1

2
 1. ACKNOWLEDGEMENT

I feel delighted in expressing my gratitude towards Mr. Sugatta Dutta(HR

manager) for giving me an opportunity to undergo Summer Training in an
esteemed organization like kotak life insurance.
I would like to express my sincere thanks to my project guide- Mr.
Akhilesh Jasuja who had given me constant cooperation, guidance and
provided all the facilities required in completing this project.
This project is my first exposure to industrial environment and was indeed
great learning experience. I have tried my level best for fulfilling this
project.
I would also like to express my sincere thanks towards Dr. Harsh Purohit,
Banasthali University, who has always encouraged and helped us throughout
our training.
Last but not the least, I would like to pay sincere thanks to kotak Mahindra
group for giving me the opportunity of summer training.

Sugandha Gulati

3
TABLE OF CONTENT

S.NO. CONTENT PAGE NO.

1. ACKNOWLEDGEMENT 3
2. 2.1 KOTAK MAHINDRA GROUP 5
2.2 OLD MUTUAL plc 7
2.3 KOTAK MAHINDRA BANK 8
2.4OLD MUTUAL KOTAK MAHINDRA LIFE
INSURANCE Ltd 10
2.4a) company profile 11
2.4b) vision and mission 13
2.4c) values
2.4d) objectives and philosophy
2.4e) private competitors of company 14
2.4f) products offered 15
2.4g) management team 17
2.4h) recent press releases 18

3. 3.1 INSURANCE 20
3.2 HISTORY 21
3.3 MEANING AND CLASSIFICATION 25
3.4 FUNCTIONS 29
3.5 FUNCTIONING 30
3.6 IRDA 31
4. OBJECTIVES AND LIMITATIONS 32
5. SCOPE OF THE PROJECT 33
6. DATA COLLECTION 34
7. RESEARCH METHEDOLOGY 35
8. CHANGING PERCEPTION AND FACES
8.1) changing perception of Indian customers 36
8.2)changing face of Indian insurance industry 37
9. CUSTOMER BUYING BEHAVIOUR—THE STUDY 40
10. FINDINGS 50
11. RECOMMENDATIONS 51
12. CONCLUSION 52
13. BIBLIOGRAPHY 53
14. ANNEXURES 54

4
2.1 ABOUT KOTAK MAHINDRA
Kotak Mahindra one of India's leading financial institutions was born in
1985 as Kotak Capital Management Finance Limited. This company was
promoted by Mr. Uday Kotak, Mr. Sidney A. A. Pinto and Kotak &
Company. Industrialists Mr. Harish Mahindra and Mr. Anand Mahindra took
a stake in 1986, and that's when the company changed its name to Kotak
Mahindra Finance Limited. It’s been a steady and confident journey to
growth and success.

5
1986 Kotak Mahindra Finance Limited starts the activity of Bill
Discounting
1987 enters the Lease and Hire Purchase market
1990 The Auto Finance division is started
1991 The Investment Banking Division is started. Takes over
FICOM, one of India’s largest financial retail marketing
networks
1992 Enters the Funds Syndication sector
1995 Brokerage and Distribution businesses incorporated into a
separate company - Kotak Securities. Investment Banking
division incorporated into a separate company - Kotak
Mahindra Capital Company
1996 The Auto Finance Business is hived off into a separate
company - Kotak Mahindra Primus Limited. Kotak Mahindra
takes a significant stake in Ford Credit Kotak Mahindra
Limited, for financing Ford vehicles. The launch of Matrix
Information Services Limited marks the Group’s entry into
information distribution.
1998 Enters the mutual fund market with the launch of Kotak
Mahindra Asset Management Company.
2000 Kotak Mahindra ties up with Old Mutual plc. for the Life
Insurance business.
Kotak Securities launches kotakstreet.com - its on-line broking
site. Formal commencement of private equity activity through
setting up of Kotak Mahindra Venture Capital Fund.
2001 Matrix sold to Friday Corporation
Launches Insurance Services

6
KOTAK JOURNEY SO FAR…

2.2 ABOUT OLD MUTUAL

Old Mutual was established more than 150 years ago and has developed into
an International financial services group whose activities are focused on

7
asset gathering and asset management. The Old Mutual Group offers a
diverse range of financial services in three principal geographies: South
Africa, the United States and the United Kingdom. The company is listed on
the London Stock Exchange with a market capitalization of approximately
$6 billion and is a member of the elite FTSE 100 index. In the 2003 rankings
of the World's 500 largest corporations by Fortune magazine, Old Mutual
climbed 87 places to position number 366 and was also listed as the 14th
largest insurance company in the world.

Old Mutual is the largest financial services business in South Africa,

through its life insurance, asset management, banking and general insurance
operations. The company serves 4 million life insurance policyholders and
employs over 13 000 South Africans in its local operations.
In the USA, Old Mutual is one of the top ten fixed annuity businesses
offering an array of specialist asset management skills through its 23 asset
management businesses. The company’s US Life business recorded sales of
$4 billion at the end of 2002.

2.3 About kotak Mahindra bank

The Kotak Mahindra group is a financial organization established in 1985

in India. It was previously known as the Kotak Mahindra Finance Limited, a
non-banking financial company. In February 2003, Kotak Mahindra Finance
Ltd, the group's flagship company was given the license to carry on banking
business by the Reserve Bank of India (RBI). Kotak Mahindra Finance Ltd.
is the first company in the Indian banking history to convert to a bank.

The bank is headed by K.M. Gherda as Chairman and Uday Kotak as

Executive Vice Chairman & Managing Director. Shankar Acharya is the
chairman of board of Directors in the company.

8
The Bank has its registered office at Nariman Bhavan, Nariman Point,
Mumbai

9
2.4 OLD MUTUAL KOTAK MAHINDRA LIFE INSURANCE Ltd

Kotak Mahindra Old Mutual Life Insurance Ltd is a 74:26 joint venture
between Kotak Mahindra Bank Ltd., its affiliates and Old Mutual plc. A
Company that combines its international strengths and local advantages to
offer its customers a wide range of innovative life insurance products,
helping them takes important financial decisions at every stage in life and
stay financially independent. The company is one of the fastest growing
insurance companies in India and has shown remarkable growth since its
inception in 2000. Kotak Life Insurance employs around 6, 213people in its
various businesses and has 216 branches across 153 cities.
The Kotak Mahindra Group is one of India’s leading banking and financial
services organizations, with offerings across personal financial services;
commercial banking; corporate and investment banking and markets; stock
broking; asset management and life insurance. The Kotak Group has a net
worth of Rs. 7,509 cr and has a distribution network through branches,
franchisees, representative offices and satellite offices across cities and
towns in India and offices in London, New York, San Francisco, Singapore,
Dubai and Mauritius, servicing around 6.7 million customer accounts.
Old Mutual plc
Old Mutual plc is an international savings and wealth management company
based in the UK. Originating in South Africa in 1845, Old Mutual is a

10
Global 500 and FTSE 100 Company, listed in UK, South Africa and other 3
African exchanges. The group has a balanced portfolio of businesses
offering Asset Management, Life Assurance, Banking and General
Insurance Services in over 40 countries, with a focus on South Africa,
Europe and the United States, and a growing presence in Asia Pacific.

OM Kotak Mahindra Life Insurance Company Limited (OMKM), is a

joint venture between Kotak Mahindra Bank Ltd.(KMBL), and Old Mutual
plc. At OMKM, we 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. Jeene Ki
Azaadi...
Kotak Mahindra one of India's leading financial institutions
was born in 1985 as Kotak Capital Management Finance Limited. This
company was promoted by Mr. Uday Kotak, Mr. Sidney A. A. Pinto and
Kotak & Company. Industrialists Mr.Harish Mahindra and Mr. Anand
Mahindra took a stake in 1986, and that's when the company changed its
name to Kotak Mahindra Finance Limited.
Old Mutual is largest South African Life Insurer. Old Mutual
has a multi-layered distribution network comprising of Life Advisors,
brokers (including banks) and direct. With. The total assets under
management as on 31st December 2001 was US$ 208 billion. Old Mutual is
listed on London Stock Exchange (where it is included on the FTSE 100
Index) and also on the South African,Namibian,Malawi and Zimbabwe stock
exchange.

2.4a) COMPANY PROFILE

Kotak Group was established in 1985.Kotak Mahindra Bank is the parent

company of the group. Kotak Group entered into the life insurance business
in 2001. Kotak Mahindra Old Mutual Life Insurance Ltd. is a joint venture
between Kotak Mahindra Bank Ltd. (76%) and Old Mutual plc. (24%) Old
Mutual plc is a world-Class international financial services company. It was
established in South Africa before 160 years.

OLD MUTUAL is the largest financial services business in South Africa,

through its life insurance, asset management, banking and general insurance

11
operations. The company serves 4 million life insurance policyholders and
employs over 13 000 South Africans in its local operations.

In the USA, OLD MUTUAL is one of the top ten fixed annuity businesses
offering an array of specialist asset management skills through its 23 asset
management businesses. The company’s US Life business recorded sales of
$4 billion at the end of 2002. Operations in the United Kingdom are focused
on wealth management, through Gerrard as one of the leading private client.

The OLD MUTUAL Group has the ability to cater for a variety of consumer
segments and offers a comprehensive and innovative range of products for
all income groups.

“At Kotak Life Insurance, we 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.”

Kotak Life Insurance has a deep rooted commitment to improve the quality
of life of its customers, employees and stakeholders. We aim at improving
the long term value in ouR relationship by continuous innovation and
improvements. We do this by our three-prong effort which strives to make
Kotak Life Insurance a corporate with values.

Increase Customer Value:

Kotak Life Insurance has gone to the heart of its customer's requirements
and developed products which are unique and serve the customer needs
perfectly. We built a relationship of mutual trust and benefit to serve the
Indian customer. At Kotak Life Insurance the customer always comes first.

Cohesive Work Environment: -

We form long-term partnership with our employees by offering them an

invigorating work experience. We not only demand loyalty, sincerity and
values but also give it back in equal measures. Kotak Life Insurance will like
to offer its employees space to grow, innovate and build a long-term career.

Work with Honor:-

Kotak Life Insurance delivers everyday services in the marketplace with the
high sense of duty and commitment. Our employees strive to build the long-

12
term value for all those come in contact with Kotak Life Insurance. Our
consumers, distributors, employees, shareholders and the nation have our
commitment that we will uphold the values of trust, integrity and a Sense of
Honor in every thought, act and deed in order to positively contribute to
individual, society and nation growth.

2.4b) Vision and mission of the company

Our vision is to be a market leader in offering innovative products and

services that help Businesses achieve simplified growth and
The company has a corporate mission of certain goals in respect of
“customer satisfaction”,” employee development”, “service to society”
,which are meant to create a good image of the organization .

2.4c) Objective and philosophy of the company

“Understand and actively promote the financial interests of clients.”

We see your needs through your eyes, your ideas, expectations and personal
situation form the basis of our counseling and service.
We take time and care in the process of striking a balance between the
feasible and the desirable, between the required and the tolerable. We take
your time too. It is essential to understand we build a relationship of mutual

13
trust. We understand that it is the absolute returns and not relative return to
some volatile index, which is important to our clients. We are committed to
the safety of invested capital.

2.4d) Values of the company:-

Every member of the Kotak Group team is committed to 5 core values:

Integrity, Customer First, Boundary less, Ownership, and Passion.
Thesevalues shine forth in all we do, and have become the keystones of our
success.

2.4e) Private competitors of the company

Insurer Market share

Sahara life 0.06
Met life 0.40
Reliance life 0.54
ING vyasa 0.79
Kotak Mahindra Old 1.11
Mutual
shriramlife 0.03
Bajaj Alliaz 7.86
Aviva 1.14
Max newyork 1.23
Tata AIG 1.29
Birla sun life 1.89
SBI life 2.31
ICICI prudential 7.35
HDFC standard life 2.87

14
2.4f) Kotak Life Insurance Plans:

Kotak Mahindra Life Insurance’s main aim is to help customers take

important financial decisions at every stage in life. They are offering to the
customers a wide range of original life insurance product plans. They
believe in offering life time value for customers. Below are given links to
Kotak Life Insurance plans,

Protection Plans:

Kotak Loan Protection Plan

Kotak Term/Preferred Term Plan

Kotak Eternal Life Plan

Retirement Plans:

Kotak Secure Retirement Plan

Kotak Retirement Income (Unit Linked)

Kotak Long Life Secure Plus

Kotak Long Life Wealth Plus

15
 Kotak Retirement Income Plan

Savings & Investment Plans:

Kotak Platinum Advantage Plus

Kotak Smart Advantage Plan

Kotak Safe Investment Plan

Kotak Flexi Plan

Kotak Platinum Advantage Plan

Kotak Easy Growth Plan

Kotak Capital Multiplier Plan

Kotak Money Back Plan

Kotak Endowment Plan

Kotak Premium Return Plan

Kotak Surakshit Jeevan Plan

Child Plans:

Kotak Headstart Child Plans

Kotak Child Advantage Plan

Group Plans:

Kotak Group Shield

Kotak Group Assure

Kotak Term Grouplan

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 Kotak Gratuity Grouplan

Kotak Superannuation Grouplan

kotak Credit-Term Grouplan

Kotak Complete Cover Grouplan

Rural Plans

Kotak Gramin Bima Yojana

2.4g) MANAGEMENT TEAM

• UDAY KOTAK: CHIEF EXECUTIVE OFFICER.

• GAURANG SHAH: MANAGING DIRECTOR.

• G MURALIDHAZ: CHIEF OPERATING OFFICER.

• PANKAJ DESAI: EXECUTIVE MANAGER

• SUBHASHISH GHOSH: FINANCIAL INSURANCE GROUP

• SUGATA DUTTA: HEAD HUMAN RESOURCES

• Ms. ELIZABETH VENKATRAMAN: SENIOR VICE

PRESIDENT

• ANDREW CARTWRIGH: APPOINTED ACTUARY

• SURESH AGARWAL: HEAD OF ALTERNATE CHANNEL

• SHEKHAR BHANDARI: HEAD OF TIED CHANNEL

• ANAND DEWAN: HEAD MANAGEMENT DEVELOPMENT

TRAINING

17
2.4h) RECENT PRESS RELEASES OF KOTAK LIFE
INSURANCE CO. LTD.:

Kotak Life Insurance opens branch in Gorakhpur

Gorakhpur, March 25, 2010: Kotak Mahindra Old Mutual Life Insurance
Limited (Kotak Life Insurance), one of India’s leading Life Insurance
Companies today inaugurated its branch office in Gorakhpur, its first in this
vibrant and historic city.
Gorakhpur is among the fastest growing cities in the country and Kotak Life
Insurance is keen to match the growing pace of the city. The Gorakhpur
branch offers customers a comprehensive suite of life insurance and personal
financial planning solutions. In Uttar Pradesh, the company operates in 22
districts through a strong network of branches, brokers, regional distributors
and bancassurance partners. The new branch will help the company cater to
the needs of customers. With the inauguration of this branch, Kotak Life
Insurance now has 216 branches across the country.

18
Kotak Life Insurance opens branch in Aligarh
Aligarh, February 25, 2010: Kotak Mahindra Old Mutual Life Insurance
Limited (Kotak Life Insurance), one of India’s leading Life Insurance
Companies today inaugurated its branch office in Aligarh, its first in this
vibrant industrial and educational hub. Aligarh is witnessing an economic
resurgence, having recorded phenomenal growth in both traditional sectors
such as manufacturing and non traditional sectors such as retail, and, Kotak
Life Insurance is keen to match the growing pace of the city. The Aligarh
branch offers customers a comprehensive suite of life insurance and personal
financial planning solutions. In Uttar Pradesh, the company operates in 22
districts through a strong network of branches, brokers,
regional distributors and bancassurance partners.
With the inauguration of this branch, Kotak Life Insurance now has 215
branches across the country.
Kotak Life Insurance opens branch in Aligarh
Aligarh, February 25, 2010: Kotak Mahindra Old Mutual Life Insurance
Limited (Kotak Life Insurance), one of India’s leading Life Insurance
Companies today inaugurated its branch office in Aligarh, its first in this
vibrant industrial and educational hub. Aligarh is witnessing an economic
resurgence, having recorded phenomenal growth in both traditional sectors
such as manufacturing and non traditional sectors such as retail, and, Kotak
Life Insurance is keen to match the growing pace of the city. The Aligarh
branch offers customers a comprehensive suite of life insurance and personal
financial planning solutions. In Uttar Pradesh, the company operates in 22
districts through a strong network of branches, brokers,
regional distributors and bancassurance partners.
With the inauguration of this branch, Kotak Life Insurance now has 215
branches across the country.
Kotak Life Insurance Records Profit of 18.5 crores, Growth of 39% in
Q3-FY10
Mumbai, February 2, 2010: Kotak Mahindra Old Mutual Life Insurance
Limited (Kotak Life Insurance) announced a profit of Rs. 18.52 crores in the
period Oct-Dec 2009 (unaudited). The company recorded growth of 39 per
cent in Total Received Premium Income to Rs. 711.62 crore during the
period Oct-Dec 2009 from Rs. 511.64 crores in the corresponding period
previous year.

19
The Individual New Business Premium has grown from Rs. 247.5 crores in
the period Oct-Dec 2008 to Rs. 299.3 crores in the period Oct-Dec 2009, a
growth of 22 per cent. Renewal income witnessed a 59 per cent jump and
grew to Rs. 372 crores in the Oct-Dec 09 period from Rs. 233.2 crores in the
corresponding period last year.

3.1 INSURANCE

Insurance may be described as a social device to reduce or eliminate risk

of life and property.
Under the plan of insurance, a large number of people associate themselves
by sharing risk, attached to individual. The risk, which can be insured
against include fire, the peril of sea, death, incident, & burglary. Any risk
contingent upon these may be insured against at a premium commensurate
with the risk involved.
Insurance is actually a contract between 2 parties whereby one party called
insurer undertakes in exchange for a fixed sum called premium to pay the
other party happening of a certain event.

20
Insurance is a contract whereby, in return for the payment of premium by the
insured, the insurers pay the financial losses suffered by the insured as a
result of the occurrence of unforeseen events. With the help of
Insurance, large numbers of people exposed to a similar risk make
contributions to a common fund out of which the losses suffered by the
unfortunate few, due to accidental events, are made good.

Every business is exposed to different types of risks such as fire, theft,

burglary, accident, etc., Some of the risks can be transferred to specialized
institutions known as Insurance companies. Insurance is nothing but
socialization of risks. Insurance companies indemnify the loss of the insured.

3.2 Brief History of the Insurance Sector in India

21
The evaluation of insurance dates back as early as the commencement of
trade between two countries in England, especially between the European
countries. During the transportation of goods, there were chances of the ship
being drowned in the rough sea conditions or attacked by the pirates, leading
to a huge loss to the party sending the goods. The traders of England devised
a way whereby the loss of goods would be compensated by every trader
putting in some amount as per their financial strength so that a single party
may not be the loser. This is the earlier concept of insurance. This concept is
taking shape for the last 300 years, yet in India the first insurance company
was established in 1818 with the advent of Europeans widows. The name of
the company was Oriental Life Insurance Company.

The business of life insurance in India in its existing form started in India in
the year 1818 with the establishment of the Oriental Life Insurance
Company in Calcutta.

The story of insurance is probably as old as the story of mankind.

The same instinct that prompts modern businessmen today to secure
themselves against loss and disaster existed in primitive men also. They too
sought to avert the evil consequences of fire and flood and loss of life and
were willing to make some sort of sacrifice in order to achieve security.
Though the concept of insurance is largely a development of the recent past,
particularly after the industrial era – past few centuries – yet its beginnings
date back almost 6000 years.

Life Insurance in its modern form came to India from England in the year
1818. Oriental Life Insurance Company started by Europeans in Calcutta
was the first life insurance company on Indian Soil. All the insurance
companies established during that period were brought up with the purpose
of looking after the needs of European community and these companies
were not insuring Indian natives. However, later with the efforts of eminent

22
people like Babu Muttylal Seal, the foreign life insurance companies started
insuring Indian lives. But Indian lives were being treated as sub-standard
lives and heavy extra premiums were being charged on them. 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.
The Swadeshi movement of 1905-1907 gave rise to more insurance
companies. The United India in Madras, National Indian and National
Insurance in Calcutta and the Co-operative Assurance at Lahore were
established in 1906. In 1907, Hindustan Co- operative Insurance Company
took its birth in one of the rooms of the Jorasanko, house of the great poet
Rabindranath Tagore, in Calcutta. The Indian Mercantile, General Assurance
and Swadeshi Life (later Bombay Life) were some of the companies
established during the same period. Prior to 1912 India had no legislation to
regulate insurance business. 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 with total business-in-force as Rs.298 Crore in
1938. During the mushrooming of insurance companies many financially
unsound concerns were also floated which failed miserably. The 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 for nationalization of life insurance industry was made repeatedly in
the past but it gathered momentum in 1944 when a bill to amend the Life
Insurance Act 1938 was introduced in the 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 was accomplished in two stages; initially the
management of the companies was taken over by means of an Ordinance,
and later, the ownership too by means of a comprehensive bill. The

23
Parliament of India passed the Life Insurance Corporation Act on the 19th of
June 1956, and the Life Insurance Corporation of India was created on 1st
September

LIC had 5 zonal offices, 33 divisional offices and 212 branch offices, apart
from its corporate office in the 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
Crore of New Business in 1957 the corporation crossed 1000.00 Crore 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 on-line premium collection facility in selected cities.
LIC’s ECS and ATM premium payment facility is an addition to customer
convenience. Apart from on-line Kiosks and IVRS, Info Centers have been
commissioned at Mumbai, Ahmadabad, 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 records of the satellite offices will facilitate
anywhere servicing and many other conveniences in the future.

From then to now, LIC has crossed many milestones and has set
unprecedented performance records in various aspects of life insurance
business. The same motives which inspired our forefathers to bring
insurance into existence in this country inspire us at LIC to take this
message of protection to light the lamps of security in as many homes as
possible and to help the people in providing security to their families.

24
25
3.3 MEANING OF INSURANCE
Insurance is a mechanism that ensures an individual to thrive on adverse
consequences by compensating the individual, his/her loss financially. Every
individual in the world and all activities connected with him/her, be it life,
profession, business, travel or any other pursuits are subject to unforeseen and
uncalled for hazards or dangers. The benefit that an individual enjoys in his life by
owning a car or a house or a factory can be snatched by sudden accident which can
render even the individual immobile, and his family vulnerable. At this critical
juncture, only insurance helps him not only to survive but also recover his loss and
continue his life in a normal manner, which would otherwise be unthinkable.

The concept of insurance is quite simple. People, who are in similar trade and are
exposed to the same risks, congregate and some to an agreement that if any
individual member suffers a loss, then the loss will be shared by others and
minimized in order to enable the individual member recover from the loss and
cover his ground. Similarly the different kinds of risks can be identified and
separate groups can be formed to counter such risks and reduce the impact to a
manageable proportion, in which the share could be collected from the members
either after the loss or in advance, at the time of admission to the group. This is an
exemplary sign of humanity and insurance therefore serves the mankind to a great
extent; a point most of the individuals tend to overlook, since monetary aspect is
involved. Now such is for tangible assets.

The concept of insurance has been extended beyond the coverage of tangible
assets. Exporters run the risk of importers in other country defaulting as well as
losses due to sudden fluctuations in the currency exchange rates, economic policies

26
turmoil. These risks are now insured. Doctors run the risk of being charged with
negligence and can subsequently liable for damages. The amount in questions can
be fairly large, beyond the capacity of individuals to bear. These are insured. Thus
insurance is extended to intangible assets. In some countries even the voice of a
singer, legs of a footballer can be insured, even though the advantage of spread
may not be available in these cases. Satisfaction of economic needs requires
generation of income from some source. If the property, which is the source of
such income, were lost fully or partially, permanently or temporarily, the income
too would stop. The purpose of insurance is a safeguard against such misfortunes
few, through the help of the fortune many, who were exposed to the same risk, but
saved from the misfortune. Thus the essence of insurance is to share losses and
substitute certainty by uncertainty.

Classification of insurance:
The insurance industry in India can broadly classify in two parts. They are.

1) Life insurance.

2) Non-life (general) insurance.

1) Life insurance:-

Life insurance can be defined as “life insurance provides a sum of money if the

person who is insured dies while the policy is in effect”.

In 1818 British introduced to India, with the establishment of the oriental life
insurance company in Calcutta. The first Indian owned Life Insurance Company;
the Bombay mutual life assurance society was set up in 1870. The life insurance
act, 1912 was the first statuary measure to regulate the life insurance business in

27
India. In 1983, the earlier legislation was consolidated and amended by the
insurance act, 1938, with comprehensive provisions for detailed effective control
over insurance. The union government had opened the insurance sector for private
participation in 1999, also allowing the private

Companies to have foreign equity up to 26%. Following the opening up of the

insurance sector, 12 private sector companies have entered the life insurance
business.

Benefits of life insurance:

℘Life insurance encourages saving and forces thrift.

℘It is superior to a traditional savings vehicle.
℘It helps to achieve the purpose of life assured.
℘It can be enchased and facilitates quick borrowing.
℘It provides valuable tax relief.

Thus insurance is found to be very useful in the lives of the person both in short
term and long term.
Fundamental principles of life insurance contract:-

1) Principle of almost good faith:

“A positive duty to voluntary disclose, accurately and fully, all facts, material to
the risk being proposed whether requested or not”.

2) Principle of insurable interest:

“Relationships with the subject matter (a person) which is recognized in law and
gives legal right to insure that person”.

2) Non-life (general) Insurance:-

Triton insurance co. ltd was the first general insurance company to be
established in India in 1850, whose shares were mainly held by the British. The
first insurance company to be set up by an Indian was Indian mercantile insurance
co. Ltd., which was stabilized in 1907. There emerged many a player on the Indian
scene thereafter.

28
The general insurance business was nationalized after the promulgation of General
Insurance Corporation (GIC) OF India undertook the post-nationalization general
insurance business.

DEFINITIONS OF INSURANCE:

GENERAL DEFINITION:
In the words of JOHN MAGEE “ Insurance is a plea by which by which large no
of people associate themselves and transfer to the share holder of all risk that
attach to individual“

FUNDAMENTAL DEFINITION:
In words of DS HAUSELL “Insurance may be defined as a social device providing
financial compensation of for the effects of misfortune, the payment being made
from the accumulated contribution of all parties participating in the scheme”

CONTRACTUAL DEFINITION:
In the words of JUSTICE TANDEL “Insurance is a contract in which a sum of
money is paid to the assured as consideration of insurers incurring the risk of
paying a large sum upon a contingency.

29
3.4 FUNCTIONS OF INSURANCE:

Primary functions

 Provides protection: insurance cannot check the happening of risk but can
provide for losses of risk.
 Collective bearing of risk: insurance is a device to share the financial losses
of few among many others.
 Assessment of risk: insurance determines the probable volume of risk by
evaluating various factors, which give rise to risk.
 Provide certainty: insurance is a device, which helps to change from
uncertainty to certainty.

Secondary functions

 Prevention of losses: insurance cautions businessman and individuals to

adopt suitable device to prevent unfortunate consequences of risk by
observing safety instructions.
 Small capital to cover large risk: insurance relieves the businessman from
security investment, by paying small amount of insurance against large risk
and uncertainty.
 Contribute towards development of large industries.

30
3.5 FUNCTIONING OF INSURANCE INDUSTRY

Insurer’s Business Model:

Profit = Earned Premium + Investment Income – Incurred Loss – Underwriting
expenses

Insurers make money in two ways:

1. Through Underwriting, the processes by which insurers select the risks to

insure and decide how much in premiums to charge for accepting those
risks, and

2. By investing the premiums they collect from insured.

The most difficult aspect of the insurance business is the underwriting of policies.
Using a wide assortment of data, insurers predict the likelihood that a claim will be
made against their policies and price products accordingly. To this end, insurers
use actuarial science to quantify the risks they are willing to assume and the
premium they will charge to assume them. Data is analyzed to fairly accurately
project the rate of future claims based on a given risk. Actuarial science uses
statistics and probability to analyze the risks associated with the range of perils
covered, and these scientific principles are used to determine an insurer's overall
exposure. Upon termination of a given policy, the amount of premium collected
and the investment gains thereon minus the amount paid out in claims is the
insurer's underwriting profit on that policy.
An insurer's underwriting performance is measured in its combined ratio. The loss
ratio (incurred losses and loss-adjustment expenses divided by net earned
premium) is added to the expense ratio (underwriting expenses divided by net
premium written) to determine the company's combined ratio. The combined ratio
is a reflection of the company's overall underwriting profitability. A combined
ratio of less than 100 percent indicates underwriting profitability, while anything
over 100 indicates an underwriting loss.
Insurance companies also earn investment profits on “float”. “Float” or available
reserve is the amount of money, at hand at any given moment that an insurer has
collected in insurance premiums but has not been paid out in claims. Insurers start

31
investing insurance premiums as soon as they are collected and continue to earn
interest on them until claims are paid out.

3.6 The Insurance Regulatory and Development Authority (IRDA)

The Insurance Regulatory and Development Authority (IRDA) is a national

agency of the Government of India, based in Hyderabad. It was formed by an act
of Indian Parliament known as IRDA Act 1999, which was amended in 2002 to
incorporate some emerging requirements. Mission of IRDA as stated in the act is
"to protect the interests of the policyholders, to regulate, promote and ensure
orderly growth of the insurance industry and for matters connected therewith or
incidental thereto."

In 2010, the Government of India ruled that the Unit Linked Insurance Plans
(ULIPs) will be governmed by IRDA, and not the market regulator Securities and
Exchange Board of India.

32
4. OBJECTIVES
The objectives of the present study has both primary and secendory objectives .
Primary objectives :
o Proper understanding and analysis of life insurance industry.
o To know about brand awareness of Kotak Life Insurance and
customer’s preference about Kotak Life Insurance.
o To understand customer behavior for life insurance products.
To know of customer preferences in various grounds for buying life
insurance.

Secendory objective
o To recommend suggestions based upon findings

LIMITATIONS

While doing this project, I face certain limitations and they are:

• The research could not be conducted in a very vast area, thus it does not
necessarily show a pattern applicable to all of country.
• Some respondents were reluctant to divulge personal information
which can affect the validity of all responses.
• Basic terminologies were not clear to individuals.
• Secendory data used might change or fluctuate.

Apart from the above limitations, I made every possible attempt to make this
project a successful one.

33
5. Scope of the project:

The project on “customer buying behavior for life insurance products” has a wide
scope in the society. It will help individuals, organization as well as future project
makers in a wide manner. Some of them are mentioned here:

• It will help the organization to realize the importance of customer

preferences.
• It will enhance the knowledge of the reader related to the organization .
• It will also help the future project doers as it contains the sufficient
information about the company.
• It will lend a hand to the employees of the organization who does not know
anything about the company they are working with in.

34
 6. DATA COLLECTION

There are two types of data collection method use in my project report.
– Primary data
– Secondary data

Primary Source refers to the information gathered by the research analyst, i.e., the
first source of information. There are several sources of primary data which
includes questionnaires, interviews, survey, etc.

Secondary data collection methodwas used by referring to various websites, books,

magazines, journals and daily newspapers for collecting information regarding
project under study.

JUSTIFICATION:
Both primary as well as secendory data are used in making this project a successful
one.
To conduct the survey, primary data collection was done in which questionnaire
was used as the main source.
To collect the information about the company and insurance, secendary data was
used because it could not be possible to collect primary data for that.

Sample size
sample size of the study conducted was 100 respondents with different profiles.

Tools used
Graphs and pie charts are used to display the data collected from primary sources

35
7. RESEARCH METHODOLOGY

TITLE
To determine customer buying behavior with a focus on market
segmentation for Kotak Life Insurance.

RESEARCH DESIGN
All the findings and conclusions are based on the survey done in the working area
within time limit. I tried to select a sample representative of the whole group
during my job training. I have collected data from 100 respondents for studying
Customer Buying Behaviour and selected randomly from different areas in rohtak
and hissar such as

Public places like shopping centers, malls, restaurants etc.

Employees of Government Departments .
Employees of Private Firms.
Business / Self Employed.

The data for this research project has been collected through self administration.
Due to time limitation and other constraints direct personal interview method is
used. A structured questionnaire was framed as it is less time consuming, generates
specific and to the point information, easier to tabulate and interpret. Moreover
respondents prefer to give direct answers.

36
8.1 Changing perception of Indian customers

Indian Insurance consumers are like Indian Voters, they are soft but when time is
right and ripe, they demand and seek necessary changes. De-tariff of many
Insurance Products are the reflection of changing aspirations and growing demand
of Indian consumers.
For historical years, Indian consumers were at receiving end. Insurance Product
was underwritten and was practically forced onto consumers on a “Take-it-As-it-
basis”. All that got changed with passage of IRDA act in 1999. New insurance
companies have come into existence leading to open competition and hence better
products for customers.
Indian customers have become very sensitive to Coverage / Premium as well as the
Products, that is given to them. There are not ready to accept any product, no
matter even if that is coming from the market leader, should that product is not
serving the purpose. A case in point is ULIP Product / Group Life and Credit Life
in Life Insurance segment and Travel / Family Floater Health and Liability
Insurance in the Non-life segment are new age Avatar. The new products are
constantly being demanded by Indian consumers, which is putting huge pressures
on Insurance companies (Read Risk Under-writers) and Brokers to respond.
Customers are looking at Insurance for covering Pure Risk now which I have
covered in my next section.
Now Indian customers are aware of insurance industry and insurance products
provided by companies. They have become more sensitive. They would not accept
any type of insurance product unless it fulfills their requirements and needs. In
historic day’s customers looking at insurance products as a life cover which can
provide security against any unacceptable events, but now customers look at

37
insurance products as an investment as well as life cover. So today’s customers
wants good return from the insurance companies. The Indian customer’s forms the
pivot of each company’s strategy.

8.2 Changing face of Indian insurance industry:

After the Insurance Regulatory and Development Authority Act have been passed
there has been establishment of many private insurance companies in India.
Previously there was a monopoly business for Life Insurance Corporation of India
(L.I.C.) who was the only life-insurance company for the people till 2000. L.I.C.
still holds 71.4% of the market share in 2006. But after the introduction of private
life insurance companies there is a great competition in Indian market now.
Everyone is trying to capture the fresh market here and penetrate it with aggressive
marketing strategies. Today life-insurance is not only limited up to just life risk
cover and maturity period bonuses but changed to greater return from the
investments. With the introduction of the unit linked insurance policies these
companies are investing the money in different investment instruments like shares,
bonds, debentures, government and other securities. People are demanding for
higher returns with the life risk cover and private companies are giving 30- 40%
average growth per annum. These life-insurance companies have every kind of
policies suiting every need right from financial needs of, marriage, giving birth and
rearing up a child, his education, meeting daily financial needs of life, pension
solutions after retirement. These companies have every aspects and needs of our
life covered along with the death-benefit.
In India only 25% of the population has life insurance. So Indian life-
insurance market is the target market of all the companies who either want to
extend or diversify their business. To tap the Indian market there has been tie-ups
between the major Indian companies with other International insurance companies
to start up their business. The government of India has set up rules that no foreign
insurance company can set up their business individually here and they have to tie
up with an Indian company.

Indian insurance industry can be featured by:

• Low market penetration.
• Ever growing middle class component in population.
• Growth of customer’s interest with an increasing demand for better

38
 insurance products.
• Application of information technology for business.
• Rebate from government in the form of tax incentives to be insured.

Today, the Indian life insurance industry has more than a dozen private
players, each of which are making strides in raising awareness levels, introducing
innovative products and increasing the penetration of life insurance in the vastly
underinsured country. Several of private insurers have introduced attractive
products to meet the needs of their target customers and in line with their business
objectives. The success of their effort is that they have captured over 28% of
premium income in five years.
The biggest beneficiary of the competition among life insurers has been the
customer. A wide range of products, customer focused service and professional
advice has become the mainstay of the industry, and the Indian customer’s forms
the pivot of each company’s strategy. Penetration of life insurance is beginning to
cut across socio-economic classes and attract people who have never purchased
insurance before.
Life insurance is also now being regarded as a versatile financial planning
tool. Apart from the traditional term and saving insurance policies, industry has
seen the entry and growth of unit linked products. This provides market linked
returns and is among the most flexible policies available today for investment.
Now products are priced, flexible, and realistic and sustain so people in better
position to understand the risk and benefits of the product and they are accepting
these innovative products.
So it is clear that the face of life insurance in India is changing, but with the
changes come a host of challenges and it is only the credible players with a long
term vision and a robust business strategy that will survive. Whatever the
developments, the future and the opportunities in this industry will surely be
exciting.
The number of companies in Insurance particularly in Life Insurance has changed
drastically now the number is in 17. List of them are mentioned as below:-

1. Bajaj Allianz Life Insurance

2. ICICI Prudential Life Insurance
3.TATA AIG Life Insurance
4. Max New York Life Insurance
5. AVIVA Life Insurance
6. Bharti AXA Life Insurance

39
7. Kotak Mahindra Life Insurance
8. Reliance Life Insurance
9. SBI Life Insurance
10.HDFC Standard Life Insurance
11.Birla Sun Life Insurance
12.SaharaLifeInsurance
13.ING Vysya Life Insurance
And so on…

40
9. CUSTOMER BUYING BEHAVIOUR

The Study

This study, which was conducted in the city of Hissar and Rohtak (Haryana),
covered almost 100 individual of different strata. The data so collected was
grouped according to the company of the consumer's choice from where they have
purchased the product and result was thus generalized.

The study covered 100 individuals

INSURED UNINSURED

52 48

41
OF THE TOTAL INSURED

AGE PERCENTAGE

21-40 58

41-60 34

others 8

GENDER PERCENTAGE

MALE 78

FEMALE 22

42
 OCCUPATION PERCENTAGE

Business class 25

Service class 50

Others 25

Thus the overall penetration of companies in to the psyche of consumer buying

preference (based on the customer's purchase of a company's life insurance policy)
is given in the graph as under:

43
From the above graph it is clear that when it comes to preference of the life
insurance policy of particular company it is LIC, which has got the maximum
preference over other products, as per the respondents. But the picture may take the
different shape if we analyze it from the different perspective, i.e. demographical
perspective. This is to be note that out of total surveyed (100), 51.3% were found
insured and out of this 51.3%, 72.9% were from LIC, 4.09% were from HDFC,
3.9% were from SBI, 4.48% Bajaj Allianz, 7.79% ICICI Prudential, 2.53 % Birla
Sun life, 0.58% Om Kotak Mahindra, 1.56% Max New York, 0.78 ING Vyasya.
1.36% Tata AIG.

Consider the graphs below: (figures given in percentage)

Figure [a]: Preference of MALE towards different companies.

Figure [b]: Preference of FEMALE towards different companies

44
Figure [c]: Preference of SERVICE class people towards different companies
Figure [d] : Preference of BUSINESS class people towards different companies

The most important thing which is to be considered here is that customer try to
segregate the life insurance companies not on the basis of brand of the company (in
most of the case it has been found), but they demarcate it on the basis of ownership
of the company, whether it is government owned or privately owned company.

Considering Figure [a], which is for the preference of male for any of the
company, it was found that 75% of the male has got the preference for LIC rather
than any other life insurance company; whereas is we consider Figure [b] the
preference graph is showing the different trend as here only 66% of female is only
interested in LIC.

Taking Figure [c] and Figure [d] under consideration where the graph is showing
the preference on the basis of occupation customers are into. Figure [c] is for those
customers who were found to be in service and Figure [d] is for those who had
their own business. The data revealed by the study was telling some different story,
as the percentage of LIC preference in business class was much lower than the
figure for service class. Former had 75% preference for LIC whereas later had 80%
preference for LIC.

45
DATA VALIDATION OF QUESTIONNAIRE

Figure 1

Figure 2

46
Figure 3

Figure 4

47
Figure 5

Figure 6

48
Figure 7

Figure 8

49
ANALYSIS OF THE QUESTIONNAIRE

From the survey conducted on 100 people mainly from Rohtak and Hissar district,
which acted as the universe of this survey, we can very rightly say that although
many people are shifting towards private players but still most of them can only
believe on LIC as it is government owned.

It was found during the collection of data, people who were into service are those
kind of customer who don't want to carry any risk while investing and thus had
their preference for the LIC because according to them LIC is more secured than
any company because of its government owned condition. Even if in certain type
of life insurance policy they may not be getting the same high return which they
would have got while investing in other "private" companies they are much happier
and satisfied while investing in LIC as it gives them peace of mind. Whereas
reverse was the case with customer who had their own business, according to them
it doesn't matter who is the owner of the company, what they want at the end is
return and good service. And same was the case with the person who were married,
they all demanded the security for the money and according to them no company
can give better security then LIC as it is government owned.

Most of the people prefer the policy term of 10-20 years. Very few of them
consider insurance as tax savings or just investment. Most of the population
considers it as investment with risk cover. Company’s credibility is the most
important factor that attracted the respondents to go towards the company.
Insurance companies as well as the agents are doing appreciating work as 55% of
the insured persons have been approached by them instead of customers
aaproaching the insurance companies. if we talk of customer satisfaction , then the
task is a bit disappointing as 40% of the customers are not satisfied by the
insurance companies

50
10. FINDINGS

It was a great experience for me to do such a project with a survey in the market.
Many such things were learnt which I never earlier thought of. It was amazing to
see that every customer had different views about different things and they have
different reasons behind there different perceptions.

Many points were found while doing this project

It was found that many persons do not even know the name of the company.

Preference of customers for the company is also very less.

Of the survey conducted on 100 people, only 52 of them are insured.

Age 51% people perceive that policy can be brought any time. There is no
specified age for that.

Satisfaction 40% people are not at all satisfied with the insurance companies.

Feature 37% people buy the policy of a company by seeing its credibility.

Perception on insurance 47% people consider it as both investment and risk

cover.

Policy term 58% people want to buy policy for a term of 10-20 years.

Premium payment 33% people want to pay half yearly premium

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11. RECOMMENDATIONS

During the data collected, it has been found that people have great awareness about
various companies but a lot more has to be done, especially by smaller companies
like Kotak Life Insurance to establish their market presence.
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 influenced by the marketing activities of insurance
companies. A high penetration of print, radio and TV ad campaigns over the years
is beginning to have its impact now.
Another important trend was in terms of people viewing insurance as a tax
saving and investment instrument as much as protective one.
The general satisfaction levels among public with regards to policy and agents still
requires improvement. Here lies the opportunity for a relatively new comer like
Kotak Life Insurance. LIC has never been known for prompt service or customer
oriented methods but Kotak Life Insurance can build its reputation based on these
factors.

Kotak Mahindra Old Mutual Life Insurance Ltd should make certain clubs as their
corporate agents. The main reason is that club is an organization having a large
member base across the country.
Tie up can also be made with associations like All India Tennis Association
(AITA) for the distribution of life insurance products. The reason behind this
recommendation is that such association has a large number base and also part of
the premium generation can be utilized for the welfare of the sorts men engaged
with association. Kotak can also tie up with colleges and Institutes all over India
where students who want to start their business can be encouraged. Company can
form this tie up for a limited time periods where college placement cell would be
involved for the selection of the students.
The company must increase its sales channel to reach more and more number of
people.

52
13. CONCLUSION

The insurance sector in India has become stronger in terms of the no. of customers.
It has become Globally competitive and diverse aiming at higher efficiency.
Exposure to worldwide competition and reforms in has led to the emergence of
better quality products and services. Reforms have changed the face of Indian
Insurance Sector. THE Insurance sector has improved manifolds in terms of
services.

“WITH NEW OPPORTUNITIES UNFOLDING INSURANCE SECTOR, INDIA

IS EMERGING AS A GLOBAL POWER IN INSURANCE SERVICES IN THE
COMING YEARS”

During the data collected, it has been found that people have some
awareness about various companies but a lot more has to be done,
especially by smaller companies to establish their
market presence. People have started understanding significance of insurance
needs and are willing to trust even private companies with their hard earned
money. People in general have been influenced by the marketing activities of
insurance companies. A high penetration of print, radio and TV ad campaigns over
the years is beginning to have its impact now. Another important trend was in
terms of people viewing insurance as a tax saving and investment instrument as
much as protective one. The general satisfaction levels among public with regards
to policy and agents still requires improvement. Here lies the opportunity for a
relatively new comers. So Insurance companies can build their reputation by
providing prompt service or customer oriented methods.

53
14. BIBLIOGRAPHY

• McGill's, Life Insurance, Individual life insurance, pg 208-210., edition

2007

• Kenneth Black Jr. , Life and Health Insurance, 13th Edition , life insurance,
pg 103-104

• en.wikipedia.org/wiki/Insurance

• www.kotaklifeinsurance.com/LIFEINSURANCE

• www.irdaindia.org/IRDA

• economictimes.indiatimes.com/.../insurance/insurance.../Kotak-Life-
Insurance.../

• www.linkedin.com/companies/kotak-life-insurance

• www.indiahousing.com › Insurance Companies

www.indiastat.com
www.scribd.com
www.indianinsuranceresearch.com

54
15. ANNEXURES

QUESSTIONNAIRE

Q 1) Do you have any life insurance policy?

a) YES
b) NO

Q 2) Are you aware about the Life Insurance products or will

prefer to purchase the Life Insurance products of
• HDFC Standard Life Insurance
• SBI Life Insurance
• Kotak Life Insurance
• TATA AIG Life Insurance
• Reliance Life Insurance
• ICICI prudential
• LIC
• Any other

Q3) Which company’s insurance policy do you have?

__________________________________________________________________

Q4) Term of your insurance policy?

a) < 5 years
b) 5 – 10 years
c) 10 – 20 years
d) any other

Q5) What do you think are the benefits of Life Insurance?

a) Covers future uncertainty
b) Tax Savings
c) Investments
d) Comprehensive investment and risk coverage instrument

Q6) Which feature of Life Insurance policy will you consider while buying?
a) Money Back Guarantee

55
b) Larger Risk Coverage
c) Low Premium
d) Company’s Credibility
e) Easy Access to Agents

Q7) How have you bought / would buy a Life Insurance policy?
a) Customer approaching insurance company / agent
b) Insurance company / agent approaching the customer

Q8) Are you satisfied with your Life Insurance policy?

a) Highly Satisfied
b) Satisfied
c) Not So Satisfied

Q9) According to you, what is the right age to buy insurance?

a) < 25 years
b) 25 – 35 years
c) 35- 45 years
d) > 45 years
e) Anytime

Q10) How would you like to pay the premium amount?

a)yearly
b)quarterly
c)half yearly
d)single premium

Respondent’s Profile :
NAME:
AGE:
GENDER: •
EDUCATIONAL QUALIFICATION:
PROFESSION:
(Business,
Professional, Service, Any
Other)
ANNUAL HOUSEHOLD INCOME

56
(<2 lakhs,
2-5 lakhs,
5-10 lakhs,
>10
lakhs)

57