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1.1 - Introduction
With largest number of life insurance policies in force in the world, Insurance happens to be a mega opportunity in India. It’s a business growing at the rate of 15-20 % annually and presently is of the order of Rs 450 billion. Together with banking services, it adds about 7 % to the country’s GDP. Gross premium collection is nearly 2 % of GDP and funds available with LIC for investments are 8 % of GDP. Yet, nearly 80 % of Indian population is without life insurance cover while health insurance and non-life insurance continues to be below international standards. And this part of the population is also subject to weak social security and pension systems with hardly any old age income security. This itself is an indicator that growth potential for the insurance sector is immense. A well-developed and evolved insurance sector is needed for economic development as it provides long term funds for infrastructure development and at the same time strengthens the risk taking ability. It is estimated that over the next ten years India would require investments of the order of one trillion US dollar. The Insurance sector, to some extent, can enable investments in infrastructure development to sustain economic growth of the country. The growing number of wealthier as well as aging Indian middle class is set to offer a strong business potential for the country’s untapped life insurance market. Insurance is a federal subject in India. There are two legislations that govern the sector- The Insurance Act- 1938 and the IRDA Act- 1999. The insurance sector in India has come a full circle from being an open competitive market to nationalization and back to a liberalized market again. Tracing the developments in the Indian insurance sector reveals the 360 degree turn witnessed over a period of almost two centuries. As the twentieth century has come to a close and we have move into the third millennium, we can see many developments and changes taking place around us with all the industries and firms within each SIVA SIVANI INSTITUTE OF MANAGEMENT 1
industry trying to keep pace with the changes and diverse needs of the people. Though for decade together, marketers have regarded ‘customer’ as the king and evolved all activities to satisfy him or her, giving this concept a momentum it is necessary to understand the Perception and Expectations of the customer in respect various aspects & attributes so as to design a successful and an acceptable product or service. This can largely be attributed to the prevailing market situation. Not only has competition become intense but over and above with the market being flooded with many me-too products, the challenge before the marketer is to understand the diversity of consumer expectations and offer goods/services accordingly. Today the company image is built and made known by its customers. Thus the success of the firm will be determined by how effective it has been in meeting the diverse consumer needs and wants by treating each customer as unique and offering products and services to suit his or her needs. Therefore today all the firms are engaged in a process of creating a lifetime value and relationship with their customers, a step towards developing knowledge regarding its customers needs is the utmost important. The current study is an attempt to measure the various parameters as perceived by the customers and to help the company in serving its customers in a much better and efficient manner.
1.2 - Scope of the study
The scope of the study lies in finding out the perception of customers in Lucknow city through responses taken by 300 customers during a period of 60 days and highlighting the key areas which require some concern on part of LIC of India and improving upon which the company may strengthen its customer base. The present study, analysis, findings and suggestions proposed by the present researcher will be of immense use for future researcher with similar studies in insurance market.
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1.3 Significance of the study :
High quality products with quality support services both in terms of international standards and competitiveness have entered into our country. Customer satisfaction has emerged as the key differentiator and defining attribute. The study is very much significant because it brings out the differences in various parameters like awareness, service quality, problems faced and rationale behind investment between the products of LIC and private sector companies and these are the main attributes which build up the customer perception and loyalty towards a company. The study is significant also because it will help LIC to create a positive impact on its customers by working on its lacking qualities.
1.4 Objectives of the study :
For every problem there is a research. As all the researches are based on some and my study is also based upon some objective and these are as follows : I ) To test the awareness of customers on various aspects of life insurance policies offered by LIC and other private sector insurance companies and find whether there is any relation between them. II ) To study the service quality being offered by LIC and private sector insurance companies and test if any relation exists. III ) To analyze various problems confronted by the policyholders of LIC and private sector insurance companies and determine the relation between the two. IV ) To clearly understand the rationale behind the investment in policies of LIC and private sector insurance companies. V ) To analyze the various aspects of LIC and do a complete SWOT analysis of the organization.
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1.5 Review of Literature :
1) Retention of the Customers is the essence of Insurance business, Imtiyaz.H Ltd.VASI DO, Insurance Times (Pg 20).Feb 2007-: Retaining a customer is four time cheaper than acquiring a new one. The retention of the customers is of utmost importance in the insurance industry in specification. Insurance business is of the relationship building process. were one customer leads to the building of other one. A satisfied customer is like a word of mouth advertisement for the company. The needs of the existing customers should be identified and satisfied well rather than only concentrating at the new accounts. All possible measures needs to taken to retain the customers as it is lesser costlier as well as provides stability to the business .
2) Trends in Life Insurance Business—Unit Linked Insurance Plans, IRDA annual report 2007-08, box item 1, page no. 15 -: It wasn’t too long back when the good old endowment plan was the preferred way to insure oneself against an eventuality and to set aside some savings to meet one’s financial objectives. The traditional endowment policies were investing funds mainly in fixed interest Government securities and other safe investments to ensure the safety of capital. Thus the traditional emphasis was always on security of capital rather than yield. However, with the inflationary trend witnessed all over the world, it was observed that savings through life insurance were becoming unattractive and not meeting the aspirations of the policyholders. The policyholder found that the sum assured guaranteed on maturity had really depreciated in real value because of the depreciation in the value of money. The investor was no longer content with the so called security of capital provided under a policy of life insurance and started showing a preference for higher rate of return on his investments as also for capital appreciation. It was, therefore found necessary for the insurance companies to think of a method whereby the expectation of the policyholders could be satisfied. The object was to provide a hedge against the inflation through a contract of insurance. Decline of assured return endowment plans and opening of the insurance sector saw the advent of ULIPs on the domestic insurance horizon. Today, the Indian life insurance market is riding high on the unit linked insurance plans.
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3) Sampada kapse & D.G kodwani, Insurance as an investment option, The Insurance Time, May 2003 At national as at individual level the excess of income after consumption level savings as funds for investment. Surplus funds can be invested in either real asset or in financial assets. Purpose of investment is to protect one’s wealth against erosion of value due to inflation and to earn risk adjusted return. There are three motives which drive people to purchase insurance products in India. _ Desire to cover risk _ Tax benefit _ Saving motives It is argued that in this paper that in the changing scenario for the insurance sector there is going to be a good opportunities for insurance sector to expand its market base. For this purpose there is need to improve the features of the insurance products to make them more liquid or short term schemes could be increased. It is shown that although rewards implied by the insurance products particularly by the tax benefits are quite close to those observed in banks and small saving scheme of the governments. The performance of mutual funds which come in many different types is found to be reasonable compared to the risk involved. The survey indicates that it may not be very difficult to win over the confidence of small investors towards insurance policies if good marketing techniques are adopted to educate the targeted population about the uses of insurance policies from investment point of view.
4) Samuel B Sekar, Research associate, Academic wing, The ICFAI University, Customer – driven innovation in insurance products, Insurance Chronicle, page 33, July 2006-: Insurance is one product which is not demanded by a customer, but supplied to him by massive education and drive marketing. Insurance ought to be bought not sold. The new concept of demand side innovation focuses more on customer’s social and economic reality striving to deliver maximum value to the customer at an affordable price. Therefore, when the customer becomes the primary focus including him in the invention process becomes mandatory. But, there are certain areas of insurance innovations where the customers cannot be involved. A case in point is the recent insurance product invention called Telematic Auto Insurance. It’s a product by the Progressive Auto Insurance, which monitors the driving behaviour of its auto insurance policyholder. The new machine grabs information and automatically SIVA SIVANI INSTITUTE OF MANAGEMENT 5
Though. This information received is regularly analyzed to judicially conclude the intensity of risk the person is exposed and the corresponding premium he is eligible to pay. there are instances where the customer is involved in the testing phase. his inclusion in the conception phase makes an innovation demand-driven.transmits it to the insurer. This is an example of supply side innovation. where it is strictly not possible to include the customer in the innovation process. SIVA SIVANI INSTITUTE OF MANAGEMENT 6 .
The first company. Insurance companies like Bombay Insurance Company Ltd was established in 1793.II 2. The insurance business grew at a faster pace after independence. It was the first company to charge same premium for both Indian and non-Indian lives. The first comprehensive legislation was introduced with the Insurance Act of 1938 that provided strict State Control over insurance business. was set up in Calcutta in the year 1710. brought together over 240 private life insurers and provident societies under one nationalized monopoly corporation and Life Insurance Corporation (LIC) was born. Several frauds during 20's and 30's sullied insurance business in India. known as the Sun Insurance Office Ltd.CHAPTER . By 1938 there were 176 insurance companies. In 1818 it was conceived as a means to provide for English Widows. Insurance regulation formally began in India with the passing of the Life Insurance Companies Act of 1912 and the provident fund Act of 1912. The Oriental Assurance Company was established in 1880. The Bombay Mutual Life Insurance Society started its business in 1870. Nationalization was justified on the grounds that it would create much needed funds for rapid industrialization. Till the end of nineteenth century insurance business was almost entirely in the hands of overseas companies.1 Historical Perspective : Insurance in India The Britishers opened general insurance in India around the year 1700. SIVA SIVANI INSTITUTE OF MANAGEMENT 7 . The Government of India in 1956.
What Is Life Insurance? Life insurance is a contract that pledges payment of an amount to the person assured (or his nominee) on the happening of the event insured against. Why We Need Insurance : Life insurance is a contact by which you can protect yourself against specific uncertainties by paying a premium over a period. Tax Benefits Life insurance is one of the best tax saving options today. Myths of Insurance : i) Insurance is just meant for saving tax. Savings and Investments Insurance is a means to Save and Invest. Since each one of us during our lives are faced with numerous risks-falling health. ii) Insurance does not give good returns iii) Insurance products are not flexible SIVA SIVANI INSTITUTE OF MANAGEMENT 8 . or Specified dates at periodic intervals. Protection You need life insurance to be there and protect the people you love. It is a thoughtful business concept designed to protect the economic value of a human life for the benefit of those financially dependent on him. A policy can come in handy at the time of your child’s education or marriage! Besides. it can be used as supplemental retirement income. or Unfortunate death. The contract is valid for payment of the insured amount during: The date of maturity. It can ensure that your post-retirement years are spent in peace and comfort. making sure that your family has a means to look after itself after you are gone. Your tax can be saved twice on a life insurance policy-once when you pay your premiums and once when you receive maturity benefits. if it occurs earlier. Retirement Life insurance makes sure that you have regular income after you retire and helps you maintain your standard of living. accident and even fatalities. Money saved is money earned. Your periodic premiums are like Savings and you are assured of a lump sum amount on maturity. financial losses.
Insurance penetration or premium volume as a ratio of GDP. This has resulted in increasing insurance penetration in the country. The level of penetration. The insurance market in India has witnessed dynamic changes including entry of a number of global insurers in both life and non-life segment.2 Industry Profile : INDIAN INSURANCE INDUSTRY Insurance is a big opportunity in a country like India with a large population and untapped potential. The life insurance business (measured in the context of first year premium) registered a growth of 23. has exhibited growth potential for the insurance industry.00 % for life insurance and 0.60 % for non-life insurance.72 % in 2007-08 (3. India.96 % achieved in 2006-07). At present there are a total of 21 companies in the life insurance business in India and only LIC is in the public sector and rest all 20 companies are in the private sector. particularly in life insurance. with its huge middle class households. (94. SIVA SIVANI INSTITUTE OF MANAGEMENT 9 . Saturation of markets in many developed economies has made the Indian market even more attractive for global insurance majors. tends to rise as income levels increase. Competition has brought more product innovation and better customer servicing.52 % achieved in 2006-07). Most of the private insurance companies are joint ventures with recognized foreign players across the globe. for the year 2007 stood at 4.88 % in 2007-08. This made a positive impact on the economy in income generation and creating employment opportunities in this sector. The general insurance business (gross direct premium) has registered a growth of 11. consumer awareness has improved.2. Over the last eight years.
France ING Insurance International B.02.08. U. Tata-AIG Life Insurance Co. Birla Sun Life Insurance Co.. (Earlier AMP Sanmar Life Insurance Company from 3. Canada 107 109 110 10..2000 2000-01 Old Mutual.2000 2000-01 15.08.05. 2009 SI No. PRIVATE COMPANYPrudential Life Insurance Co. Allianz Bajaj Life Insurance Co.01. Ltd. Ltd.01. American International Assurance Co. Ltd. Max New York Life Insurance Co..05) AVIVA Aviva International Holdings Ltd.02 to 29. Ltd. USA 117 06. Ltd.9.2001 2001-02 11 Reliance Life Insurance Co. 111 29.11.V. Ltd.2002 2001-02 12 122 14.2000 2000-01 Prudential.2001 2001-02 8 9 10 ING Vysya Life Insurance Co. USA REGISTRATION NUMBER 101 104 105 DATE OF YEAR OF REGISTRATION OPERATION 23. 24.08.2001 2000-01 12.01.K.2001 2000-01 7 SBI Life Insurance Co.2001 2001-02 Metlife International Holdings Ltd. Ltd. Ltd. South Africa Sun Life.1.11. Ltd.03. Om Kotak Life Insurance Co. Germany FOREIGN PARTNERS Standard Life Assurance.2001 2001-02 03. Ltd. 114 116 02. UK New York Life.2002 2002-03 SIVA SIVANI INSTITUTE OF MANAGEMENT 10 . Ltd. Metlife India Insurance Co. Netherlands Allianz.2001 2001-02 31.Table of Life Insurance Companies as on 31st March.10. 1 2 3 4 5 6 INSURERS HDFC Standard Life Insurance Co.. UK 121 03. USA BNP Paribas Assurance SA.
France Pantaloon Retail Ltd..13 14 15 16 Sahara Life Insurance Co. (SMNPL). USA 138 140 512 27. Netherlands HSBC. Automobile Insurance. Long term funds for infrastructure.05. the future of insurance companies in India looks bright. Canara HSBC OBC Life Insurance Company Ltd. Home Insurance and many others.2005 2005-06 14. Italy Fortis. Life Insurance Corporation of India 135 19. Accident Insurance.12.2008 2008-09 Besides Life Insurance. Generali.09.06.2007 08. In short. . DLF Pramerica Life Insurance Co. SIVA SIVANI INSTITUTE OF MANAGEMENT 11 . UK 127 128 130 133 06. Employment generation.2004 2004-05 17. Contribution to Indian Economy Life Insurance is the only sector which garners long term savings. Spread of financial services in rural areas and amongst socially less privileged.06. Strong positive correlation between development of capital markets and insurance/pension structure. Ltd. Sanlam.2006 2006-07 04. Future Generali India Life Insurance Company Ltd.07.2007 2007-08 17 18 19 20 21 IDBI Fortis Life Insurance Company Ltd.2008 2007-08 2008-09 136 Religare. Sain Marketing Network Pvt. South Africa AXA Holdings. Aegon Religare Life Insurance Company Ltd.11. Ltd. Shriram Life Insurance Co.2008 2008-09 27. Ltd. Bharti AXA Life Insurance Co. Ltd. all the above-mentioned companies provide coverage in Medical Insurance. Netherlands Prudential of America.02.
9 3.53 4. Japan.1 7.05 4. England which have very high penetration so there is a great scope for growth of life insurance in India .1 7.1 4 1.8 3.32 8.3 7. SIVA SIVANI INSTITUTE OF MANAGEMENT G N EN G LA N D CA NA D A FR AN C ER M JA PA CH IT AL Y US A A AN Y IN E 12 .1 4.86 2006 4. Table 1 INDIA USA CHINA GERMANY FRANCE JAPAN ENGLAND CANADA ITALY 2005 2.9 8.5 12.08 8.7 3.7 2007 4 4.6 3.2 1.2 4 Chart 1 14 12 10 8 6 4 2 0 2005 2006 2007 IN DI A Insurance penetration is measured as ratio (in per cent) of premium (in US Dollars) to GDP (in US Dollars) Interpretation – The above table shows that since the total premium collected is just 4% of India’s GDP in 2007 as compared to France.3 13.1 3.International Comparision of Life Insurance Penetration : The table below shows that India is doing well in comparison to several countries but still the life insurance penetration is still low and there is a huge scope for growth in the insurance industry.14 1.06 7.78 3.
87) 2002-03 24545580 (96.62) 26211198 1658847 (101.40) 50874157 7922274 (104.01) 2005-06 31590707 (31.75) PRIVATE SECTOR INDUSTRY TOTAL 13261558 (67.Number of Life Insurance Offices. showing a growth of over 65 %. LIC’s offices increased at a more modest 10 % from 2301 offices to 2522.75) 2004-05 23978123 (-11.61) 2006-07 38229292 (21. New Policies issued : Life Insurers (as on 2008-09) : Table 3 INSURER LIC 2007-08 37612599 (-1. SIVA SIVANI INSTITUTE OF MANAGEMENT 13 .37) 35462117 2233075 (34.09) 2003-04 26968069 (9. A major portion of this expansion was in the private sector whose offices more than doubled from 3072 to 6391.25) 25370674 Figure in bracket indicates the growth over the previous year in percent.64) 46151566 3871410 (73.Company wise (as on 2008-09) Table 2 INSURER PRIVATE SECTOR LIC 2522 2008 6391 2007 3072 2006 1645 2005 804 2004 416 2003 254 2002 116 2001 13 2301 5373 2220 3865 2197 3001 2196 2612 2191 2445 2190 2306 2186 2199 INDUSTRY 8913 TOTAL Expansion of Offices The number of offices of the life insurers has increased dramatically in the year 2007-08 from 5373 at the beginning of the year to 8913 by the end of the year.05) 28626916 825094 (3.
74 lakhs in 2007-08 as against 461. were 26.46 per cent). and Rs.201351.64 %). The market shares of private insurers and LIC. Regular premium.26 per cent). LIC showed a decline of 1. The table below shows the trend followed during past seven years in terms of total life premium collected. (previous year 104.107638.01 % in 2006-07.07% and 73.89 crore (53. single premium and renewal premium in 2007-08 were Rs.54888.83% respectively in 2006-07. We can clearly see that private companies are catching up as they are registering a continuously high growth rate as compared to LIC which is a matter of concern.28 per cent).Chart 2 120 100 80 60 40 20 0 -20 Growth Rate over past years LIC Private Companies 2007-08 2006-07 2005-06 2004-05 2003-04 2002-03 New policies underwritten by the industry were 508. Total Life Insurance Premium( as according to IRDA handbook 2007-08 ) Life insurance industry recorded a premium income of Rs.61 % as against a growth of 21. Rs.40 %.41 crore during 2007-08 as against Rs. While the private insurers exhibited a growth of 67. SIVA SIVANI INSTITUTE OF MANAGEMENT 14 . recording a growth of 29.01 per cent.23 %.16 crore (27.93% as against 17. in terms of number of policies underwritten.38824.52 lakhs during 2006-07 showing an increase of 10. respectively.85 crore in the previous financial year.36 crore (19.156075.17% and 82.
65 LIC Private companies 50 17.19) 2006-07 127822.19 0 2007-08 2006-07 2005-06 2004-05 2003-04 2002-03 Interpretation -From the above table 4 and chart 3 we can clearly see that private companies are registering encouraging growth rates in terms of total premium collection over the past few years as compared to LIC’s normal and ordinary growth.65) PRIVATE SECTOR TOTAL 51561.41 (29. SIVA SIVANI INSTITUTE OF MANAGEMENT 15 .31) 3120.29 (18.84 (47.33 (178.00 (87.28) INDUSTRY 201351.5 87.19) 105875.3 9.85) 2004-05 75127.30) 2002-03 54628.83) 66653.59) 55747.25) 2003-04 63533.06 (310.54 (95.59 178.38) 15083.51 (147.78) 7727.50) 28253.99 (17.01) Figure in the bracket represent the growth over the previous year in percent.49 (9.25 16.42 (82.83 147.76 (27.08) 156075.22 (20.Table 4 INSURER LIC 2007-08 149789.65 95.79 Growth Rate over past years 310.80 (24.84 (40. Chart 3 350 300 250 200 150 100 82.43 (16.85 18.65) 82854.08 40.75 (19.55 (11.79) 2005-06 90792.19 20.56) 1119.
42 % in 2006-07 has increased to 12.92 % in 2007-08 as SIVA SIVANI INSTITUTE OF MANAGEMENT 16 .00 Referrals PRIVATE TOTAL LIC INDUSTRY TOTAL 53.32 11.New Business Premium (Individual and Group) of Life Insurers for 2007-08 Channel wise : Table 5 Life Insurer Individual Agents Corporate Agents Brokers Direct Selling Total New Business( Individual and group) 100. the others grew from 2.17 28.20 100.33 % in 2007-08.02 1.98 72.00 2. while the banks’ share grew from 5.96 % to 4.05 0. The share of corporate agents in the new business premium procured by the private life insurers was significant at 29.00 100.85 16.46 82.97 % in 2007-08.46 % in 2006-07 to 7.51 Chart 4 - The share of corporate agents which was 8.61 16.36 % in the corresponding years.96 0. Within the corporate agency channel.61 15.81 6.12 1.
Under the group scheme 56. While the number of policies written by LIC declined by 23. Performance in the first quarter of 2008-09 (i) Life insurance: The life insurers underwrote a premium of Rs.1075.01 crores and the two new entrants.36 %. The premium underwritten by LIC declined by 12. The number of policies written at the industry level declined by 7. 4172.385 crores making the total additional capital brought in 2007-08 by the private insurers to Rs.01 crores.96 lakhs and private insurers 12. The total capital of the life insurers at end March 2008 stood at Rs. 6795.12296.90 crores and group business for Rs.compared to 24.13 lakhs lives were covered recording a growth of 8.1011. Of the total premium underwritten.12 crores and Rs. while for LIC the share fell to 1.88 %.00 %.3160.17.20 crores during the first quarter in the current financial year as against Rs.58 % and 76.42 crores.56 crores and the private insurers accounted for Rs. Of the total premium underwritten.31 % while. lower than 68.78 crores in the rural sector.99 % in 2006-07.51 % over the previous period. Of the total lives covered under the group scheme. they were Rs.45 %. that of private insurers increased by 72. over the corresponding period in the previous year.78 %. in the case of private insurers they grew by 44. 3324.14320.50 lakhs lives in the social sector with a premium of Rs. The additional capital brought in by the existing private insurers during 2007-08 was Rs.59 % in 2007-08 from 2. the domestic and the foreign joint venture partners added Rs. individual business accounted for Rs.30 crores.80 crores in the comparable period of last year recording a growth of 14.10 crores and underwrote 13. brought in equity of Rs.19 crores and Rs.5720.85 crores.14 % in the previous year.45 crores respectively. LIC accounted for 38.64 crores. The life insurers covered 12.55 % in the total premium collection and 63. SIVA SIVANI INSTITUTE OF MANAGEMENT 17 .7524.87 % respectively reported in the previous year.10995.53 lakhs policies with a premium of Rs.71 crores and group business was Rs.88 % in number of polices underwritten.12511.77 lakhs.88 crores respectively. Of this. In the case of private insurers.3787. 5275. In respect of LIC. LIC accounted for Rs.1275. The market share of LIC was 52.2248. individual business was Rs.
3 COMPANY PROFILE : Life Insurance Corporation of India The Life Insurance Corporation of India popularly known as “LIC of India” was incorporated on September 1. It is the largest life insurance company in India and also the countries largest investor. It is one of the largest capitalized insurance companies of Nepal. International A joint venture offshore company promoted by LIC. It was established 52 years ago with a view to provide an insurance cover against various risk in life. especially the vast rural masses. LIC Nepal A joint venture company formed in September 2001 with the Vishal Group of Industries with a capital base of Rs.they are persuading people to take out bigger policies.the luminaries who spearheaded this move at that time visualised an entity that will provide life insurance to Indians. The LIC International operates in all Gulf Cooperation Council (GCC) countries.2 lakhs. The subsidiary companies under LIC are: LIC of India. nearly all private insurers are fast.forwarding the second phase of their expansion plans. The primary objective is to the US-dollar denominated policies which cater to the insurance needs of non-resident in Indians. commenced its operation in july1989. But a rejuvenated LIC is also trying to fight back to woo new customers. It provides insurance services to policyholders who residing in Gulf. 1956 by nationalizing 245 Indian as well as foreign companies . the average size of a life insurance policy before privatization was around Rs 50. But the private insurers are ahead in this game and the average size of their policies is around Rs 1.000. For instance.000. That has risen to about Rs 80. Buoyed by their quicker than expected success. at an economical cost and channel the savings for the betterment of the nation. It has joint share between LIC of India (55%) Vishal Group (25%) and has a public participation to the extent o 20%. SIVA SIVANI INSTITUTE OF MANAGEMENT 18 .The private insurers also seem to be scoring big in other ways.250mn. No doubt the aggressive stance of private insurers is already paying rich dividends.1 lakhs to Rs 1.way bigger than the industry average. 2. It is fully owned by the Government of India and headquartered in Mumbai.
1989. Dubai. construction. It builds and operates “Assisted Community Living Center” for senior citizens.Life Insurance Corporation Lanka Limited (LICL) A joint venture company formed in 2003 with the Bartleet Group of Companies. Qatar and Saudi Arabia. It has set up a representative office in Dubai and Kuwait to cater to the non. The combined strengths of these two formidable companies has enabled LICL to emerge as the premier provider of Life Insurance in Sri Lanka. personal needs and gives loans to professionals for purchase or construction of clinics\ nursing homes\ diagnostic centers\office space and also for purchase of equipments. and 127marketing offices. It operates a network of approximately 6 regional offices. 13 back offices. Mauritius. The company provides long terms finance to individuals for purchase. LIC Housing Finance Incorporated on june 19. LIC Housing Finance Limited Care Homes It is a Wholly-owned subsidiary of LIC Housing Finance. Vision “To emerge as a transnationally competitive financial conglomerate of significance to societies and be the pride of India “ . Fiji. The Indian-based blue-chip also has offices in UK. its main objective is to provide long term finance for construction or purchase of houses or apartments. It also provides finance on existing property for business. Kuwait. SIVA SIVANI INSTITUTE OF MANAGEMENT 19 . 000prudent house owners who enjoy the company’s financial assistance. Mission Explore and enhance the quality of life of people through financial security by providing products and services of aspired attributes with competitive returns and by rendering resources for economic development. it is one of the oldest and reliable institutions in Sri Lanka. It has client group of over 9. repair and renovation of new \ existing flats\houses.40.resident Indians in countries covering Bahrain. and in all Middle East countries.
Govt. Dasgupta Arun Ramanathan Sindhushree Khullar 20 SIVA SIVANI INSTITUTE OF MANAGEMENT . Promote amongst all agents and employees of the corporation a sense of participation. the investible funds to be deployed to the best advantage of the investors as well as the national priorities and the obligations of attractive returns. Thomas Mathew T.Objective of LIC Spread life insurance widely in particular to the rural areas and socially and economically backward classes. Secretary. To conduct business with utmost economy and keeping gin mind that the money belongs to the policyholders. Mehrotra. It acts as a trustee of the insured public in its individual and collective capacities. Ministry of finance. whose money it holds in trust. the primary obligation to its policyholders.K. To maximize mobilization of people’s savings by making insurance linked savings adequately attractive. Board of Directors Chairman Managing Director Finance Secretary and secretary( financial services) Department of Financial Services. To meet the various life insurance need of the community that would arise in the changing social and economic environment. Ministry of Finance TS Vijayan D. It ensures that all people working in the corporation are involved to the best of their capability in furthering the interests of the insured public by providing efficient service with courtesy. of Economic Affairs. A.K. pride and job satisfaction through discharge of their duties with dedication towards achievement of corporate objective. This is done with a view to reach all the insurable persons in the country and provide them adequate financial cover against death at a reasonable cost. of India Addl. Bearing in mind. Dept.
00. It is one of the leading online non-life and life insurance aggregator to sell its policy Jeevan Aastha on the internet.Chairman cum Managing Director GIC of India Chairman and Managing Director. It is the largest insurance player in India and its objective is to channelize its funds for the benefit of the community at large.LIC has been investing a major portion of its funds in socially-oriented sectors with a view to reach every insurable person in the country and provide adequate financial cover against death at a reasonable cost. Venkat Subramaniam Products and Services LIC has eight zonal offices and 105 divisional offices located in different parts of India. primarily to cater to the insurance needs of non-resident Indians.com an insurance portal that enables the consumers to get detailed information on the policy. Apart from the corporate group insurance business the pension& group schemes is responsible for ‘Aam Aadmi Bima Yojna’. LIC has extended its activities in 12 countries from outside India. Another goal is to mobilize people’s savings adequately attractive. It enjoys a near monopoly power in the solicitation and sale of life insurance policies in India. It compromises of 2.000 corporate clients covering more than 3. It has more than 1. The corporation has major business houses as clients.15. Export Import. SIVA SIVANI INSTITUTE OF MANAGEMENT 21 . 149 agents for soliciting life insurance business from public. 02.LIC has recently tied up with Policybazaar. LIC aims at strengthening it relationship with its vast customer base by providing value-added service such as credit cards and offering premium payment facility to the policyholders.000 members.C. Bank of India Yogesh Lohiya T.048 branches and employs over 10. under the group business of India.a social security schemes for the rural landless households under the aegis of the Government of India.18.
Insurance Plans The following insurance plans are on offer. They provide the most suitable options that can fit customer’s requirement. LIC Product Portfolio Children Plans Jeeevan Anurag CDA Endowment Vesting at 21 CDA Endowment Vesting at 18 Jeevan Kishore Child Career Plan Child Fortune Plus Marriage Endowment or Educational Annuity Plan Jeevan Chhaya Money Back Plans Jeevan Varsha The Money Back Policy-20 years The Money Back Policy-25 years Jeevan Surabhi-15 Years Jeevan Surabhi-20 Years Jeevan Surabhi-25 Years Bima Bachat Child future Plan Plans for Handicapped Dependents Jeevan Aadhar Jeevan Vishwas The Endowment Assurance Policy The Endowment Assurance Policy-Limited Payment Jeevan Mitra (Double Cover Endowment Plan) Jeevan Mitra (Triple Cover Endowment Plan) Jeevan Anand New Janraksha Plan Jeevan Amrit Special Money Back Plan for women Jeevan Bharti-1 Whole Life Plans The Whole Life Policy The Whole Life Policy –Limited Payment The Whole Life Policy – Single Premium Jeevan Anand Endowment AssurancePlans Jeevan Tarang Term Assurance Plans Two year Temporary Assurance Plan The Convertible Term Assurance Policy Anmol Jeevan.1 Amulya Jeevan -1 SIVA SIVANI INSTITUTE OF MANAGEMENT 22 .
Joint Life Plan Jeevan Sathi Decreasing Term Assurance To Cover Home Loan Payment Mortgage Redemption Jeevan Nidhi Jeevan Akshay-VI New Jeevan Dhara-I New Jeevan Suraksha-I Group Term Insurance Schemes Group Term Insurance Scheme in Lieu of EDLI Group Leave Encashment Scheme Group Mortgage Redemption Assurance Scheme Gratuity Plus Group critical Illness Rider Plans for High Worth Individuals Jeevan Shree-1 Jeevan Pramukh Unit Linked Plans Market Plus –I Profit Plus Fortune Plus Money Plus-I Child Fortune Plus Pension Plans Group Scheme Special Plans Golden Jubilee Plan New Bima Gold Special Plan Bima Nivesh 2005 Jeevan Saral Jeevan Madhur Health Plus Janashree Bima Yojna (JBY) Siksha Sahayog Yojana Aam Admi Bima Yojana Social Security Scheme Unit linked insurance plans (ULIPs) are insurance plans that combine the benefit of investment with insurance. they were major beneficiaries of the secular rise in stock markets. Being market. ULIPs have gained high acceptance due to the attractive features they offer. ULIPs were launched at an opportune time when stock markets had just taken off. These include: SIVA SIVANI INSTITUTE OF MANAGEMENT 23 .linked. They give the investor an option to put a part of their premium in various investment portfolios and derive the benefits depending upon the performance of the funds chosen by them.
SIVA SIVANI INSTITUTE OF MANAGEMENT 24 . Transparency Changes in the plan & net amount invested are known to the customer. Flexibility to choose premium amount. Secure Fund. Low minimum tenure. The movement of NAV enables the policy holder to assess the performance of his investment and accordingly make intervention in the form of switches. Flexibility to change asset allocation by switching between funds. Option to change level of Premium even after the plan has started (Top up facility). within a ULIP there are options wherein equity investments are capped. Surrender charges. Option to choose fund mix based on desired asset allocation. They invest across the board in stocks. Partial / Systematic withdrawal allowed 4. Flexibility Flexibility to choose Sum Assured. The common type of charges. debt. have a broader choice. Insurance companies are required to declare the NAV of various ULIPs on a daily basis.The common types of funds available in ULIPs are Bond Fund. cash or a combination). However the investment risk is borne by the investor. Index Fund. Convenience of tracking one’s investment performance on a daily basis. Balanced Fund. corporate bonds and money market instruments. corporate bonds and the money market. 3. Depending on one’s risk appetite one can choose the fund.1. Fund management charges. Unit-linked insurance policies (ULIPs) have become increasingly popular. Policy/administration charges. government securities. Fund Options A choice of funds (ranging from equity. Mortality charges. Fund switching charges and Service tax. Of course. withdrawal and top-ups. Liquidity Option to withdraw money after few years (comfort required in case of exigency). fees and deductions in ULIPs are Premium allocation charges. 2. endowment plans have invested in government securities. Protector Fund. and Enhancer Fund. After opening up of the insurance sector. Traditionally. Growth Fund. ULIPs however.
30 2005-06 17.09 2007-08 9.Analysis of figures for the last three years indicates the growth pattern of unit linked business.75 46.31 56. SIVA SIVANI INSTITUTE OF MANAGEMENT 25 .25 53.70 70.31 70.30 29.69 43.24 58.91 2007-08 90.23 2006-07 11.76 41.77 2006-07 88.67 37.70 Chart 5 - Interpretation – The above graph shows that during the past few years ULIP plans have become more and more popular among the investors because of the returns they provide in addition to the insurance cover. Table 6 TRENDS IN LIFE INSURANCE BUSINESS—UNIT LINKED INSURANCE PLANS Unit Linked Business (%) Non-linked Business (%) 2005-06 Private LIC Industry 82.69 29.33 62.
industries and also in various other countries.16.000 crores total premium by the end of current fiscal.00. Readers Digest Trusted Brand Award 2008 in the Platinum Category. 702. Adding fuel to the fire.18 croress in 2004-05 and the sum assured under this business rose to high of Rs. has to consider various factors and forces such as safety.000cr or 75% in the next three years.500 development officers in the current fiscal year and 5. The total funds of the corporation also grew from Rs.00. In short. Investments . the corporation is not in apposition to pursue a prudent investment policy due to which its investment income may come under pressure. It is on new growth trajectory surpassing its own past records. The state. the falling interest rate would also adversely affect the investment performance of the Corporation. With the targeted Rs.liability management etc. The life insurance giant is looking a market share about 75%. 4. while investing its funds. The LIC. 329.336.67 cr in 1957.36 cr in 2004-05.allof which gets deployed for the development of the nation.owned corporation is targeting a business of over Rs.75.000 new officers could be hired in the next fiscal.The SIVA SIVANI INSTITUTE OF MANAGEMENT 26 .3. the company has recruited about two lakhs insurance agent across the country.74 cr in 1957 rose to a high of Rs. which were Rs. CNBC ‘Awaaz’ Consumer Awards 2008 and NDTV Profit Business Leadership Award 2008. 1.Performance of LIC of India The number of new policies marketed grew from 14. The corporation has crossed many milestones and has set unprecedented performance records in various aspects of life insurance business.80 cr in 1961 to Rs. It has also hired 4.1.95 cr in 2004-05 .13.66 cr in 2004-05 from Rs.000 crores by2011-12. The average premium growth so far has been 20%.800. It has bagged various awards which include Loyalty Award 2009.4.69 lakhss in 1961 to 2.910.79.The LIC has huge investible funds and the main source comes from the premiums collected from the policy holders. The life insurance major expects its assets size to grow about Rs.000 agents hired in the previous fiscal. which is more than double of the 90.886. In the current fiscal year. Golden Peacock Innovative Product/Service Award 2009. liquidity and productivity of funds plus various other regulatory bindings in terms of investment norms. The Corporation invests these funds in various states. the LIC has to make its investments within the ambit of these bindings as a result.6. Still at present LIC continues to be the dominant life insurer even in the post-liberalization phase of the Indian insurance industry. asset.
Investment Portfolio of LIC of India The Life Insurance Corporation of India has been a nation builder since its formation in 1956.1 service brand of the country for the 5th consecutive year. In the chart below is shown the market share of LIC and private in terms of total premium collected. The investment of the corporation’s funds is governed by Section 27A of the insurance act. As per the prescribed investment pattern approved by IRDA.Economic Times Brand Equity Survey rated LIC as the No. National priorities and obligation of reasonable returns to the policyholders are its main criteria for the investment. so invested for the benefit of the community at large accumulated to Rs 751129 crores (provisional) as on 31st march 2008. 1938 subsequent guidelines/instructions issued there under by the Government of India from time to time and the IRDA by way of regulations. The corporation has deployed the funds to the best advantage of the policyholders as well as the community as a whole. True to the objective of nationalization. Not less than 35% in other investments. The total funds. to be governed by exposure prudential norms SIVA SIVANI INSTITUTE OF MANAGEMENT 27 . the controlled funds are invested as follows : Not less than 50% is invested in Government securities or other approved investments. true to the spirit of nationalization. the LIC has mobilized the funds invested by the people in the life insurance for the benefit of the community at large. ( refer table 4 for data ) Chart 6 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 0 20 Market Share in % 99 98 95 91 86 82 74 40 60 80 1 2 5 9 14 18 26 100 120 LIC Private companies The bar graph clearly indicates that market share is continuously declining for LIC over the past few years. Not less than 15% is invested in infrastructural and social sector investments.
26 152.22 1.00 120.77.95 Annual growth(%) 20.82 2.49 Compiled from the annual reports of LIC of India Investment in Government and social sector : As on Type of investment Central securities State Government & 58928 64285 89234 other Govt.46.910.20 172. guaranteed marketable secrities Infrastructure & social sector investment Housing Power & sewage Roads.56 13.022.26 26. ports and bridges Others railways Total 358401 410529 469191 28 725 1516 4398 1154 8774 including 3954 19807 29740 22451 37881 7500 24325 41120 6649 Government 31-3-2006 236959 31-3-2007 272498 31-3-2008 297943 Irrigation/ water supply 8288 SIVA SIVANI INSTITUTE OF MANAGEMENT .Total funds of LIC Year 1999-00 2000-01 2001-02 2002-03 2003-04 2004-05 Total funds 1.92 258.11 24.36 Growth trend 100.69 2.039.93.61.002.34 3.85 126.96.36.199 4.621.15 214.16.
Awards and achievements of LIC : Golden Peacock Innovative Product / Service Award – 2009 Loyalty Award 2009 Readers Digest Trusted Brand Award 2008 in the Platinum category CNBC Awaaz Consumer Awards 2008 SIVA SIVANI INSTITUTE OF MANAGEMENT 29 .
Red-tapism is very much persistent. a whole lot of innovative Pension markets. After sales customer grievance redressal mechanism is inefficient. Agents not taking into account the needs of people and promote policies having high commissions only. Weakness : Its employees and other staff are lethargic and least motivated to render prompt and sincere customer service. LIC has a strong and very well developed distribution network. consultant. SIVA SIVANI INSTITUTE OF MANAGEMENT 30 . Entry of new private players in industry. The top management or bosses are mediocre and there is large scale corruption in main office. Very slow decision making process and internal problems between top management and lower cadre staff. Threats : There is too much internal discord. Strength : It is the oldest and most well experienced player having a Pan India presence. It is having a huge consumer base and is evolved as one of the most powerful country. health insurance and large real estate portfolio. other agencies and helps in long term viability of the project. Opportunity : Emergence of a huge middle income consumer market in the country People becoming more aware and demanding so there is scope for products.The SWOT analysis involves an in depth study of the strength and weakness of the provided organization and it also provides information to the promoter. The development officers and agents who are the foundation pillars of LIC are not provided with extra funds and powers to promote its products aggressively. brands of the It has a large product portfolio and claim settlement is easier to get. It has the advantage of government guarantee is accompanied with it.
A well defined proper organization structure with officials with exact knowledge of their duties is a must for an organization to prosper. It checks that all the information provided by the customer is true and the proposal form and all other details and proofs are legal. Sales Department – This department is mainly concerned with the sale of new policies and is headed by Assistant Branch Manager Sales(ABMS). LIC has its main central head office at ‘Yogaakshema’ Jeevan bima marg at Mumbai. If anything is found insufficient the proposal form is sent back to the sales department to correct the mistake and again submit it. east central zone. eastern zone. LIC has a vast network of offices across the length and breadth of our country and abroad so it has defined and maintained its organizational structure in the following way. northern zone. It is the development officer who continuously encourages the agents to get new business and the income. western zone respectively. In a branch office the top most is a branch manager and under his control are seven different departments with each of these departments functioning independently to each other. The internal agent of LIC is the Development Officer who has the job of communicating and training the Free Lancing agents. After these eight zonal offices there are several divisional offices under each zonal office and these divisional offices are mostly in each big city. 2. At last comes the branch office and there are several branch offices under each divisional office. south central zone.New Business Department – This department performance the very important function of underwriting new policies which are sent to it for authentication. After scrutinizing the new policy it issues the first premium receipts(FPR) and then issues the policy bond. SIVA SIVANI INSTITUTE OF MANAGEMENT 31 . At all the branch offices there is a branch manager and several departments and the major function of these branch offices is sales and servicing of the policies. Then it is followed by eight zonal offices namely central zone. southern zone. north central zone.2. These seven departments are as follows : 1.4 Departmental details : The organization having a such a huge size has to have a well defined hierarchical structure and LIC is not an exception to this fact. performance and commission through policy selling comes under the jurisdiction of this department.
5. 7. 4. second is submitted to the branch manager.Claims Department – All types of claims i. Accounts Department – It is responsible for processing of all the cheques and loans which come to it. 6. It takes care of the premium dates and if the policy is lapsed then its revival is done by this department. survival benefit claim. Each day’s business is collected and its four copies are made and one copy is sent to the divisional office. Also if any loan is required by the customer against his/her policy then its approval has to be given from the policy service department only. maturity claim and death claim are settled by this department.Policy Service Department – After the policy bond is issued. third remains with the incharge of micro department and fourth in the branch office. the case is passed on to this department to take care of after sales service of the policy.e. loans etc come under the responsibility of this department. Office Service Department – This department takes care of all miscellaneous tasks of office and dispatch of cheques. Micro Department – This department has the all important function of co-ordinating with each department. In case of death claim if death occurs after three years then no investigation is involved in the settlement process and if it occurs before three years then proper investigation is done and the claim is considered to be an early claim case. The details regarding financial aspects are covered under this department .3. SIVA SIVANI INSTITUTE OF MANAGEMENT 32 .
Accounts Dept. Claims Dept. Office Service Dept. SIVA SIVANI INSTITUTE OF MANAGEMENT Micro Dept.Central Head Office Zonal Office Divisional Office Branch Office Sales Dept. 33 . New Business Dept. Policy Service Dept.
SIVA SIVANI INSTITUTE OF MANAGEMENT 34 . 151 from LIC and 149 from private sector were identified randomly for detailed study and analysis. problems faced and the investor’s motive of investment.CHAPTER .III 3. The first part helps us to understand the level of awareness. LIC and various other company websites. The published research reports and market studies also helped the researcher to guage into the problem. The study is mainly based on primary data collected from field source. The population of Lucknow city is divided into three stratums such as old. the researcher selected LIC of India from the public sector and the private sector insurance companies.1 Research Methodology : Introduction : Being a comparative study of public and private sectors. service quality and problems faced by the consumers. publications and various websites including the official website of IRDA. Research design : The research is divided into two parts. the second part deals with extracting important findings from this information and analyzing the measures required to correct problems if any. For the purpose of analyzing the awareness level a two point rating scale is used. Chi-square test. schedules and discussions with the customers of LIC and customers of private companies. Statistical tools used : Statistical tools like weighted averages. service quality. magazines. mean and standard deviation etc are used for the analysis of data. The researcher used stratified random sampling technique for collecting the primary data. Secondary data is collected from various bibliographical sources such as journals. The primary data is collected through a comprehensive interviews. Research sample : A sample of 300 respondents. novels. A two point and a three point scale is used to test the various aspects covering the awareness level. percentages. new and cantt area and an equal number of samples are drawn from each stratum.
the following hypotheses have been formulated: I) Ho : There exists a relation between the awareness level and the type of company customers choose for taking up an insurance policy. service quality. 3 and 6 it has been found that growth rate as well as the market share of LIC is constantly decreasing in comparison to the private companies so to improve on the correctional areas.3 Formulation of Hypothesis : Keeping the above mentioned objectives in mind and to have a disciplined direction to the enquiry. Referring to the Tables 3 and 4 and also chart 2. II) Ho : There exists a relation between the level of satisfaction by the service quality and the type of company customers choose for taking up an insurance policy. These values were entered into a master sheet and later with the help of a code book these numerical values were further entered into the spreadsheet format on the computer.2 Statement of the Problem : Customer satisfaction is the true differentiator for the success of any business and is more so in insurance where the products are perceived to be intangible. In order to present the results and analyze them.3. SIVA SIVANI INSTITUTE OF MANAGEMENT 35 .e.Firstly. the four main aspects i. 3. Date Processing and Analysis: Data are process with the help of computer software and Statistical analysis are made with the help of Excel sheet and SPSS (statistical package for social sciences). the answers ticked by the respondents were recoded while assigning the numerical values. These raw data were processed with the help of the statistical pack as stated. problems faced and rationale behind investment has to be known. awareness level. cross-tabulations were made. III) Ho : There exists a relation between the grievance redressal mechanism and the type of company customers choose for taking up an insurance policy. IV) Ho : There exists a relation between the claim settlement process and the type of company customers choose for taking up an insurance policy. percentage tables.
The above are some of the aspects which posed real problems in the way of completion of the research work but the majority of respondents were cooperative and my gratitude are due to them.Limitations of the study : In spite of every care taken on the part of the researcher there were certain limitations which could not be overcome and are as follows : Some of the persons were not so responsive. SIVA SIVANI INSTITUTE OF MANAGEMENT 36 . The sample size may not adequately represent the whole market. Possibility of error in data collection because many of investors may have not given the actual answers of my questionnaire. The research study was confined to Lucknow city only. Sample size is limited to 300 people only. Some respondents were reluctant to divulge personal information which can hinder the validity of all responses.
Out of 300 respondents around 50% are between 20-40 years and 38% are between 40-60 years of age. gender.IV 4. a vast majority of respondents (85%) fall in the age band of 20-60 years.1 Data analysis and interpretation : Analysis of Data : The demographic profile of the respondents is analyzed on the basis of age. SIVA SIVANI INSTITUTE OF MANAGEMENT 37 .CHAPTER . The age distribution of sample respondents is shown in Table 7 below : Table 7 – Age Group Distribution Age Group Number of Respondents Percentages Below 20 13 4.7 Above 60 20 6.7 Total 300 100 Chart 7 Age Distribution of Respondents 160 140 120 100 80 60 40 20 0 Below 20 20-40 40-60 Above 60 Number of Respondents Interpretation It is clear from Table 7. educational qualification and annual income. occupation.3 40-60 116 38.3 20-40 151 50.
Only 95 (32%) of them are females. SIVA SIVANI INSTITUTE OF MANAGEMENT 38 .Table 8 – Gender of respondents Gender Male Female Total Number of Respondents 205 95 300 Percentage 68.3 31.7 100 Chart 8 - Sex of respondents Female 32% Male 68% Interpretation Out of the 300 samples drawn 205 (68%) are male and it depicts the domination men in the life insurance sector.
around 46% of respondents are employees and the rest are equally represented by professionals.7 19.7 100 Chart 9 Occupational Distribution 160 140 120 100 80 60 40 20 0 Pr of es sio na l pl oy ee es s Bu sin ul tu re Number of Respondents Interpretation Occupation wise.3 46.3 17.Table 9 – Occupation Distribution Occupation Professional Employee Business Agriculture Total Number of Respondents 49 140 48 53 300 Percentages 16. SIVA SIVANI INSTITUTE OF MANAGEMENT Ag ric Em 39 . businessmen and agriculturists.
Up to SIVA SIVANI INSTITUTE OF MANAGEMENT De gr ee H & 40 .7 14 100 Chart 10 Educational Qualification of Respondents 160 140 120 100 80 60 40 20 0 ab ov e te Sc ho ol ed ia Te ch ni c al Number of Respondents In te rm ig h Interpretation It is also revealed from Table I.3 47. Remaining 22% are intermediate and only 16% are high school passed.Table 10 – Educational Qualification of Respondents Educational Qualification Upto High School Intermediate Degree & above Technical Total Number of Respondents 48 67 143 42 300 Percentages 16 22. that more than 60% of the respondents are graduates or technically qualified.
7 17 12. 00 20 0 .000.000 1.80.20.0002.80. Also 11% have income above Rs 2.20.000 Above 2. 00 80 0 .0001.80.20.40.2 0.000.0 60 00 .40. 40 .4 0.3 11 100 Chart 11 Annual Income of Respondents 140 120 100 80 60 40 20 0 60 .0 00 -1 .Table 11 – Annual Income of Respondents Annual Income Below 60.000 Total Number of Respondents 60 119 51 37 33 300 Percentages 20 39.000-1.0001.20. 00 Ab 0 ov e 2. 1. Be lo w SIVA SIVANI INSTITUTE OF MANAGEMENT 41 .000 1.000 and only 17% have income in the range of 1.0 00 Number of Respondents Interpretation Around 60% of the respondents have an annual income below 1. 1.000 60.8 0.0 00 -1 .0 00 -2 .40.
3 14 18.Table 12.3 8 51.Type of the policy Type of Policy Whole Life Endowment Money Back Pension Fund ULIP Others Total Number of Respondents 13 42 55 24 155 11 300 Percentages 4. SIVA SIVANI INSTITUTE OF MANAGEMENT Pe ns i M on O 42 .7 100 Chart 12 - Type of Policy 180 160 140 120 100 80 60 40 20 0 en t UL IP Li fe W ho le Ba ck th er s Fu nd m Number of Respondents En do w on ey Interpretation Out of the total population more than 50% of the respondents have unit linked insurance plans (ULIP) and only 18% have money back policies and endowment plans are with only14% of customers.7 3.
7 12.3 41.Periodicity of the Policy Periodicity of Policy 5 years 5-15 years 15-25 years Above 25 years Total Number of Respondents 22 125 116 37 300 Percentages 7.Table 13.7 38.3 100 Chart 13 Periodicity of Policy 140 120 100 80 60 40 20 0 5 years 5-15 years 15-25 years Above 25 years Number of Respondents Interpretation The table spells that around 80% of the respondents have policies with a maturity period of 5 to 25 years and only 12% have policies with a maturity period of more than 25 years. SIVA SIVANI INSTITUTE OF MANAGEMENT 43 .
The policy holders are not excused with any ignorance to the contract and it is the policyholders to get acquainted with the rules and regulations of the policy. it is the duty of the insurance company to disclose of the policy details. So the study about awareness level of customers assumes paramount significance. Hence it is gratifying to note that LIC is more transparent and divulge concrete details about policy and empower its policy holders in a much better way. SIVA SIVANI INSTITUTE OF MANAGEMENT 44 .3% of private company policyholders know about all their policy terms and conditions.2% of respondents of LIC are aware of all details of their policy where as only 44. Table 14 Yes LIC Private Company Total 103 66 169 No 48 83 131 Number of Respondents 151 149 300 Chart 14 Awareness Level No 48 83 LIC Private Company Yes 103 66 0 50 100 150 200 Interpretation – From the graph it is clear that 68.Awareness level of Respondents : As a contractual relationship exists between the insurer and the insured.
000 which is less than 0.000 17.000 a. (2sided) Exact Sig.000 .0%) have expected count less than 5.000 . the products are designed exclusively for the customers and the quality is the leading criterion for the selection of particular product. Table 15 LIC Fully Satisfied Partially Satisfied Not Satisfied Total 85 43 23 151 Private Company 50 57 42 149 Total 135 100 65 300 SIVA SIVANI INSTITUTE OF MANAGEMENT 45 .439 16. (1sided) df a sided) 1 1 1 . the insurance sector is also evaluated by its ability to provide quality services to its customers.000 17. 0 cells (.619 .05 so there exists a relation between the awareness level and type of company one chooses for investing his money. (2Value Pearson Chi-Square Continuity Correction Likelihood Ratio Fisher's Exact Test Linear-by-Linear Association N of Valid Cases b b Exact Sig. the insurance providers should realize the changes in the market and adopt new weapons in the form of high quality services. Satisfaction Level about service qualities : Like any other service sector.Testing hypothesis I : Chi-Square Tests Asymp. In the modern market.000 . b.381 300 1 . Hence the null hypothesis is proved. Sig. The minimum expected count is 65.06.480 17. Hence. Computed only for a 2x2 table Here since the Chi-square value is 0.
767 15.575 a df 2 2 1 sided) .000 which is less than 0. It is evident that customers. Sig.Chart 15 Private Company LIC 15% 28% 34% Fully Satisfied Partially Satisfied Not Satisfied Fully Satisfied 28% 57% Partially Satisfied Not Satisfied 38% Interpretation – From the above tables it shows that 57% customers are fully satisfied with LIC’s service quality and comparatively only 34% are satisfied by private companies.552 300 Here also the Chi-square value is 0. SIVA SIVANI INSTITUTE OF MANAGEMENT 46 .000 . Also 38% in private and 28% in LIC are only partially satisfied and remaining are not satisfied. are satisfied with the quality of services provided by LIC and there is significant difference in the service quality across both sectors. (2Value Pearson Chi-Square Likelihood Ratio Linear-by-Linear Association N of Valid Cases 16. in general.05 so the null hypothesis that relation exists between the level of satisfaction and type of the company one chooses for buying a policy is proved.000 .000 16. Testing hypothesis II : Chi-Square Tests Asymp.
undue delay in settlement of claims. misleading information by the agents and lack of technical knowledge or training. It is the duty of any insurance company to make an amicable settlement of these problems. lack of cooperation by officials/agents. Some important problems faced by policyholders analyzed are complex formalities for opening a policy. levy hidden charges. excessive penalties for non payment of premium. SIVA SIVANI INSTITUTE OF MANAGEMENT 47 . A few of them have been taken into account here. Table 16 – Accessibility of the employee/agents Yes LIC Private Company Total 102 117 219 No 49 32 81 Total 151 149 300 Chart 16 – LIC Private Company 21% 32% Yes No 68% Yes No 79% Interpretation – LIC clearly lags behind from private companies as only 68% customers against 79% of private company customers say that employees of the company are always accessible. lack of timely communication.Problems faced by the Customers : The problems faced by policyholders are many and varied. inefficient grievance redressal mechanism.
SIVA SIVANI INSTITUTE OF MANAGEMENT 48 .Table 17 – Complex formalities Yes LIC Private Company Total 92 79 171 No 59 70 129 Total 151 149 300 Chart 17 – LIC Private Company 39% Yes No 61% 47% 53% Yes No Interpretation – In LIC 61% customers feel that the formalities for opening a policy are too complex and the documentation is time taking but only 53% feel this in case of private sector. Hence in all there is more or less the same response about the complex formalities in both the sectors.
e.18. But also an alarmingly high % of customers of LIC and Private company i.234 a df 2 2 1 sided) .679 300 a. SIVA SIVANI INSTITUTE OF MANAGEMENT 49 .01 is less than 0.010 . Here the null hypothesis is proved since Chi-square value 0. Sig.307 3.055 9.Table 18 – Grievance redressal mechanism LIC Fully Satisfied Partially Satisfied Not Satisfied Total 63 42 46 151 Private Company 39 61 49 149 Total 102 103 95 300 Chart 18 – LIC Privat e Company 30% 42% Fully Satisfied Partially Satisfied Not Satisfied 26% 33% Fully Sat isf ied Part ially Sat isf ied Not Sat isfied 28% 41% Interpretation – From the above figure it is clear that 42% and 26% customers are fully satisfied with the grievance redress mechanism of LIC and Private company respectively.010 .05 and so there exists a relation between the grievance redress mechanism and type of company. The minimum expected count is 47. 30% and 33% respectively are not satisfied with their process.0%) have expected count less than 5. 0 cells (. Testing hypothesis III : Chi-Square Tests Asymp. (2Value Pearson Chi-Square Likelihood Ratio Linear-by-Linear Association N of Valid Cases 9.
0 cells (. Testing hypothesis IV : Chi-Square Tests Asymp.685 6.012 .0%) have expected count less than 5.Table 19 – Claim Settlement Process Yes LIC Private Company Total 125 105 230 No 26 44 70 Total 151 149 300 Chart 19 – LIC Private Company 17% 30% Yes No 70% 83% Yes No Interpretation – It is a matter of concern for LIC that around 83% say that it makes undue delay in claim settlement where as for private companies this % is 70%.008 a. (2Value Pearson Chi-Square Continuity Correction Likelihood Ratio Fisher's Exact Test Linear-by-Linear Association N of Valid Cases b b Exact Sig.333 300 1 .017 .05 so null hypothesis is proved and there exists a relation between claim settlement process and the type of the company.409 . b.014 6. Therefore null hypothesis is proved.011 6. The minimum expected count is 34. Sig.012 . SIVA SIVANI INSTITUTE OF MANAGEMENT 50 . (1sided) df a sided) 1 1 1 .77.355 5.012 which is less than 0. (2sided) Exact Sig. Computed only for a 2x2 table Since the Chi-square value is 0.
Table 20 – Information by the agent Yes LIC Private Company Total 104 124 228 No 47 25 72 Total 151 149 300 Chart 20 – LIC Private Company 17% 31% Yes No Yes No 69% 83% Interpretation – According to the figure we can infer that where 83% customers of private company the agent provides them with correct information only 69% say this in case of LIC. SIVA SIVANI INSTITUTE OF MANAGEMENT 51 .
SIVA SIVANI INSTITUTE OF MANAGEMENT 52 .Rationale behind the investment Table 21 Factors Individual Risk Coverage Tax Benefits Growth and return on investment Risk Coverage of Family Child Welfare LIC 1 3 4 2 5 Private Company 1 4 2 3 5 Table 21 shows that the most important drive for taking an insurance policy by a customer is the individual risk coverage irrespective of the sectors. The most proximate reasons are risk coverage. classes or seminars conducted by various organizations and influence of the peer group do not play a major role in the investment decision of the customer. tax benefits. children’s welfare and growth and return of investment. The rationale behind taking an insurance policy is almost same in both the sectors. Advertising of the company.
e.(refer table 15 and chart 15) 8) Employees or agents of LIC are not easily accessible when compared to private sector and customers have to try several times in order to meet LIC employees etc.(refer table 16 and chart 16) 9) Most of the respondents of LIC feel that formalities for opening a policy are too complex and take longer time.V 5.CHAPTER .1 Findings and Recommendations : Every study is completed only if it has certain outcomes in the form of findings and certain recommendations for the correction of faulty areas that have been found during the course of the study.(refer table 13 and chart 13) 6) It is very much clear that the awareness level of the customers of LIC is much higher than that of the private sector. 4) The most preferred plan among the investor’s is unit linked plans because of its high returns.(refer table 12 and chart 12) 5) Almost 80% of the policies sold have the periodicity of 5-25 years.(refer table 17 and chart 17) SIVA SIVANI INSTITUTE OF MANAGEMENT 53 . more than half of investor’s investing in insurance are the young people in the age group of 20-40. 2) Refering table 8 and chart 8 it can be said that males dominate in having life insurance policies. Findings from the data : Following are the important findings of the study : 1) Refering table 7 and chart 7 it is clear that the majority i.(refer table 14 and chart 14) 7) A greater number of customers of LIC are either fully or partially satisfied but there is not much significant difference across sectors in terms of service quality satisfaction level. 3) Referring table 9 and chart 9 it can be said that majority of people having life insurance are employed.
it should be made easier and faster( refer finding 9). (refer finding 12). LIC should also tie up with several other banks apart from the existing ones to sell its products i.(refer table 18) 11) It is a threat for LIC that more than four fifth of the customers of LIC feel that it unduly delays in claim settlement. Customer friendly documentation i. All the hidden charges should clearly be stated in the form and explained by the agent and LIC should provide better training to its agents. LIC should keep a check that its agents equally promote all its products( refer finding 14). Hence the rationale behind investment is more or less same.e. Claim settlement process should be made fast and must not involve lengthy decision making process( refer finding 11). through bancassurance ( refer chart 4) The company has the option of tying up with local NGO’s for selling its rural insurance products.(refer table 21). LIC may provide additional funds to its development officers and agents( refer finding 14). conduct road shows. so that it can better propogate awareness about its various lesser known products.(refer table 20 and chart 20) 13) From table 21 it is evident that individual risk coverage is the most preferred criteria among the investors irrespective of both the sectors. Some special focus should be laid on individual risk coverage while designing the products.e.(refer table 19 and chart 19) 12) Also a lesser number of customers of LIC feel that their agent provides them with the correct and relevant information in comparison to customers of private company.10) Two fifth of the customers of LIC are fully satisfied with its grievance redress mechanism while only one fourth are fully satisfied in case of private sector.( refer table 1 and chart 1) The company if possible should invest in advertising. SIVA SIVANI INSTITUTE OF MANAGEMENT 54 . Recommendations : To increase the level of insurance penetration LIC may focus on bringing products that suit to the rural customers. and spend money on hoardings.
customer satisfaction has become an important aspect to retain the customers. In today’s competitive world. I learnt how to judge a customer and offer him/her a product which would interest him. not only to grow but also to serve. wide range of product offerings and multiple distribution channels cause companies to value satisfied and highly profitable customers. While dealing with retail customers I had a really enriching experience. I also had a chance to see how closing takes place in insurance companies. it is evident from the study that the public sector giant LIC dominates the Indian insurance industry. Increased competition. Also working in a real office environment provided me an enriching experience. Conclusion : The entry of private sector insurance companies into the Indian insurance sector triggered off a series of changes in the industry. Customer service is the critical success factor in a company and providing top notch customer service differentiates great customer service from indifferent customer service. SIVA SIVANI INSTITUTE OF MANAGEMENT 55 .Learning This project has given me a good opportunity to learn a lot about the insurance sector in general and LIC in particular and especially about the basic technicalities involved right from selling to servicing and lastly the claim settlement process. Even with the stiff competition in the market place.
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