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ANALYSIS WITH OTHER MAJOR INSURANCE PLAYERS
Submitted as a part of curriculum in Masters of Business Administration programme by INSTITUTE OF MANAGEMENT SCIENCES UNIVERSITY OF LUCKNOW
Academic Year 2008-2009
AMAR KUMAR GUPTA MBA (RETAIL MANAGEMENT)
(INSTITUTE OF MANAGEMENT SCIENCES UNIVERSITY OF LUCKNOW,LUCKNOW)
CONTENTS Chapter 1: EXECUTIVE SUMMARY Chapter 2: INSURANCE – AN INTRODUCTION Chapter 3: INDUSTRY PROFILE 3.1 ORIGIN OF INSURANCE 3.2 ORIGIN OF LIFE ASSURANCE IN INDIA 3.3 INSURANCE SECTOR REFORMS 3.4 POTENTIALITY OF INSURANCE IN INDIAN MARKET Chapter 4: LIFE INSURANCE PRODUCTS 4.1: WHOLE LIFE POLICY 4.2: ENDOWMENT POLICY 4.3: MONEY BACK POLICY 4.4: TERM POLICY 4.5: ANNUITY 4.6: JOINT LIFE POLICY 4.7: GROUP INSURANCE Chapter 5: IRDA ACT 1999 5.1: DUTIES, POWERS, FUNCTIONS Chapter 6: PLAYERS IN INDIAN INSURANCE INDUSTRY 6.1: LIFE INSURERS 6.2: GENERAL INSURERS 6.3: INSURANEC BUSINESS Chapter 7: COMPANY PROFILE 7.1: ABOUT ICICI PRUDENTIAL 7.2: PRODUCTS 7.3: ABOUR THE PARTNERS 7.4: INSURANCE PLANS 6 7 18
Chapter Chapter Chapter Chapter
8: MARKETING RESERCH 9: CONCLUSION 10: RECOMMENDATION 11: BIBLIOGRAPHY
58 88 90 92 93
Chapter 12: ANNEXURE QUESTIONNAIRE
ACKNOWLEDGEMENT There is always a sense of gratitude which one express to other for the helpful so needy services they render during all phases of life. I would like to express my gratitude towards all those who have been helpful to me in getting this mighty task of training to a successful end. First of all, I consider it a pleasant duty to express my heart felt appreciation , gratitude and indebtedness to Mr. Abhishek Gupta (Manager- Agency Recruitment) & Mr.Sumit Narang(Sales Manager) for his keen interest, invaluable pain taking & excellent guidance, patience, endurance, encouragement & thoughtful advice throughout the project work duration. I would also like to be thankful to Mr. Kalhan Kaul (Branch Manager, MAX NEW YORK LIFE INSURANCE, SHAHJAHANPUR), who has given me the right way to prepare my project report. I am also thankful to all my friends who gave me constant & continuous inspiration to complete this project. (AMAR KUMAR GUPTA)
PREFACE Insurance market is growing very fast. The opportunity is also high in this sector as only 5% of Indian market is covered by this sector and the players are trying to extend in to the rest untapped 95%. Though LIC in India is the market leader, relatively younger private organization are also doing well in this sector. This is the pick time for all the players to capitalize this growth and increase their market share through good distribution channel network. MAX NEW YORK is one of the major Life insurance player. who is emerging a market leader among private insurance group. The success story of good market share of different organization depends on the distribution channel network of the organization. The distribution channel network is the interface between the producer or service provider and user. Hence it should be highly effective to create a good brand perception on its user.
Chapter - 1 EXECUTIVE SUMMARY The Indian Insurance Industry is broadly segmented into public and private insurance companies. Before year 2000, only public sector insurance companies were allowed to do business in India. But after year 2000, insurance sector was thrown open for private insurance companies as well. But as of now there now around 19 private life insurance companies and around 9 private non-life insurance companies doing business in India. This report is prepared with an aim to provide an overview of present Indian Insurance Industry. Also with LIC, heading the public life insurance companies and MAX NEW YORK LIFE heading the private life insurance players, this report also provides a comparative analysis of Life policies. Based on this report , the prospecting insurance customers would get help in choosing the right insurance products for themselves.
Chapter - 2 INSURANCE – AN INTRODUCTION Insurance may be described as a social device to ensure protection of economic value of life and other assets. Under the plan of insurance, a large number of people associate themselves by sharing risks attached to individuals. The risks, which can be insured against, include fire, the perils of sea, death and accidents and burglary. Any risk contingent upon these, may be insured against at a premium commensurate with the risk involved. Thus collective bearing of risk is insurance. 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. The term "risk" is used to describe the possibility of adverse results flowing from any occurrence or the accidental happenings, which produce a monetary loss. Insurance is a pool in which a large number 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. The sharing of risk among large groups of people is the basis of insurance. The losses of an individual are distributed over a group of individuals. Definitions: General definition: In the words of John Magee, “Insurance is a plan by themselves which large number of people associate and transfer to the shoulders of all, risks that attach to individuals.”
Fundamental definition: In the words of D.S. Hansell, “Insurance accumulated contributions of all parties participating in the scheme.” Contractual definition: In the words of justice Tindall, “ Insurance is a contract in which a sum of money is paid to the assured as consideration of insurer’s incurring the risk of paying a large sum upon a given contingency.” Characteristics of insurance • • • • • • Sharing of risks Cooperative device Evaluation of risk Payment on happening of a special event The amount of payment depends on the nature of losses incurred. The success of insurance business depends on the large number of insured against similar risk. • Insurance is a plan, which spreads the risk and losses of few people among a large number of people. • • The insurance is a plan in which the insured transfers his risk on the insurer. Insurance is a legal contract which is based upon certain principles of insurance which includes, utmost good faith, insurable interest, contribution, indemnity, causas proxima, subrogation, etc. • The scope of insurance is much wider and extensive. people
Functions of insurance: Primary functions: 1. Provide protection:- Insurance cannot check the happening of the risk, but can provide for the losses of risk. 2. Collective bearing of risk: - Insurance is a device to share the financial losses of few among many others. 3. Assessment of risk: - Insurance determines the probable volume of risk by evaluating various factors that give rise to risk. 4. Provide certainty: - Insurance is a device, which helps to change from uncertainty to certainty. Secondary functions: 1. Prevention of losses: - Insurance cautions businessman and individuals to adopt suitable device to prevent unfortunate consequences of risk by observing safety instructions. 2. Small capital to cover large risks: - Insurance relives the businessman from security investment, by paying small amount of insurance against larger risks and uncertainty. 3. Contributes towards development of larger industries. Other Function: Means of savings and investment: Insurance companies are business houses. The product they sell is financial protection. To succeed and survive, they must cover their costs, which
include payments to cover the losses of policyholders, as well as sales and administrative expenses, taxes and dividends. Insurance companies have two sources of income for covering these costs: premiums and investment income. The premiums are collected on a regular basis and invested in Government Bonds, Gilt, stocks, mutual funds, real estates and other conservative avenues. However, investment income depends on market conditions, interest rates, economy etc. and varies from year to year. Because of the uncertainty associated with the investment income, insurance companies must generate enough income from premiums to cover the bulk of their expenses. The risk becomes insurable if the following requirements are complied with: • • • • The insured must suffer financial loss if the risk operates. The loss must be measurable in money, The object of the insurance contract must be legal. The insurer should have sufficient knowledge about the risks he accepts.
Fundamentals of Insurance The fundamental Principles of the Insurance are as follows: • Insurable Interest: Insurable interest means the legal right to insure. Insurable Interest is a must and only then the insurance contract is enforceable at law. This principle differentiates a Contract of insurance from wager. Lack of insurable interest renders the contract null and void. For Insurable Interest to exist there must be Property, Rights, Interest, Life or
Liability; this must be insured and the Insured should have a legally recognizable relationship thereto. The Insured should be benefited by the safety of the property or is prejudiced by its loss. Insurable Interest may arise in the following manner: 1. Ownership: Absolute ownership entitles the owner to insure the property. This is the commonest method whereby Insurable Interest arises. 2. Partial Interest is also insurable e.g. a mortgagee. A creditor can also insure the life of his debtor but only to the extent of his loan. 3. Administrators and executors i.e. officials appointed by a court of law to take care of a property may also insure the property. 4. Relationship does not automatically constitute insurable interest. The only relationship recognized by law for this purpose is the one between a husband and wife. 5. An employer can insure his employee under a Personal Accident Policy as he has insurable interest in them.
Proximate cause: Generally, the claims are payable under insurance policies if they arise out of events which are proximately caused by the insured perils. In other words, the proximate cause of the event has to be peril covered by the policy, so as to constitute a valid claim.
Contribution: An insured may have several insurance on the same subject matter. If he recovers his loss under all these insurance, he will obviously make a profit out of loss. This will be an infringement of the principle of indemnity. Common Law has, therefore, evolved the doctrine of contribution whereby the insured is prevented from recovering more than his loss, despite his having several insurance on the subject matter.
Subrogation: The principle of indemnity seeks to prevent the insured from making profit out of loss. However, it may so happen that that the insured may recover his loss under his policy and he may also have rights against third parties. If, after the insurance claim is settled, the insured is allowed to enforce his rights against third parties and to retain whatever damages he receives from them, he will certainly make a profit and the principle of indemnity will be infringed. Common Law has therefore, evolved the doctrine of subrogation as corollary to the principle of indemnity. Subrogation may be defined as the transfer of rights and remedies of the insured to the insurers who have indemnified the insured in respect of the loss. The Common Law right of subrogation is implied an all contracts on indemnity, as it arises only after payment of loss.
Utmost Good Faith: In all General Insurance contracts we know that a property or interest or liability or life is offered for insurance and the insured has to take decisions on the acceptance of the proposal. If he decides to accept the proposal a premium commensurate with the risk has to be charged. To enable him to take necessary decision in this regard, the insurer must have certain facts about the risk offered. These facts influence the judgment of the insurer in deciding about the acceptance or otherwise of the risk and the rate of premium to be charged, if accepted. Such facts are known as material facts.
Nature of Insurance Contracts When the insured pays the premium and the insurers accept the risks, the contract of insurance is concluded. The policy issued by the insurers is the evidence of the contract. The contract of insurance, like any other contract, for
example a contract for the sale of goods, is subject to the general law of contract as embodied in the Indian Contract Act,1872. According to this Act, a contract must have certain essential features in order to make it legally valid and enforceable. The following are the essential elements: a) Offer and acceptance: Usually, the offer is made by the proposer, and acceptance made by the insurer. b) Consideration: This means that the contract must involve some mutual benefit to the parties. The premium is the consideration from the insured and the promise to indemnity is the consideration from the insurers. c) Agreement between the parties: Both the parties should agree to the same thing in the same sense. d) Capacity of the parties: Both the parties to the contract must legally competent to enter into the contract. For example, minors cannot enter into insurance contracts. e) Legality: The object of the contract must be legal and the contract should not violate any legal requirements. E.g. no insurance can be had for smuggled goods. Risk Reasonable or not, risks are inescapable in business. Every business venture is something of a gamble, because the possibility of loss is as real as the prospects for profits. And even though managers do everything possible to ensure that their business succeeds, they cannot guard against every conceivable form of risk.
Pure Risk versus Speculative Risk • Pure Risk: Events representing the kind of risk that no business can predict or escape, known as Pure Risk, it is the threat of a loss without the possibility of gain. In other words, a disaster such as avalanche or fire is costly for the business it strikes, but the fact that no disaster occurs contributes nothing to a firm's profit. • Speculative Risk: It is the type of risk that offers the prospect of making profit and prompts people to go into business in the first place. Every business accepts the possibility of losing money in order to make money. Approaches to Risk Management Risk Management is the process of reducing the threat of loss due to uncontrollable events. Steps in selecting a risk management approach: • • To identify all the things those can possibly go wrong. · To consider the probability that an event will occur.
Techniques of Risk Management are: 1. Avoiding the Risk: When a company avoids risk, it eliminates the possibility that a particular event will occur. To avoid the possibility of a suit, for example, not to produce any products -which would, of course, eliminate both the threats of a lawsuit and the opportunity to profit. With rare exceptions, avoiding risk entirely is extremely difficult. 2. Reducing Risk: A more practical approach is to reduce the risk by taking precautions. Risk reduction is an important element in most companies' approach to risk management. Typical precautions include putting safety locks on doors to prevent robberies, installing overhead sprinklers to minimize fire damage, and periodic checking motor vehicles to prevent accidents. 14
3. Assuming risk: Many companies draw on current revenues or set aside a "Contingency Fund" to cover unexpected losses. Setting aside money on regular basis could be cheaper than purchasing insurance. Moreover, the company can earn interest on the reserved cash. Such assumption of risk is also called selfinsurance or risk retention. 4. Transferring the risk: Most companies still rely on outside insurance firms for financial protection against catastrophic losses. In buying insurance, companies transfer the risk of loss to an insurance firm, which agrees to pay for certain types of losses. In exchange, the insurance firm collects a fee known as a premium. Insurable and Uninsurable Risks: Insurable risks: An insurable risk - one that an insurable company will cover Generally meets the following requirements. The peril insured against must not be under the control of the Insured. This means, of course that insurer do not pay for losses that are intentionally caused by an insured, caused at the Insured's direction, or caused with the insured's collusion. For example, a fire insurance policy excludes loss caused by the Insured’s own arson. It does, however, include loss caused by an employee's arson. Losses must be calculable, and the cost of insuring must be economically feasible. To operate profitably, insurance companies must have data on the frequency of losses caused by a given peril. If this information covers a long period of time and is based on a large number of cases, Insurance companies can usually predict quite accurately how many losses will occur in the future. For example, the insurance companies to fix up the rate of premium of Personal Accident Insurance may use the information of the number of people who will die each year in India in accidents. The peril must be unlikely to affect all insured simultaneously. Unless an insurance company spreads its coverage over large geographic areas or a broad population base or different classes of Insurance, a single disaster might force it to pay out all its
policies at once. The possible loss must be financially serious to the Insured. An Insurance company could not afford the paperwork involved in handling numerous small claims of a few Rupees each. As a result, many policies have a clause specifying that the insurance company will pay only that part of a loss greater than an amount - the deductible or excess - stated in the policy. The excess represents small losses that the Insured has to absorb.
Chapter – 3 INDUSTRY PROFILE 3.1 Origin of Life Insurance Life Assurance was born in England when the first policy providing temporary cover for a period of 12 months was issued as easy as 1583 A.D. The Amicable Society started granting fluctuating sum on death since 1705 and a fix sum since 1757, With the development of mortality tables, the life Assurance acquired a scientific character. The Equitable Society founded in 1762 was the first Society established on scientific basis. 3.2 ORIGIN OF LIFE ASSURANCE IN INDIA In India, after failure of two British companies, the European and the Albert in 1870, which attempted writing business on Indian lives, first Indian Life Assurance Society was formed in the same year called Bombay Mutual Assurance Society Ltd. It was followed by the Oriental Life Assurance Company Limited in 1874, Bharat in 1896 and Empire of India in 1897. The Idea of insurance was born out of a desire of the people to share loss of an individual by many. Originally it restricted to forms other than life assurance. It started with Marine Insurance, where the losses on account of perils of sea were shared by all who were engaged in trade. Reference to some forms of insurance, is found in the codes of Hammurabi, Manu (Manav Dharma Shastra). The word `Yogakshema’ is used in the Rig Veda suggesting that some form of community insurance was practiced by the Aryans in India over 3000 years ago. In India during Buddhist period burial societies existed which were mutual in their character and used to help a family by building a house, protecting the widow, marrying the girls.
The Swadeshi Movement of 1905 provided impetus to the formation of several companies such as the `Hindustan Cooperative’, the `United India’, the `Bombay Life’, the `National’. Further in the wake of freedom movement number of companies such as the `New India’, the `Jupiter’ the `Lakshmi’ emerged. The Government began to exercise a certain measure of control on Insurance business by passing the `Insurance Act’ in 1912. For controlling investment of funds, expenditure and management, a comprehensive Act was passed known as `The Insurance Act 1938’. For controlling the affairs, the office of Controller of Insurance was established. The act was extensively amended in 1950. In the year 1955, approximately 170 Insurance Offices and 80 Provident Fund Societies had been registered for transacting Life Assurance business in India. There were, however, no full guarantees to the policyholders. The concept of trusteeship was lacking. Many insurance companies went into liquidation. There were malpractices in insurance business. For achieving the following purposes it was felt necessary to nationalize the insurance business in India. To provide security to the policyholders (i) (ii) (iii) (iv) To utilize the funds for nation-building activities. To avoid cut throat competition To abolish mal-practices To spread the insurance message to the rural areas.
The first step in this direction was taken by the Government of India by issuing the Life Insurance (the Emergency provisions) Ordinance, 1956 on 19th January, 1956. The then Finance Minister, Shri C. D. Deshmukh mentioned the purpose of nationalisation as reaching the goal of socialistic pattern of society, rendering genuine service to the people in the rural area. The Life Insurance
Corporation Act (Act XXXI of 1956) was passed by the Parliament in June 1956 which came in force on 1st July 1956. The Life Insurance Corporation of India came into existence on 1st September 1956. 3.3 INSURANCE SECTOR REFORMS Having looked at the insurance sector, let us look at the efforts made by the government to make the industry more dynamic and customer friendly. To begin with, the Malhotra committee was set up with the objective of suggesting changes that would achieve the much required dynamism. The Malhotra Committee Report In 1993, Malhotra Committee, headed by former Finance Secretary and RBI Governor R. N. Malhotra, was formed to evaluate the Indian insurance industry and recommend its future direction. In 1994, the committee submitted the report and gave the following recommendations: Structure • • Government stake in the insurance Companies to be brought down to 50% Government should take over the holdings of GIC and its subsidiaries so that these subsidiaries can act as independent-corporations • All the insurance companies should be given greater freedom to operate
Market Regulations: • Private Companies with a minimum paid up capital of Rs.1bn should be allowed to enter the industry • No Company should deal in both Life and General Insurance through a single entity
Foreign companies may be allowed to enter the industry in collaboration with the domestic companies
Postal Life Insurance should be allowed to operate in the rural market Only one State Level Life Insurance Company should be allowed to operate in each state
Regulatory Body • • • The Insurance Act should be changed An Insurance Regulatory body should be set up Controller of Insurance (Currently a part from the Finance Ministry) should be made independent Investments • Mandatory Investments of LIC Life Fund in government securities to be reduced from 75% to 50% • GIC and its subsidiaries are not to hold more than 5% in any company (There current holdings to be brought down to this level over a period of time)
Customer Service • LIC should pay interest on delays in payments beyond 30 days
Insurance companies must be encouraged to set up unit linked pension plans Computerization of operations and updating of technology to be carried out in the insurance industry
Overall, the committee strongly felt that in order to improve the customer services and increase the coverage of the insurance industry should be opened up to competition. But at the same time, the committee felt the need to exercise caution as any failure on the part of new players could ruin the public confidence in the industry. Hence, it was decided to allow competition in a limited way by stipulating the minimum capital requirement of Rs.1 bn. This amount is not very high for foreign firms, as it translates to only about US$25 million. Further, to date it is unclear whether equity should be payable in one go or should be brought in as installments. Also, the foreign equity participation was to be restricted to only 40%. The committee felt the need to provide greater autonomy to insurance companies in order to improve their performance and enable them to act as independent companies with economic motives. For this purpose, it had proposed setting up an independent regulatory body. The industry and analysts find that there is lack of clarity in the following areas:• Though coverage of rural areas was to be made compulsory, it raises the question as to who would subsidies the rural policies as they would be difficult to service and hence costs will go up. • There is some confusion with respect to investments. Where should the funds be invested? Currently 70% of the funds with LIC & GIC are invested in Government securities. Would new entrants be allowed to invest in GOI securities? • The report also does not enumerate exit options available to the new entrants. In the event of failure, there should be an arrangement made whereby the
other Companies pool in to bail the customers, who in all probability would be middle class individuals. 3.4 POTENTIALITY OF INSURANCE IN INDIAN MARKET Marketing inefficiency of general insurers has kept society in dark even when so many personal as well as commercial lines of insurance covers are available for them. Insurers have failed to identify the need of the individual risk factors and thereafter selecting proper market segments and developing demand of these needs by adopting proper marketing mix. There is great scope of commercial line of insurance as we are developing at a very fast rate but the potentiality and scope of personal lines of insurance is vast as this areas is still under-tapped. Product designing and pricing is also simple and growth of this portfolio is guaranteed in this country which has a base of over 100 crore population, where there are about 25 crore dwellings, 20 crore schools, colleges and educational institutions and about 5 crore small and big shops. But despite this the Indian insurers share in personal line of business is very low or negligible. There are enormous growth opportunities to Indian as well as foreign insurers because of such a huge base of population there is ample scope to introduce the new line of covers as per the changing needs and to increase the per capita share of the insurance by encouraging risk transfer by investing small portion of the savings of the individuals. By opening up the sector far more opportunities has came up in insurance and reinsurance market. After privatization of this sector presence of the foreign players has also increased. Therefore the insurers, in time to come, will have to change their attitude from selling of the product to marketing of the protection needs of the insured and for this what is required is: • Effective product planning
• • • •
Suitable pricing Efficient promotion and physical distribution. Proper physical evidence. Good and well trained sales force.
Your Plans, Your Dreams & Their Future: The Essence of Life Insurance Your family counts on you every day for financial support: food, shelter, transportation, education, and much more. You and your spouse have plans for your future and dreams for your family: another child, a bigger home, a new business, college education, travel, retirement… Life insurance is all about making sure your family has adequate financial resources to make those plans and dreams come true, if you were to die prematurely. And just as your spouse and children (as beneficiaries) count on you, you count on your spouse. That's why coverage for your spouse is also important. If he or she were to die unexpectedly, you would feel similar financial strains. This is especially true today, with so many "double income" families.
When Should Someone Invest? The answer, of course, is right now! Since no one can tell when the best time to invest is, it is whenever you have the money! One should first invest in any plans for which tax-deductible contributions can be made because these types of savings reduce current taxes. Then, any more surplus funds should be invested in a variable annuity, especially in equities so as to get the maximum growth of the capital. Insurance as a Safety Net 23
The function of insurance is to protect you against losses you can't afford. This is done by transferring the risks of a person, business, or organization -- the "insured" -- to an insurance company, or "insurer." The insurer then reimburses the insured for "covered" losses -- i.e., those losses it pays for under the policy's terms. As the insurance consumer, you pay an amount of money, called a premium, to the insurer to transfer the risk. The insurer pools all its premiums into a large fund, and when a policyholder has a loss, the insurer draws funds from the pool to pay for the loss. Life is full of unexpected events that can create large financial losses. For example, whenever you drive, it is possible that you may have a costly accident. Risks affect you by causing worry about potential loss and how to deal with the consequences. Insurance reduces anxiety over a possible loss and absorbs the financial brunt of its consequences. However, while insurance coverage is essential, how much and what type of insurance people need differ with each individual. You must decide how much risk you're willing to tolerate without insurance. For example, benefits for disability policies typically begin after a waiting period of one to six months. Therefore, you should ensure that you have some form of coverage or financial resources before the policy period begin.
Where Can I Get Insurance? Since insurance can be expensive, it makes sense to get more than one price quote for coverage. At one time, we in India had no option but the nationalized insurance companies like LIC, GIC, etc. Now several private players, often with foreign tie-ups, are entering the fray. There are now several companies selling any one type of insurance, each with its own price structures, coverage, and policy exclusions. To help consumers choose among the various types of coverage’s, companies train sales representatives in the technical points of their
insurance products. Many representatives work for just one insurance company. There are also brokers and independent agents -- self-employed business people who sell insurance on commission for several insurers -- who claim they can comparison shop to get the best coverage’s for consumers. Certain banks also sell insurance. What Type of Insurance Agent Should I Trust? With multiple players in the life insurance field now, a choice should be first made regarding the insurance company before choosing an agent. To determine a company's willingness to pay claims, ask a policyholder who has filed several claims. Obviously, the more claims an insurer has handled with no complaints, the more likely that the company will provide you with good service. Barring LIC, the remaining players in life insurance are still new in the field, so this kind of information will not be available for another few years at the least. It remains to be seen how the newer players will perform on the claims front, but given the regulatory framework and their strong parentage, their performance should be comparable, if not better than LIC. It is quite imperative that your insurance agent be competent and professional enough to clearly understand your insurance requirements and suggest a suitable scheme. Also, with insurance companies offering varying rate of commissions on different schemes, there is a likelihood that a 'not-soprofessional' agent may be tempted to recommend a scheme which pays him a higher commission, though it may not be very suitable for your needs. This is especially so in the case of LIC, sole provider of life insurance in our country till recently, where the eligibility criteria are not very rigorous and very often the level of knowledge and competence of the agents leaves a lot to be desired. The new players seem to be much more stringent in appointing agents and more committed in providing training to them. In today's context, especially in case of 25
LIC, it may be advisable to go in for an agent who comes recommended from one of your friends, relatives or associates. Further, the agent should be able to provide you with a comparison of multiple schemes and also explain them in simple terms, so that you are are able to make an informed decision. In case an agent is not inclined to spend the time and resources to provide you with relevant information and solve your queries, it may be better to give a go-by to such a person and start looking for a new agent. The market is becoming increasingly competitive and it should not be a difficult task to find a good agent. Life Insurance Players:
Bajaj Allianz General Insurance: Bajaj Allianz General Insurance Company Limited is a joint venture between Bajaj Auto Limited and Allianz AG of Germany. Both enjoy a reputation of expertise, stability and strength.
Birla Sun Life Insurance: The Aditya Birla Group contributes its knowledge of the Indian market while Sun Life Financial contributes global expertise in the areas of protection and wealth management.
HDFC Standard Life Insurance: HDFC and Standard Life have a long and close relationship built upon shared values and trust. Providing long term financial security to policy holders will be the constant endeavor.
ICICI Prudential Life Insurance: The Company was granted Certificate of Registration for carrying out Life Insurance business, by the Insurance Regulatory and Development Authority.
ING Vysya Life Insurance: ING, the world’s second largest life insurance company together with Vysya Bank, one of India’s leading private sector banks, forms ING Vysya Life Insurance.
Life Insurance Corporation (LIC): Life Insurance Corporation (LIC) has been one of the pioneering organizations in India who introduced use of Information Technology in their business.
MetLife India: The Metropolitan Life Insurance Company is the number one insurer in the U.S. It is helping build financial independence for its customers.
Oriental Insurance: The Oriental Insurance Company Ltd. (OICL) is one of the leading General Insurance companies in India and is a subsidiary of the General Insurance Corporation (GIC) of India.
Royal Sundaram Alliance Insurance: Royal Sundaram marks the coming together of Sundaram Finance, one of India’s most respected and trusted finance companies, and Royal and Sun Alliance, one of the largest insurance groups in the world.
Tata AIG Insurance: Life insurance & general insurance for individuals & corporates by Tata AIG. This site will guide you on how to capitalize on opportunities and protect against uncertainties.
Chapter – 4 LIFE INSURANCE PRODUCTS 4.1 WHOLE LIFE POLICY These are low-cost insurance plans where the sum assured is payable on the death of the insured A typical whole life policy runs as long as the policyholder is alive. In other words, the risk is covered for the entire life of the policyholder, which is why it is known as whole life policies. The policy money and the bonus are payable only to the nominee of the beneficiary upon the death of the policyholder. The policyholder is not entitled to any money during his or her own lifetime, i.e. there is no survival benefit. Whole life policies are fairly rigid and inflexible and are suitable only in a few, very specific cases. Whole Life Policy can be a good initial policy to buy since its cost is very low. That is an important consideration when one is just starting a career. 4.2 ENDOWMENT POLICY Under these plans, the sum assured is pay-able on the maturity of the policy or in case of death of the insured individual before maturity of the policy. Endowment policies cover the risk for a specified period at the end of which the sum assured is paid back to the policyholder along with the entire bonus accumulated during the term of the policy. It is this feature - the payment of the endowment to the policyholder upon the completion of the policy’s term -, which rightly accounts for the popularity of endowment policies. The original sum assured and the accumulated bonus - received back comes handy from the endowment can either be used for buying an annuity policy to generate a
monthly pension for the whole life, or put it in any other suitable investment of his choice. As compared to whole life policies, the premium rates for endowment policies are higher and the bonus rates are lower. On the plus side, these polices offer an endowment - representing a return on his premium payments payable to him in his own lifetime when the policy comes to an end. 4.3 MONEY BACK POLICY Unlike ordinary endowment insurance plans where the survival benefits are payable only at the end of the endowment period, money back policies provide for periodic payments of partial survival benefits during the term of the policy, of course so long as the policy holder is alive. An important feature of this type of policies is that in the event of death at any time within the policy term, the death claim comprises full sum assured without deducting any of the survival benefit amounts, which may have already been paid as money-back components. Similarly, the bonus is also calculated on the full sum assured Under money back policies premiums can be paid as per the insurance company’s policy. These could be quarterly, half yearly or annually. The premiums for these policies are payable for the selected term of years, or till death if it occurs earlier. By buying such policies one can receive income at regular intervals other than the risk cover it provides. Also a good amount of bonus on the full sum assured is quite a good bargain Individual before expiry of the policy
4.4 TERM POLICY: Term policies; cover only the risk during the selected term period. If the policyholder survives the term, the risk cover comes to an end. A Term plan is designed to meet the needs of people who are initially unable to pay the larger premium required for a whole life or an endowment assurance policy, but they hope to be able to pay for such a policy in the near future. No surrender, loan or paid-up values are granted under these policies because reserves are not accumulated. If the premium is not paid with the days of grace, the policy will lapse without acquiring a paid-up value. However, a lapsed policy may be revived during the lifetime of the life assured but before the expiry of the period of two years from the due date of the first unpaid premium on the usual terms. Accident and / or Disability benefits are not granted on policies under the Term plan. 4.5 ANNUITY (PENSION PLAN) These plans provide for either immediate or deferred pension for life. The pension payments are made till the death of the annuitant (per-son who has a pension plan) unless the policy has provision of guaranteed period. An annuity is an investment that one make, either in a single lump sum or through installments paid over a certain number of years, in return for which one receive back a specific sum every year, every half-year or every month, either for life or for a fixed number of years. After the death of the annuitant or after the fixed annuity period expires for annuity payments, the invested annuity fund is refunded, perhaps along with a small addition, calculated at that time.
Annuities differ from all the other forms of life insurance discussed so far in one fundamental way - an annuity does not provide any life insurance cover but, instead, offers a guaranteed income either for life or a certain period. Typically annuities are bought to generate income during one’s retired life, which is why they are also called pension plans. Annuity premiums and payments are fixed with reference to the duration of human life. 4.6 JOINT LIFE POLICY Joint life policies are similar to endowment policies in as much as these policies also offer maturity benefits to the policyholders, apart form covering the risks as all life insurance policies. But these are categorized separately as these cover two lives together thus offering a unique advantage in some cases; notable, for a married couple or for partners in a business firm. Under a joint life policy the sum assured is payable on the first death and again on the death of the survivor during the term of the policy. Vested bonuses would also be paid besides the sum assured after the death of the survivor. If one or both the lives survive to the maturity date, the sum assured as well as the vested bonuses are payable on the maturity date. The premiums payable cease on the first death or on the expiry of the selected term, whichever is earlier. Accident benefits equivalent to the sum assured are available under this plan on the first death. However, if both lives are covered under Double Accident Benefit (DAB), the surviving life is covered under DAB until the end of the policy year, in which the first life dies under the cover of the policy.
These benefits are available with respect to both lives if • Both lives perish simultaneously owing to an accident. To avoid such an eventuality, nomination is allowed under the policy OR • Both die within the specified period as a result of the same accident OR
The second life also dies in the same policy year as result of another accident. To avoid such an eventuality, nomination is allowed under the policy. Particularly for couples - Joint life policies provide dual-purpose income and risk protection for both belonging to every income group and class of society. Under a joint life plan though the premium payment stops after the first life's death, bonuses continue to accrue on the basic Sum Assured till Maturity Date or till the death of the second life, if earlier. 4.7 GROUP INSURANCE Group Insurance offers life insurance protection under group policies to various groups such as employer-employee, professionals, co-operatives, weaker sections of society etc. It also provides insurance coverage to people under certain approved occupations at the lowest possible premium cost. Besides providing insurance coverage, it also offers group schemes to employers, which provide funding of gratuity and pension liabilities of the employer’s Group insurance plans have low premiums. Such plans are particularly beneficial to those for whom other regular policies are a costlier proposition. Group insurance plans extend cover to large segments of the population including those who cannot afford individual insurance. As such the premia one need to pay is comparatively lower and at the same time one can avail of insurance benefits.
The main features of the schemes are low premium and simple insurability conditions. Premiums are based upon age combination of members, occupation and working conditions of the group. A number of group insurance schemes have been designed for various groups. These include employer-employee groups, associations of professionals (such as doctors, lawyers, chartered accountants etc.), and members of cooperative banks, welfare funds, credit societies and weaker sections of society. CreditorDebtor groups are also offered group insurance schemes. Group insurance schemes providing uniform cover can be granted to outstanding loans. These groups are Members of primary housing societies where housing loans are granted by State Apex housing societies, borrowers granted loans by Institutional agencies in Public/Joint Sectors for housing purposes and borrower members of cooperative societies/banks formed by employees of the same employers 4.8 SPECIAL PLAN Special plans are insurance policy plans available from the national insurance providers to serve the needs of citizens that cannot be commonly classified or segregated. These special plans are designed to satisfy needs ranging from debtclearance in event of the death of the insured to financial aid in the event of a medical mishap. Special plans also provide financial assistance for handicapped dependants as well as emergency surgery required if and when a medical condition arises. Since special plans are designed for people with diverse and specific needs, the average citizen may not necessarily need or use them. Yet, in the normal course of life, situations may arise when one may need to provide for unplanned or unexpected contingencies and mishaps.
Chapter –5 IRDA ACT 1999 As per the section 4 of IRDA Act' 1999, Insurance Regulatory and Development Authority (IRDA, which was constituted by an act of parliament) specify the composition of Authority. The Authority is a ten member team consisting of : (a) (b) (c) a Chairman; five whole-time members; four part-time members,
(all appointed by the Government of India) 5.1 DUTIES, POWERS AND FUNCTIONS OF IRDA Section 14 of IRDA Act, 1999 lays down the duties, powers and functions of IRDA.. (1) Subject to the provisions of this Act and any other law for the time being in force, the Authority shall have the duty to regulate, promote and ensure orderly growth of the insurance business and re-insurance business. (2) Without prejudice to the generality of the provisions contained in sub-section (1), the powers and functions of the Authority shall include – (a) issue to the applicant a certificate of registration, renew, modify, withdraw, suspend or cancel such registration; (b) protection of the interests of the policy holders in matters concerning assigning of policy, nomination by policy holders, insurable interest, settlement of insurance claim, surrender
value of policy and other terms and conditions of contracts of insurance; (c) Specifying requisite qualifications, code of conduct and practical training for intermediary or insurance intermediaries and agents; (d) Specifying the code of conduct for surveyors and loss assessors; (e) (f) Promoting efficiency in the conduct of insurance business; Promoting and regulating professional organizations connected with the insurance and re-insurance business; (g) Levying fees and other charges for carrying out the purposes of this Act; (h) calling for information from, undertaking inspection of,
conducting enquiries and investigations including audit of the insurers, intermediaries, insurance intermediaries and other organizations connected with the insurance business; (i) control and regulation of the rates, advantages, terms and conditions that may be offered by insurers in respect of general insurance business not so controlled and regulated by the Tariff Advisory Committee under section 64U of the Insurance Act, 1938 (4 of 1938); (j) Specifying the form and manner in which books of account shall be maintained and statement of accounts shall be rendered by insurers and other insurance intermediaries; (k) (l) Regulating investment of funds by insurance companies; Regulating maintenance of margin of solvency;
Adjudication of disputes between insurers and intermediaries or insurance intermediaries;
Supervising the functioning of the Tariff Advisory Committee; specifying the percentage of premium income of the insurer to finance schemes for promoting and regulating professional organizations referred to in clause (f);
Specifying the percentage of life insurance business and general insurance business to be undertaken by the insurer in the rural or social sector; and
Exercising such other powers as may be prescribed.
Chapter – 6 PLAYERS IN INDIAN INSURANCE INDUSTRY 6.1 LIFE INSURERS Insurance industry, as on 1.4.2000, comprised mainly two players: the state insurers:
Life Insurance Corporation of India (LIC)
6.2 GENERAL INSURERS:
General Insurance Corporation of India (GIC) (with effect from Dec'2000, a National Reinsure)
GIC had four subsidiary companies, namely ( with effect from Dec'2000, these subsidaries have been de-linked from the parent company and made as independent insurance companies. 1. The Oriental Insurance Company Limited 2. The New India Assurance Company Limited, 3. National Insurance Company Limited 4. United India Insurance Company Limited.
Yr: 2000-2007: Insurance Industry in the year 2000-2001 had 15 new entrants, namely: Life Insurers: S.No. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 Name of the Company Max New York Life Insurance Co. Ltd. HDFC Standard Life Insurance Company Ltd. ICICI Prudential Life Insurance Company Ltd. Om Kotak Mahindra Life Insurance Co. Ltd. Birla Sun Life Insurance Company Ltd. Tata AIG Life Insurance Company Ltd. SBI Life Insurance Company Limited ING Vysya Life Insurance Company Private Limited Allianz Bajaj Life Insurance Company Ltd. Metlife India Insurance Company Pvt. Ltd. Reliance Life Insurance Company Ltd. Shriram Life Insurance Company Ltd. Sahara India Life Insurance Company Ltd. Bharti AXA Life Insurance Company Ltd. Aviva Life Insurance Company Ltd.
General Insurers: S.No. 1 2 3 4 5 6 Name of the Company Royal Sundaram Alliance Insurance Company Limited Reliance General Insurance Company Limited. IFFCO Tokio General Insurance Co. Ltd TATA AIG General Insurance Company Ltd. Bajaj Allianz General Insurance Company Limited ICICI Lombard General Insurance Company Limited.
6.3 INSURANCE BUSINESS: Insurance business is divided into four classes : 1) Life Insurance 2) Fire Insurance 3) Marine Insurance and 4) Miscellaneous Insurance. Life Insurers transact life insurance business; General Insurers transact the rest. No composites are permitted as per law Legislation (as on 1.4.2000):
Insurance is a federal subject in India. The primary legislation that deals with insurance business in India is: Insurance Act, 1938, and Insurance Regulatory & Development Authority Act, 1999. 39
Insurance Products (as on 1.4.2000) (for latest information get in touch with the current insurers – website information of insurers is provided at the web page for insurers): Life Insurance: Popular Products: Endowment Assurance (Participating) and Money Back (Participating). More than 80% of the life insurance business is from these products. General Insurance: Fire and Miscellaneous insurance businesses are predominant. Motor Vehicle insurance is compulsory. Tariff Advisory Committee (TAC) lays down tariff rates for some of the general insurance products. New products have been launched by life insurers. These include linked-products. For details, please visit the websites of life insurers.
Chapter – 7
7.1 ABOUT MAX NEW YORK Max New York Life Insurance Company Ltd . is a joint venture between New York Life; a Fortune 100 company and Max India Limited; one of India's leading multibusiness corporations. The company has positioned Itself on the quality platform. In line with its vision to be the Most Admired Life Insurance Company in India , it has developed a strong corporate governance model based on the core values of excellence, honesty, knowledge, caring, integrity and teamwork. The strategy is to establish itself as a Trusted Life Insurance Specialist through a quality approach to business. Incorporated in 2000, Max New York Life started commercial operation in 2001. In line with its values of financial responsibility, Max New York Life has adopted prudent financial practices to ensure safety of policyholder's funds. The Company's paid up is Rs. 1,232 crore. Having set a Best in Class Agency Distribution Model in place, the company is spearheading a major thrust into additional distribution channels to further grow its business. The company has multi-channel distribution that includes the agency distribution, partnership distribution, bancassurance, distribution focused on emerging markets and alliance marketing through employed sales force. The company currently has33 bancassurance relationships, 14 corporate agency tie-ups and direct sales force at 14 locations. Max New York Life has put in place a unique hub and spoke model of distribution to deepen rural penetration. The company has 39 (9 hub office 30 spoke offices) offices dedicated to emerging markets in Punjab and Haryana. Max New York Life offers a suite of flexible products. It now has 38 products covering both life and health insurance and 8 riders that can be customized to over 800 combinations enabling customers to choose the policy that best fits their need. Besides this, the company offers 6 products and 4 riders in group insurance business. The company currently has more than 10,424 employees. Promoters: Max New York Life is a joint venture between Max India Ltd., one of India’s leading multi-business corporate and New York life, a Fortune 100 company. Max
New York Life Insurance, incorporated in 2000, is one of India’s leading private life insurance companies. The company offers both individual and group life insurance solutions. It has established a wide distribution network across India. Through its wide network of highly competent life insurance agent advisors and flexible product solutions, Max New York life Insurance is creating a partnership for life with its customers in India. Max India Ltd.
Founded in 1985, Max India Limited is a Public Limited company listed on the NSE and BSE of India with over 26,000 shareholders. Today, Max India Limited is a multi-business corporate, driven by the spirit of Enterprise, focused on Knowledge, People and Service oriented businesses of:
• • •
Healthcare (Max Healthcare) Life Insurance (Max New York Life Insurance) Clinical Research (Neeman Medical International)
Max also Maintains Interests in:
Specialty Plastic Products for the packaging industry (Max Speciality Products)
Healthcare Staffing (Max Health Staff)
Prominent shareholders are Mr Analjit Singh and a leading private equity firm, Warburg Pincus which accounts for 28.7% of the total shareholding. The balance shareholding is held by the public and Institutional Investors. Till 1999, The Company’s Main Interests and Partnerships were the following: Business
• • •
Bulk Active Pharmaceuticals Electronic Component Distribution Mobile Telephony
• • •
V-SAT Communications Plating Chemicals Information Technology
• • • • • • •
DSM Gist Brocades Motorola, USA Avnet Inc., USA Hutchison Telecom Ltd. Hong Kong Comsat Investment Inc., USA & Lockheed Martin, USA Atotech, Germany Mind Crossing, USA
In 2000, the Company reinvented and restructured itself to focus on the businesses of ‘Life’ under the them, Life…Our Focus. Max New York Life Insurance, founded as a Joint Venture between Max India Limited and New York Life, a Fortune 100 company, is one of the leading private life insurers in India. Max Healthcare, a subsidiary of Max India Limited is India’s first provider of comprehensive, standardized, seamless, and integrated world-class healthcare services. Neeman Medical International (NMI) is an International Clinical Research provider operating across three locations spanning North America, Asia and Latin America. Each location is backed by comprehensive infrastructure and highly skilled and experienced personnel.
New York Life LLC
New York Life Insurance Company,(www.newyorklife.com) a Fortune 100 company founded in 1845, is the largest mutual life insurance company in the United States and one of the largest life insurers in the world. Headquartered in New York City, New York Life’s family of companies offer life insurance, annuities and long-term care insurance. New York Life Investment Management LLC provides institutional asset management and retirement plan services. Other New York Life affiliates provide an array of securities products and services, as well as institutional and retail mutual funds. The mission of New York Life is to maintain its superior 'financial strength', adhere to the highest standards of 'integrity' and demonstrate 'humanity' by treating its customers, agents and employees with compassion, consideration and respect. New York Life is one of the largest and strongest life insurance companies in the world with more than USD$215 billion assets under management and has received among the highest ratings for financial strength from the life insurance industry's principal rating agencies: A.M. Best (AA+), Standard & Poor's (AA+), Moody's (Aa1), Fitch (AAA). According to Moody's, "New York Life's rating reflects the company's good quality investment portfolio, ample liquidity, and sound capitalization, as well as the good growth potential of its international business.” As a leader in the insurance industry, New York Life continues to bring to its operations new management concepts, advanced technologies, new distribution and training systems and innovative insurance products.
Parenting is all about creating the right environment for your children to grow in. The care & love that you shower on them must also be accompanied with the proper planning for their future. Helping your child "win the battle of life" is the best gift that a Parent can give to his child. Max New York Life with their children plans makes it possible for you to achieve this dream of giving your child a happy and financially secured future. Following are the products, which will provide financial support to your children, while pursuing their dream careers, getting married, buying a home etc:
Children's Endowment to 18 (Par) Children's Endowment to 24 (Par) SMART Steps™ SMART Steps™ Plus SMART Steps™ Single Premium
People retire but needs don't. Max New York Life with their retirement plans comes forward to support you in your old age and makes the unfulfilled dreams of your life come true. Retirement is like a second life, where you can fulfill all your dreams, which you have been pushing aside in your past because of lack of time. Our retirement plans make sure that you maintain your comfortable lifestyle and don't compromise with your wishes because of lack of financial resources in your old age. Easy Life™ Retirement (Par) SMART Invest™ Pension
A very common saying - "Heath is Wealth", may have become old but it's true. Diseases can grab anyone at anytime. So, you have to pre-plan in such a way that you don't have any financial constraint at the time, when your loved ones are in severe pain. Everybody believes that "prevention is better than cure" and adapt strict diet plans, exercise daily for it as well but no matter how well you take care of your self, diseases can grab you anytime. So, Max New York Life's Health Plans have been designed to take into account the diverse set of needs at times of an individual's ill health. These health plans provide you financial security at the time of health treatments required. LifeLine MediCash™ LifeLine Wellness™ Plus LifeLine MediCash™ Plus LifeLine Safety Net™ LifeLine Wellness™
It must be admitted that a certain degree of instability lies in every individual's life. Foreseen and unforeseen needs can arrive at any point of time. Max New York Life's savings plans will help you. Our dual benefits saving plans recognizes your need for a complete all round financial protection and therefore provides you life cover and helps in the growth of your money. Money will fly soon, if not taken care of. Therefore, we offer you diverse savings plans, which would undoubtedly suit your needs and your budget. Whole Life Participating Life Gain™ Plus 25 (Par) 20 year Endowment (Par) Life Pay™ Money Back Endowment to Age 60 (Par) Life Gain™ Endowment Life Gain™ Plus 20 (Par) Life Partner™
Can anybody remember when the times were not hard and money not scarce? Max New York Life's Rural Plans have been tailored especially to meet all kinds of requirements of rural customers or investors. The Hassle free procedures and Low & affordable premiums, being the key features of rural plans, proves Max New York Life exceptional in offering their incredible services to all the classes of our society. The following Rural plans have been designed keeping in mind the rural investors. So that they don't have to worry about the high premium rates and complex application forms. Easy Term Policy
What is Max Vijay
The Background As human beings we all have dreams and aspirations, a desire to achieve and go beyond. Go beyond the present, changing our lives and for some, changing the lives of others too for the better. We are all firm believers in the ‘hand of destiny’, however that doesn’t deter us from trying, thankfully. Yet there are those, who through the drudgeries and miseries of their everyday life, sometimes feel trapped refusing to seek and explore an otherwise unexplored path. The Vision Created with the vision to empower every Indian to secure his dreams, Max Vijay is an honest endeavor to provide financial security to the under-served masses by creating a life insurance product rooted in a deep understanding of their financial needs. So what is Max Vijay, a salutation, a victory path or an insurance policy? Max Vijay is not just another life insurance policy of MNYL; Max Vijay is the symbol of victory of the common man, a beacon for a better tomorrow. We believe that true win for India lies in encouraging people to save their hard earned money, a small contribution that would go on to change their future. While the underlying reality remains that “Money…It just slips through” Max Vijay initiative will empower people, provide hope and will offer insurance cum saving solutions to the under-served packed in the form of an Insurance Savings Box (Beema Gullak) Max New York Life Insurance Company Limited proudly presents a unique Life Insurance policy “Max Vijay” which is–
• • • •
About making better tomorrow possible A Clear sight of goal - Fulfillment of dream A belief in the path to achieve the goal, and “Vijay” is the Triumph of human life
Chapter- 8 MARKET RESEARCH What is Market Research? Market research is the systematic design, collection, analysis, and reporting of data and findings relevant to a specific marketing situation facing the company. Market research firms fall in to the three categories: 1) Syndicated-service research firms-These firms gather consumer and trade information, which they sell for a fee. 2) Customs market research firms-These firms are hired to carry out specific projects. They design the study and report the findings. 3) Specialty-line market research firms-These firms provide specialized research services to other firms. Benefits of Market Research Information gained through marketing research isn't just "nice to know." It's solid information that can guide your most important strategic business decision. Market research is effective when the findings or conclusions you reach have a value that exceeds the cost of the research itself. Market research guides your communication with current and potential Customers Once you have good research, you should be able to formulate more effective and targeted marketing campaigns that speak directly to the people you're trying to reach in a way that interests them. For example, some retail stores ask customers for their zip codes at the point of purchase. This information, which pinpoints where their customers live, will help the store's managers plan suitable direct mail campaigns. 51
Market research helps you identify opportunities in the marketplace. For example, if you are planning to open a retail outlet in a particular geographic location and have discovered that no such retail outlet currently exists, you have identified an opportunity. The opportunity for success increases if the location is in a highly populated area with residents who match your target market characteristics. The same might be true of a service you plan to offer in a specific geographic area or even globally, via the Internet. Market research minimizes the risk of doing business. Instead of identifying opportunities, the results of some market research may indicate that you should not pursue a planned course of action. For example, marketing information may indicate that a marketplace is saturated with the type of service you plan to offer. This may cause you to alter your product offering or choose another location. Market research helps you evaluate your success. Information gathered through market research helps you to determine if you're reaching your goals. In the above example, if your product's target market is women between the ages of 35 and 50, then you're making progress toward your goal. (If not, this information can indicate a needed change in marketing strategy!) • Marketplace competition is information about the other companies Within your area of business. Research answers these questions: Who primary competitors in the market? How do they compete with ways do they not compete with me? What are their Are there profitable opportunities based market niche? What makes my competitors position are my
me? In what
strengths and weaknesses?
upon their weaknesses? What is their
business unique from the others? How do my
themselves? How do they communicate their services to
Who are their customers? How are they perceived by the market?
Who are the industry leaders? What is their sales volume? • Environmental factors information uncovers economical and Circumstances that can influence your productivity and operations. to be answered include: What are the current and future What are the current and future socio-economic economic and political policies have on the What are the growth political Questions
trends? What effects do
your target market or my industry?
expectations for my market? What outside factors
influence the industry's performance? What are the trends for this market and for the economy? Is the industry growing, at a plateau, or declining? Target market. What is the best target market for the products or services being offered by the organization? How large is the target market and how can it be described? What are the attitudes, opinions, preferences, lifestyles, and so on of its members? Products/services. Regarding particular, products and services, how satisfied or dissatisfied is the target. market with what is currently available? What product features and benefits do those consumers desire? How do they compare the organization’s product with those offered by competitors? Price. How much value does the target market place on the product in question? What products are they willing to substitute for the product in question? What prices are charged for those substitutes? What advantages— in features or benefits or appeals—does the organization’s product have that might allow it to charge a higher price? Distribution. What distribution channel is the target market most likely to use when purchasing the product in question? Is the organization’s pricing in line with what the target market expects to pay for the product when purchased through
that channel? Does the pricing include the size of margin the channel traditionally expects to receive? Will the channel be able to provide the service or support needed for the product? Promotion. What can the organization say in its advertisements about its product that will appeal to the target market and lead them to consider the organization’s product more attractive, than those offered by competitors? Through what medium(s) (television, newspaper, billboards, etc.) should the organization advertise? What specific vehicles (i.e., what specific television programs or newspapers) should the organization use to carry the advertisements? How often should the advertisements appear, and how much money should the organization spend on advertising? Should personal selling be used and, if so, how? What kinds of promotions would have a favorable effect on the target market? Market Research The Process
Market research, like other components of marketing such as advertising, can be quite simple or very complex. You might conduct simple market research such as including a questionnaire in your customer bills to gather demographic information about your customers. On the more complex side, you might engage a professional market research firm to conduct primary research to aid you in developing a marketing strategy to launch a new product. Regardless of the simplicity or complexity of your marketing research project, you'll benefit by reviewing the following seven steps in the market research process.
Step One: Define the Problems, the decision alternatives, and the research objectives: The market research process begins with identifying and defining the problems and opportunities that exist for your business, such as: 1 Launching a new product or service. 2 Low awareness of your company and its products or services. 3 Low utilization of your company's products or services. (The market is familiar with your company, but still is not doing business with you.) 4 A poor company image and reputation. 5 Problems with distribution, your goods and services are not reaching buying public in a timely manner. the
Step Two: Set Objectives, Budget and Timetables Objective: With a marketing problem or opportunity defined, the next step is to set objectives for your market research operations. Your objective might be to explore the nature of a problem so you may further define it. Or perhaps it is to determine how many people will buy your product packaged in a certain way and offered at a certain price. Your objective might even be to test possible cause and effect relationships. For example, if you lower your price by 10 percent, what increased sales volume should you expect? What impact will this strategy have on your profit? Budget: How much money are you willing to invest in your market research?
How much can you afford? Your market research budget is a portion of your overall marketing budget. A method popular with small business owners to establish a marketing budget is to allocate a small percentage of gross sales for the most recent year. This usually amounts to about two percent for an existing business. However, if you are planning on launching a new product or business, you may want to increase your budget figure, to as much as 10 percent of your expected gross sales. Other methods used by small businesses include analyzing and estimating the competition's budget, and calculating your cost of marketing per sale. Timetables: Prepare a detailed, realistic time frame to complete all steps of the market research process. If your business operates in cycles, establish target dates that will allow the best accessibility to your market. For example, a holiday greeting card business may want to conduct research before or around the holiday season buying period, when their customers are most likely to be thinking about their purchases. Step Three: Select Research Types, Methods and Techniques There are two types of research: primary research or original information gathered for a specific purpose and secondary research or information that already exists somewhere. Both types of research have a number of activities and methods of conducting associated with them. Secondary research is usually faster and less expensive to obtain that primary research. Gathering secondary research may be as simple as making a trip to your local library or business information center or browsing the Internet. See Market Research Types, Methods and Techniques for more details about the activities and methods for primary and secondary research. Step Four: Design Research Instruments
The most common research instrument is the questionnaire. Keep these tips in mind when designing your market research questionnaire. 1 Keep it simple. 2 Include instructions for answering all questions included on the survey. 3 Begin the survey with general questions and move towards more specific questions. 4 Keep each question brief. 5 If the questionnaire is completed by the respondent and not by an interviewer or survey staff member, remember to design a questionnaire that is graphically pleasing and easy to read. 6 Remember to pre-test the questionnaire. Before taking the survey to printer, ask a few people-such as regular customers, colleagues, employees-to complete the survey. Ask them for feedback style, simplicity and their perception of its purpose. 7 Mix the form of the questions. Use scales, rankings, open-ended and closed-ended questions for different sections of the "form" or way a question is asked may influence end questions. Step Five: Collect Data To help you obtain clear, unbiased and reliable results, collect the data under the direction of experienced researchers. Before beginning the collection of data, it is important to train, educate and supervise your research staff. An untrained staff person conducting primary research will lead to interviewer bias. questions the
on the survey's
questionnaire. The the answer given.
Basically, there are two question forms: closed-end questions and open-
Stick to the objectives and rules associated with the methods and techniques you have set in Step Two and Step Three. Try to be as scientific as possible in gathering your information. Step Six: Organize and Analyze Data Once your data has been collected, it needs to be "cleaned." Cleaning research data involves editing, coding and the tabulating results. To make this step easier, start with a simply designed research instrument or questionnaire. Some helpful tips for organizing and analyzing your data are listed below. 1 Look for relevant data that focuses on your immediate market needs. 2 Rely on subjective information only as support for more general objective research. 3 Analyze for consistency; compare the results of different methods of data collection. For example, are the market demographics from the local media outlet consistent with your survey results? your findings of
provided to you
4 Quantify your results; look for common opinions that may be counted together.
Step Seven: Present and Use Marketing Research Findings Once marketing information about your target market, competition and environment is collected and analyzed, present it in an organized manner to the decision makers of the business. For example, you may want to report your findings in the market analysis section of your business plan. Also, you may want to familiarize your sales and marketing departments with the data or conduct a company-wide informational training seminar using the information. In summary, the resulting data was created to help guide your business decisions, so it needs to be readily accessible to the decision makers.
RESEARCH STUDY 8.1. RESEARCH OBJECTIVES The objective of the project is to find out the consumer Satisfaction or Preference and behavior of customer towards “Insurance Sector especially towards MAX NEW YORK. What all are the stimuli effecting there choices before selecting a Insurance company. Is it the credibility, good return or celebrity endorser. It also helps in letting the above Insurance know its basic position in relation to its competitors in the market & how better can it help re-design its product in achieving higher sales growth. The study of this research also analyses the findings and provide MAX NEW YORK with the effective recommendations or suggestions. RESEARCH METHODOLOGY Research Design A research design is a type of blue print prepared depending on various types of blueprints available for the collection, measurement and analysis of data. A research design calls for developing the most efficient plan of gathering the needed information. The design of research study is based on the purpose of the study. A research design is the specification of methods and procedures for acquiring the information needed. It is overall operational pattern or framework of the project that stipulates what information is to be collected from which source by what procedures. Types, Methods and Techniques
Secondary Research Usually the easiest and least expensive, secondary research is information that already exists somewhere. It may be a study, a group of articles on a topic, or demographic or statistical data gathered by someone else. For example, the demographic data about car owners in your county available from your Chamber of Commerce may be just the information you need-and it's already gathered! Secondary Research Activities 1 Review and analyze the existing data on your target markets available from magazines, books, published research studies, government publications, etc. 2 Evaluate the competition. 3 Assess environmental factors such as social, economic, political, etc. Secondary Research Methods Because secondary research already exists, no specific scientific method or technique is needed to collect information. Instead, your efforts are spent locating and gathering market information from reliable sources. Don't forget the Internet. Many of the resources listed below, such as magazines, trade associations and government resources now have materials available online. Some resources for gathering secondary research information include: 1 Libraries and other public information centers - Look in reference centers for resource materials and other existing data on your market. 2 Books and business publications - Many books have been written on specific industries and markets. Look for helpful existing data and environmental factors. 3 Magazines and newspapers - Each and every day, studies and other survey results are released as news events. Also, look into news about 60
environmental factors such as the leading economic indicators or the upcoming local political elections. 4 Trade associations - Most associations have reports on the industries they serve, the standards they operate under and leaders in the field. Many even conduct educational seminars on trends and other issues. Associations are also helpful in researching the competition. Chambers of Commerce - The local Chamber is a terrific resource for information on the community you hope to serve, other local businesses and maps of the area. One can also learn from other members at Chamber networking events. 1 Banks, real estate and insurance companies may keep information and statistics on the communities they serve. 2 Wholesalers problems 3 Indian government resources can provide extensive demographic data on population, markets and the economy like Census Bureau of India. 4 Media representatives - Advertising salespeople at TV, radio, and print media outlets keep information on the markets their viewers, listeners, and readers to help influence potential advertisers. 5 Competition - Ask directly for company brochures, menu of products services, prices, annual reports, etc. One may have to disguise as a potential customer! Primary Research Sometimes, the information you need doesn't exist-anywhere! You've searched the Internet, you scoured the library, journals and databases all to no avail. That's and and manufacturers Contact these enterprises for
information on the industry standards, customers, costs, distribution, potential
when you may need to conduct primary research, or research conducted for a specific purpose. FYI, the secondary research you may have used was probably someone's primary data once. Primary Research Activities 1 Conducting surveys to create market data or using other research Instruments such as questionnaires, focus groups, interviews, etc. 2 Noting first-hand observations 3 Conducting experiments Primary Research Methods Each methodology uses "sampling" which allows the researcher to reach conclusions about a population within a certain degree of accuracy without having to survey everyone. It is not necessary to have a large sample size. Samples as few as one percent of a target market can often provide reliable results, under the direction of experienced researchers. Primary research can be either qualitative or quantitative. Qualitative research provides definitive market information regarding the opinions and behaviors of the subjects in the market research study. Qualitative research is used to achieve a variety of objectives. 1 Obtain helpful background information on a market segment 2 Explore concepts and positioning of a business or product 3 Identify attitudes, opinions and behavior shared by a target market 4 Prioritize variables for further study 5 Fully define problems
6 Provide direction for the development of questionnaires Sampling Sample A sample is the set of observations obtained from experimental unit that were selected from a larger group (the population). By studying the sample it is hoped to draw valid conclusions about the larger group. If the conclusions drawn from a sample are to be meaningful the sample must be obtained in a random fashion. This means that each member of the population has an equal chance of being included in the sample. This ensures that the sample is unbiased. Unfortunately, it is not always easy to obtain a truly random sample from sampling units that are widely dispersed. A representative sample is only possible if, before collecting the sample, the researcher has carefully and completely defined the population, including a description of the members to be included. Why Sample? Sampling is done in a wide variety of research settings. Listed below are a few of the benefits of sampling: 1. Reduced cost: It is obviously less costly to obtain data for a selected subset of a population, rather than the entire population. Furthermore, data collected through a carefully selected sample are highly accurate measures of the larger population. Public opinion researchers can usually draw accurate inferences for the entire population of the United States from interviews of only 1,000 people. 2. Speed: Observations are easier to collect and summarize with a sample than with a complete count. This consideration may be vital if the speed of the analysis is important, such as through exit polls in elections.
3. Greater scope: Sometimes highly trained personnel or specialized equipment limited in availability must be used to obtain the data. A complete census (enumeration) is not practical or possible. Thus, surveys that rely on sampling have greater flexibility regarding the type of information that can be obtained. It is important to keep in mind that the primary point of sampling is to create a small group from a population that is as similar to the larger population as possible. In essence, we want to have a little group that is like the big group. With that in mind, one of the features we look for in a sample is the degree of representative ness - how well does the sample represent the larger population from which it was drawn? How closely do the features of the sample resemble those of the larger population? Types of Samples Although there are a number of different methods that might be used to create a sample, they generally can be grouped into one of two categories: 1 Probability samples or 2 Non-probability samples. Probability Samples The idea behind this type is random selection. More specifically, each sample from the population of interest has a known probability of selection under a given sampling scheme. There are four categories of probability samples described below. Simple Random Sampling The most widely known type of a random sample is the simple random sample (SRS). This is characterized by the fact that the probability of selection is the same for every case in the population. Simple random sampling is a method of
selecting n units from a population of size N such that every possible sample of size n has equal chance of being drawn. An example may make this easier to understand. Imagine you want to carry out a survey of 100 voters in a small town with a population of 1,000 eligible voters. With a town this size, there are "old-fashioned" ways to draw a sample. For example, we could write the names of all voters on a piece of paper, put all pieces of paper into a box and draw 100 tickets at random. You shake the box, draw a piece of paper and set it aside, shake again, draw another, set it aside, etc. until we had 100 slips of paper. These 100 form our sample. And this sample would be drawn through a simple random sampling procedure - at each draw, every name in the box had the same probability of being chosen. Stratified Random Sampling In this form of sampling, the population is first divided into two or more mutually exclusive segments based on some categories of variables of interest in the research. It is designed to organize the population into homogenous subsets before sampling, then drawing a random sample within each subset. Systematic Sampling This method of sampling is at first glance very different from SRS. In practice, it is a variant of simple random sampling that involves some listing of elements - every nth element of list is then drawn for inclusion in the sample. Say you have a list of 10,000 people and you want a sample of 1,000. Creating such a sample includes three steps: 1. Divide number of cases in the population by the desired sample size. In this example, dividing 10,000 by 1,000 gives a value of 10. 2. Select a random number between one and the value attained in Step. In this example, we choose a number between 1 and 10 - say we pick 7. 65
3. Starting with case number chosen in Step 2, take every tenth record (7, 17, 27, etc.). Cluster Sampling In some instances the sampling unit consists of a group or cluster of smaller units that we call elements or subunits (these are the units of analysis for your study). There are two main reasons for the widespread application of cluster sampling. Although the first intention may be to use the elements as sampling units, it is found in many surveys that no reliable list of elements in the population is available and that it would be prohibitively expensive to construct such a list. In many countries there are no complete and updated lists of the people, the houses or the farms in any large geographical region. Important things about cluster sampling: 1. Most large-scale surveys are done using cluster sampling; 2. Clustering may be combined with stratification, typically by clustering within strata; 3. In general, for a given sample size n cluster samples are less accurate than the other types of sampling in the sense that the parameters you estimate will have greater variability than an SRS, stratified random or systematic sample. Non probability Sampling Social research is often conducted in situations where a researcher cannot select the kinds of probability samples used in large-scale social surveys. The primary difference between probability methods of sampling and non probability methods is that in the latter you do not know the likelihood that any element of a population will be selected for study. There are four primary types of non-probability sampling methods:
Availability Sampling Availability sampling is a method of choosing subjects who are available or easy to find. This method is also sometimes referred to as haphazard, accidental, or convenience sampling. The primary advantage of the method is that it is very easy to carry out, relative to other methods. A researcher can merely stand out on his/her favorite street corner or in his/her favorite tavern and hand out surveys. One place this used to show up often is in university courses. Years ago, researchers often would conduct surveys of Quota Sampling. Quota sampling is designed to overcome the most obvious flaw of availability sampling. Rather than taking just anyone, you set quotas to ensure that the sample you get represents certain characteristics in proportion to their prevalence in the population. Note that for this method, you have to know something about the characteristics of the population ahead of time. Say you want to make sure you have a sample proportional to the population in terms of gender - you have to know what percentage of the population is male and Purposive Sampling. Purposive sampling is a sampling method in which elements are chosen based on purpose of the study. Purposive sampling may involve studying the entire population of some limited group (sociology faculty at Columbia) or a subset of a population (Columbia faculty who have won Nobel Prizes). As with other nonprobability sampling methods, purposive sampling does not produce a sample that is representative of a larger population, but it can be exactly what is needed in some cases - study of organization, community, or some other clearly defined and relatively limited group. 8.3. RESEARCH METHODOLOGY ADOPTED • Type of research :- Qualitative research -Element- Consumers
-Sampling unit- Each element acts as an independent unit. • Sampling Type:- Area sampling. As research was limited on the basis of geographical location i.e.
SHAHJAHANPUR • Sample Size: - 160 Customers • Data Source: - Primary Data collected by conducting face to face interviews. • Research instruments: Questionnaire was used to extract the information from the respondents. Questions were - Close ended - Multiple choices • Method of Sampling: - Random 8.4. CONSTRUCTION OF QUESTIONNAIRE Words are often used in different ways by different people. Your goal is to write questions that each person will interpret in the same way. A good question should be short and straightforward. A questionnaire should not be too long, use plain English and the question shouldn't be difficult to answer. Only through careful writing, editing, review, and rewriting can you make a good questionnaire. Consider the following guidelines for conducting your surveys: Use Closed-ended questions as well as open-ended ones Put your questions in a logic order personal
The issues raised in one question can influence how people think about subsequent questions. It is good to ask a general question and then ask more specific questions. For example, you should avoid asking a series of questions about a Insurance sector and then question about the most important factors in selecting a Insurance company 1 The purpose of the survey 2 Why it is important to hear from the correspondent 3 What may be done with the results and what possible impacts may occur with the results. 4 Address identification 5 Person to contact for questions about the survey. 6 Due date for response
1 The research covers only west Delhi, so the survey results are restricted to a particular area. 2 Biased answers can sometimes be received in questionnaire because customers some times tend to hide their salary, price as the factor for buying the product etc. 3 Survey is done under limited time constraint so the completeness of the product may not be sure. 4 Behavior of the customer keeps on changing as they are continuously in linked with the external environmental happening. 5 Market is more heterogeneous so the survey is not too flexible. 6 Consumer taste and preferences are hard to judge so it can change frequently. 7 People were hard pressed with time so most of them were reluctant to answer.
Analysis & Data Interpretation
Table-1 TABLE IS SHOWING THE SEX RATIO OF THE RESPONDENTS WHILE TAKING THE SAMPLING IN DELHI REGION SEX %NO.OF RESPONDENTS MALE 125 FEMALE 35
% No. of Respondents
Analysis:- From above table we can see that 78% people are male respondent and 22% are female while taking the sample out of 160 people.
Table-2 TABLE IS SHOWING THE AGE GROUP OF THE RESPONDENTS AGE 18-25 26-35 36-45 ABOVE 45
Analysis:- From above table we can find that the 25% respondents are of age group between 18-25 and 37.5% people are of 26-35. Rests are of 23.7% between36-45 and above 45 are 13.75%. Inference:- From above table and analysis we can see the maximum no. of respondents are of age between 26to35.
Table-3 TABLE IS SHOWING THE OCCUPATION OF THE RESPONDENTS OCCUPATION BUSINESS SER-VICE PROFESSIONAL %NO.OF RESPONDENTS 43 82 25 ANY OTHERS 10
Analysis:- From above table we can get that 26.87% respondents are from business class. 51.25% belongs to service class and 15.62%are professionals and rest 6.25% belongs to other class. Inference:- From above table we can infer that majority of respondents belongs to service class.
BUSINESS SER-VICE PROFES-SIONAL ANY OTHERS
Table-4 TABLE IS SHOWING THE INCOME LEVEL OF THE RESPONDENTS INCOME BELOW 250000 % NO. OF RESPONDETS 123 250000 --400000 22 400000 --600000 13 ABOVE 600000 2
Analysis:- From above table we can find that 76.87% respondents belongs to income group of below 250000. 13.75% belongs to income group of 250000-400,000, 8.12% of 400,000 to 600,000, and 1.25% of above 600,000. Inference:- From above table and analysis we can infer that maximum no. of respondents are belongs to income group below 250000.
% NO. OF
BELOW 250000 250000 400000 400000 600000 ABOVE 600000
Table-5 TABLE IS SHOWING WHY PEOPLE BUY INSURANCE POLICY SAFETY OF LIFE 30 INVESTMENT 55 TAX SAVING 75 OTHERS 0
Analysis:- From above table we can see that the 18.75% respondents buy the insurance policy for safety purpose,34.37% people take it as a investment and 46.87% buy it for tax saving. Inference:- From above table and analysis we can infer that the maximum respondents want the tax saving while buying a insurance plan.
80 70 60 50 40 30 20 10 0 SAFETY OF LIFE INVESTMENT TAX SAVING OTHERS Series1
Table-6 TABLE IS SHOWING THAT PEOPLE ARE ASSOCIATED WITH WHICH INSURANCE COMPANY ICICI “PRUDENTIAL” 30 96 LIC BIRLA SUN LIFE 4 MAX NEW YORK 18 OTHERS
100 90 80 70 60 50 40 30 20 10 0 ICICI LIC 30 4 BIRLA 96
MAX NEW OTHERS YORK
Analysis:- From above table we can see that 60% respondents are associated with LIC, 18.75% with ICICI “PRU”, 11.25% with MAX NEW YORK,2.5% with BIRLA SUN LIFE AND others. Inference:- From above table and analysis we can infer that majority of people are associated with LIC but ICICI is the biggest private life insurance provider 7.5% with
Table-7 TABLE IS SHOWING HOW PEOPLE COME TO KNOW ABOUT NEW POLICIES AGENT\ ADVISIORS 120 NEWSPAPER\ MAGAZINE 26 8 6 INTERNET OTHERS
120 100 80 60 40 20 0 AGENT\ ADVISIORS INTERNET
Analysis:- From above table we can see that 75% respondents get information about new policies through Agent\Advisors. 16.25% through Newspaper\Magazine, 5% through Internet, 3.75% through other ways. Inference:-From above table and findings we can infer that Agent\Advisors are the main medium of information about insurance plan. 77
Table-8 TABLE IS SHOWING WHAT INFLUENCES PEOPLE TO BUY A POLICY AND WHAT IS THE REASON OF THEIR ASSOCIATION WITH THIS COMPANY RETURN 116 SERVICE 34 ADVERTISENENT 2 CELEBRITY ENDORSER 2 OTHERS 6
120 100 80 60 40 20 0 34 2 RETURN 2 CELEBRITY ENDORSER 6 116
Analysis:- From above table we can see that 21.25% people go for service of the company 72.5% want high return 2.5% associated with the company due to advertisement and celebrity endorser and 3.75% with other factor. Inference:- From above table and analysis we can infer that majority of people influenced by the return of the company.
Table-9 TABLE IS SHOWING HOW PRIVATE LIFE INSURANCE COMPANIES ARE PERFORMING GOOD 113 FAIR 35 POOR 5 CAN’T SAY 7
120 100 80 60 40 20 0 35 5 GOOD FAIR POOR 7 CAN’T SAY 113
Analysis:- From above table we can get that majority of people 70.62% think their company is performing good and 21.8%, think fair where 3.12% think their company performing poor and 4.37% give no response. Inference:- From above table and analysis we can infer that maximum no. of people say their company are performing good.
Chapter – 9
1 The age group between 26-35 is more conscious about the insurance and they avail the policies. 2 People get insured for safety purpose but some people have different thoughts like investment or tax saving. 3 Professionals are the highly insured group and following are service class as well as businessmen. 4 Economic condition of a person influenced for getting insurance policies. 5 ICICI “Prudential” is the biggest private life insurance company according to finding of research. After LIC it has the most number of customers. 6 Agent or Advisors are the big sources of information about a new plan of insurance company. 7 Due to credibility of that company people buy a insurance plan. 8 People are now thinking the private insurance companies are doing a good job and it is easily accessible. 9 ULIP is the popular plan among the insure because it has a higher return 10 Change is very important and one who goes with the changing environment always succeed, that is what I have learned from the study. The competition has grown too much in the insurance sector with the opening of the sector. This is for the LIC to change their strategy on the basis of the competition. On the basis of the project I can conclude that the insurance sector is one of the oldest industry of India. It was under private control earlier but
9 nationalized after independence. For many years it was only LIC for life and GIC for general insurance companies available. In 1991 when the liberalization started, foreign investors become attracted towards the country. In 1993 government appointed Mr. R.N. Malhotra committee to suggest reforms measures. In 1998 the New IRDA Bill was passed and became a law, which paved the way for foreign insurance companies. Multinational insurance companies aligned with the Indian companies to step into this sector. LIC has the largest network of operation with 2148 offices, 124,000 employee and 750000 agents. ICICI Prudential is the largest private player in the insurance industry in India. It has sold over one-lakh fifty thousand policies till date. Besides LIC, ICICI Prudential is facing stiff competition from other private insurance players. Out of total population of 1 billion of country, only 22% have insurance cover. So we can say that there is still large potential for both the public and private companies. Private companies have to give varied customized product to compete with the LIC, which is holding about 97% of the total market.
Chapter – 10
1 People have less knowledge about current Insurance plan, so company should advertise it more through Television, Radio and Newspaper because these mediums are easily accessible to them. 2 The return in insurance plan should be hiked because people are ready to take risks. 3 Insurance companies has some plan about poor people but it is not implemented properly they are remain untouched. 4 Government should allow hiking the stake of foreign collaborator because it makes more competitive market of insurance. 5 Government should withdraw its umbrella from LIC, it make healthier competition among insurance companies. 6 Insurance companies should come up with new policies that can cover the entire family in one policy. 7 Insurance companies should extend its cover to poor people, because it is known fact that merely 22% people are insured out of 100% 8 Insurance companies should venture their policies in remote areas of our country. The insurance companies should now try to identify the gap between current level of customer service and customer expectations. Some of the strategies being recommended are as follows: 1 Product Differentiation: Offering a product that is distinctly different from other products available in the market.
2 Innovativeness: Identifying means of a delightful customer experience. 3 Riders: These are additional offerings along with the main product. 4 Flexibility: The companies should make their products flexible for the convenience of their customer. 5 Hassle Free Service: All bureaucracy in customer interactions should be eliminated. 6 Proper Policy Documentation: Wrong interpretations/ non-awareness of policy document by the customer may have serious implications in the long term and the possibility of the same should be alleviated by the insurance companies.
Chapter – 11
1 Insurance Advisor’s Manuals and Study Material of MAX NEW YORK. 2 Insurance Watch and other Magazines. 3 Economic Times 4 www.google.com 5 www.licindia.com 6 www.maxnewyorklife.com 7 www.irda.gov.in
Questionnaire for Study of Insurance Preferences Dear Sir/Madam, I am a student of “…………………………………………………………” as a part of my curriculum; I am doing a brief survey to find out more about consumer preference regarding Insurance. I would be grateful if you could spare a few minutes to participate in it. Kindly mark where required. 1. Name: --------------------------------------------------------------(Optional) 2. Contact No: -------------------------------------------------------(Optional) 3. Location: ----------------------------------------------------------4. Sex: 5. Occupation: 6. Age: 7. Annual Income Male Business Professionals 18-25 yrs 36-45 yrs < 2,50,000 400,000-6,00,000 8. Do you possess a life insurance policy? Yes 9. Why do you buy insurance policy? Safety for life Tax saving Investment purpose Others No Female Service Others 26-35 yrs 45 & above 2,50,000-4,00,000 6, 00,000 & above
10. Which insurance company, you are associated with? ICICI ‘pru’ MAX NEW YORK LIFE Others 11. Why you are associated with this company, what influences you to buy a policy? Good return Advertisement Others 12. How do you come to know about new policies of your insurance Company? Agent\Advisors Internet Good Poor Can’t say Newspaper\Magazine Others Fair Service Celebrity endorser LIC Birla Sun life
13. How do you think the private insurance companies are performing?
14. Should the stake of foreign collaborator be hiked, If Yes why? --------------------------------------------------------------------------------------------15. What other services would you want from your insurance company? --------------------------------------------------------------------------------------------THANKING YOU