LIFE POLICY BOTH NO. OF RESPONDENTS 75 25 45 SHARE (%) 75 25 45

81

INTERPRETATION
?

75%

of

the

respondents

have

Life

Insurance

Policy while 45% have both. (The % is calculated out of 280 positive response) ? DATA GIVES PEOPLE PERCEPTION ABOUT INSURANCE
RESPONSE NO. OF RESPONDENTS 81 74 100 SHARE (%)

A saving tool A tax saving device A tool to protect your family

81% 74% 100%

82

INTERPRETATION • 81% of the respondents have perception of

Insurance being a saving tool. • And 74% of the respondents have perception of

Insurance being a tax saving device. • But 100% of the respondents are with the view

that Insurance is a tool to protect your family.

?

DATA SHOWS PEOPLES HAVING INSURANCE
RESPONSE NO. OF RESPONDENTS 70 30 SHARE (%) 70% 30%

Yes No

83

INTERPRETATION • Of the sample size of 400 surveyed respondents

70% of the respondents are having Insurance policy. • 30% of the respondents are either not having

any Insurance policy at present or their policy is already matured. • And at present 100% of the respondents are

with the view that Insurance is a tool to protect your family. ? DATA SHOWS BUYING PROCESS OF THE PEOPLE
BUYING PROCESS Customer approached Insurance company/Agent Company/agent approached customer NO. OF RESPONDENTS 45 55 SHARE (%) 45% 555

84

Total

100

100%

INTERPRETATION • 44.5% of the respondents approached the

Insurance Company / Agent. • Whereas, 55.5% of the respondents were

approached by the Company /Agent.

85

DATA SHOWS REASONS BEHIND FOR INSURANCE
RESPONSE Tax saving Saving / Investment Family protection NO. OF RESPONDENTS 80 80 100 SHARE (%) 80% 80.% 100%

INTERPRETATION • 80.71% of the Respondents opted for Insurance

for tax saving benefits. • 80.71% of the Respondents opted for saving /

Investments. • But all of them, i.e. 100% of the respondents

have opted for insurance for their family protection.

86

? DATA SHOWS SATISFACTION OF RESPONDENTS WITH RESPECT TO POLICY
RESPONSE Satisfied Not satisfied Not Responded Total NO. OF RESPONDENTS 60 40 0 100 SHARE (%) 60% 40% 0.0% 100%

INTERPRETATION ? 60% of the respondents are more or less satisfied with their existing policy. ? 40% of the respondents are not satisfied with their existing policy.
87

? In this case all of those who have taken a policy

have responded.

DATA SHOWS SATISFACTION OF +RESPONDENTS WITH RESPECT TO SERVICE AGENT
RESPONSE Satisfied Not satisfied Not Responded Total NO. OF RESPONDENTS 45 55 0 100 SHARE (%) 45% 55% 0.0% 100%

88

INTERPRETATION ? 45% of the respondents are satisfied with their existing service agent.
? 55% of the respondents are not satisfied with their

existing insurance agent. ? All of those who have taken a policy have

responded.

? TAX

DATA SHOWS NUMBER OF RESPONDENTS PAYING

RESPONSE Paying tax Not paying tax Total

NO. OF RESPONDENTS 100 100

SHARE (%) 100% 0% 100%

89

INTERPRETATION Of the sample size of 400 respondents, all the respondents are paying tax

? DATA SHOWS RESPONDENT’S INVESTMENTS FOR TAX SAVING
INVESTMENTS LIC NSC Bonds PPF PF EPF NO. OF RESPONDENTS 51 33 32 25 21 11 SHARE (%) 51% 33% 32% 25% 21% 11%

90

INTERPRETATION • 51% of the respondents save their tax by investing in LIC, which is the highest among all Investment. This shows that most people for getting taxes benefits invest in LIC. • 33.25% of the respondents do their tax saving

by investing in NSC.
•

32.25% of the respondents to their tax saving

by investing in bonds.

? DATA SHOWS RESPONDENTS PERCEPTION ABOUT BEST FORM OF INVESTMENT FOR SECURING THEIR FUTURE
NO. OF RESPONDENTS Fixed Assets 75 SHARE (%) 75%

91

Bank deposits Jewellery Securities i.e. bonds, MFs Shares Insurance

11 25 40. 10 70

11% 25% 40% 10% 70%

INTERPRETATION • 75.25% of the respondents as with the view that

Fixed Assets is the best form of investment for securing their future.
•

70.5%

of that and

the

respondents is the

are best

with form is

the of an

perception the highest

Insurance this shows

investment for securing their future, which is one of that insurance important key for securing your future.

92

DATA SHOWS WHAT PEOPLE INTENT TO GAIN FROM THEIR INVESTMENT
RESPONSE Saving & Returns Security Tax benefits NO. OF RESPONDENTS 100 90 71. SHARE (%) 100% 90% 71.%

INTERPRETATION • 100% of the respondents intent to gain saving

and returns from their investment. • 90% of the respondent’s intent to gain security

from their investments.
93

•

Whereas, 71.75% of the respondent’s intent to

gain tax benefits from their investments.

? DATA GIVES PEOPLE’S PERCEPTION ON APPROPRIATE AGE FOR BUYING INSURANCE
RESPONSE After 25 years After 35 years After 45 years Anytime NO. OF RESPONDENTS 29 10 0 60 SHARE (%) 29% 10% 0% 60%

INTERPRETATION ? 29% of the respondents are with the view that insurance years.
94

should

be

bought

after

the

age

of

25

? 10.5% of the respondents are with the view that

insurance should be buy after the age of 35 years. ? Whereas, 60.5% of the respondents are with the view that buying of insurance do not have any thing to do with age i.e. there is no age limitations. It can be purchased any time according to the need.
?

DATA

SHOWS

PEOPLE

OPINION

ABOUT

INDIAN

INSURANCE COMPANIES
RESPONSE Rigid plans Non user friendly Unsatisfactory services Non Aggressive Satisfactory Good Very good NO. OF RESPONDENTS 67 29 26 35 24 10 0 SHARE (%) 67% 29% 26% 35% 24% 10% 0%

95

INTERPRETATION • 67% of the respondents have the opinion that

Indian Insurance Companies have Rigid plans. • 29.5% feel that Indian Insurance companies are

Non-user friendly.
•

26.5% feel that services of Indian Insurance

companies are Unsatisfactory. • 35.75% of the respondents are with the view

that Indian Insurance companies are Non-aggressive. • 24% of the respondents feel that products and of Indian Insurance companies is

services

Satisfactory. • Whereas only 10.25% feel that it is Good

enough. • And according to the data, no single person has

felt that it is very good.

96

? DATA SHOWS WHAT PEOPLE WOULD LOOK FOR IN AN INSURANCE COMPANY
RESPONSE NO. OF RESPONDENT S 82 & 71 81 49 SHARE (%)

A trusted name Friendly service responsiveness Good plans Accessibility

82% 71% 81% 49%

INTERPRETATION • 82% customers look for a Trusted name in a

company for insurance.

97

•

81.5% customers look for a good plan in a

company for insurance. • Friendly service & responsiveness and

Accessibility are also important factors looked by customers in a company.

DATA SHOWS PEOPLE PLANNING FOR NEW INVESTMENTS RESPONSE Planning Not planning Total NO. OF RESPONDENTS 87 13 100 SHARE (%) 87% 13% 100%

INTERPRETATION

98

•

Only 12.5% of the customers contacted are not

planning for new investments presently. Whereas, 87.5% of the customers are still planning for new investments this can be a great potential for Reliance Life Insurance to take them on their favor

? DATA SHOWS PEOPLE INTERESTED IN GOING FOR INSURANCE IF A SERVICE PROVIDER AWAY FROM THE CITY OFFERS BETTER SERVICE & PRODUCTS
RESPONSE Yes No Uncertain Total NO. OF RESPONDENTS 43 44 13 100 SHARE (%) 43% 44% 13% 100%

99

INTERPRETATION • The interested customers i.e. 43% are ready to

go for insurance even away from a city if services and products are worthwhile, which again is a good prospect (potential) for Reliance Life Insurance to take them on their favor.

RECOMMENDATIONS
• As the people think that insurance is a tool to protect

their family & a tax saving device. They are aware of the fact & realizing its, importance. The company should try to expand & build up its infrastructure because there is a large potential for insurance in India. • Company should come up with its branch in Chennai.

With the objective and goals to meet the demands & expectations of the public. Because the entrance of private players will increase the competition and it would be a tough task to secure a good position in market. • Since HDFC Standard Life Insurance Company Ltd is

leading with several companies’ policies it should be easy for them to penetrate into the market and secure a good position if they pay greater attention to the service part provided to their customer and thereby forming a long and trusted relationship.

100

•

As seen from the survey that at present 70% of the

customer are having insurance policy out of which 87.5% of the customer are planning for new investments. So it can be a good potential for the company and they should make an attempt to trap these customers. 43% of the customer is even ready to go for insurance if a service provider away from their home is providing it. But intend they should provide good products and services. The company should try to convince these customers and get them in its favor.

CONCLUSION

Our exhaustive research in the field of Life Insurance threw up some interesting trends which can be seen in the above analysis. A general impression that we gathered during Data collection was the immense awareness and knowledge among people about various companies and their insurance products. People are beginning to look beyond LIC for their insurance needs and are willing to trust private players with their hard earned money. People in general have been impression by the marketing and advertising campaigns of insurance companies. A high

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penetration of print, radio and Television ad campaigns over the years is beginning to have its impact now. Another heartening trend was in terms of people viewing insurance as a tax saving and investment instrument as much as a protective one. A very high number of respondents have opted for insurance for such purposes and it shows how insurance companies have been successful to attract public money in recent times. The general satisfaction levels among public with regards to policy and agents still requires improvement. But therein lies the opportunity for a relative new comer like HDFC Standard Life Insurance Company Ltd . LIC has never been known for prompt service or customer oriented methods and HDFC Standard Life can build on these factors.

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BIBLIOGRAPHY

1.

BOOKS/MAGAZINES REFFERED: ? STUDY GUIDEPRINCILES & PRACTICES OF LIFE /

GENERALINSURANCE, by AIMA. ? Books published by INSURANCE INSTITUTE OF INDIA ? LIFE-INSURANCE, by Mc GILL

?INSURANCE WATCH. ?MONEY OUTLOOK.
2. WEBSITES REFFERED:

?
FAINSURANCE.COM

WWW.CI

?
ONEYOUTLOOK.COM

WWW.M

?
SURANCE.IND.COM ? DFCINURANCE.COM 3. REPORTS/ARTICLES REFFERED:

WWW.IN

WWW.H

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REPORT: ISSUES & CHALLENGES FACING THE INSURANCE INDUSTRY…. Dec2005. BRIEF PROFILE OF LIC, INDIA…Dec 2006. REPORT: COPING WITH COMPETITION…Jan2007

ANNEXURES AND QUESTIONNAIRE

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QUESTIONNAIRE
1.
YES

ARE YOU EMPLOYED?
NO

If YES, only then proceed 2.
YES

DO YOU HAVE ANY INSURANCE POLICY?
NO

3.

WHICH INSURANCE POLICY DO YOU HAVE?
LIFE NON-LIFE BOTH

4.

WHICH CO’S INSURANCE POLICY YOU PREFER THE MOST? (RANK THEM)
a) LIC

b) ICICIPRUDENTIAL c) SBI LIFE INSURANCE d) ING VYSYA LIFE e) RELIANCE LIFE INSURANCE f) TATA AIG LIFE g) ANY OTHER
________( Specify)

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5. FOR HOW MANY YEARS DO YOU HAVE INSURANCE POLICY? (Please Tick) a) <5Yrs b) 5-10 Yrs c) 10-15 Yrs d) Any Other______ (Specify)

6.

WHAT DO YOU THINK ARE THE BENEFITS OF INSURANCE COVER?
(RANK THEM) a) COVER FUTURE UNCERTAINITY

b) TAX DEDUCTIONS c) FUTURE INVESTMENT d) ANY OTHER
_________ (Specify)

7.

WHICH FEATURE OF YOUR POLICY ATTRACTED YOU TO BUY IT? (RANK THEM)
a) LOW PREMIUM b) LARGER RISK COVERANCE c) MONEY BACK GUARNTEE d) REPUTATION OF COMPANY e) EASY ACCESS TO AGENTS f) ANY OTHER _________ (Specify)

8.

YOUR MONTHLY INCOME? a)<4k b)4k-8k c)8k-12k d)12k-16k e)Other_____(Specify)

9.

DO YOU REALLY THINK INSURANCE POLICY COVER IN TODAY’S SCENARIO IS NOT ESSENTIAL? _____________________________________________________

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10.

WHAT’S YOUR PERCEPTION ABOUT INSURANCE? (RANK THEM)
a) A SAVING TOOL b) A TAX SAVING DEVICE c) A TOOL TO PROTECT FUTURE

11.

HOW HAS/WOULD YOU BOUGHT/BUY AN INSURANCE? a) CUSTOMER APPROCHED INSURANCE COs b) INSURANCE COs APPROCHED CUSTOMER

12.

ARE YOU SATISFIED WITH THE POLICY? a) SATISFIED SAVING TOOL b) NOT SATISFIED c) NOT RESPONDING

13.

ARE YOU SATISFIED WITH THE SERVICE AGENT? a) SATISFIED SAVING TOOL b) NOT SATISFIED c) NOT RESPONDING

14

DO YOU PAY TAXES? YES NO

15.

WHERE HAVE YOU INVESTED FOR TAX SAVING? (RANK THEM) a) LIC

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b) NSC c) BONDS d) PPF e) PF f) EPF 16.WHICH IS THE BEST FORM OF INVESTMENTS? (RANK THEM) a) FIXED ASSETS b) BANK DEPOSITS c) JEWELLERY d) SECURITIES, i.e. Bonds, MFs e) SHARES f) INSURANCE 17. WHAT DO YOU INTENT TO GAIN FROM INVESTMENTS? a) SAVING & RETURNS b) SECURITY c) TAX BENIFITS 18. WHAT’S THE RIGHT AGE TO BUY INSURANCE? a) AFTER 25 Yrs b) AFTER 35 Yrs

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c) AFTER 45 Yrs d) ANYTIME

19.HOW WOULD YOU RATE INDIAN INSURANCE COs? a) RIGID PLANS b) NON-USER FRIENDLY c) UNSATISFATORY SREVICES d) NON-AGGRESSIVE e) SATISFACTORY f) GOOD g) VERY GOOD 20. WHAT WOULD YOU LOOK FOR IN AN INSURANCE COs? (RANK THEM) a) A TRUSTED NAME b) FRIENDLY SERVICE & RESPONSIVENESS c) GOOD PLANS d) ACCESSIBILITY

DA

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21. ARE YOU PLANNING FOR NEW INVESTMENTS? PLANNING NOT PLANING

22. WOULD YOU GO FOR INSURANCE IF A SERVICE PROVIDER AWAY FROM THE CITY OFFERS BETTER SERVICE & PRODUCTS? a) YES b) NO c) UNCERTAIN

THANK YOU NAME:_________________________ ADDRESS:______________________ ______________________________ OCCUPATION:___________________

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