Post Purchase Behaviour of Consumer of Lic

POST PURCHASE BEHAVIOUR OF CONSUMER OF LIC
CHAPTER 1 INTRODUCTION
INTRODUCTION TO INSURANCE BRIEF HISTORY OF INSURANCE
IMPORTANT MILESTONE IN THE LIFE INSURANCE BUSINESS IN INDIA. GROWTH OF INDIAN LIFE INSURANCE SECTOR:
BASIC FUNCTIONS OF THE INSURANCE INDUSTRY
ETOP ANALYSIS OF THE INDIAN INSURANCE INDUSTRY
PEST ANALYSIS
B.M. COLLEGE OF BUSINESS ADMINISTRATION

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INTRODUCTION TO INSURANCE
Insurance industry has always been a growth-oriented industry globally. On the Indian scene too, the insurance industry has always recorded noticeable growth vis--vis other Indian industries. The Triton General Insurance Co. Ltd. was the first general insurance company to be established in India in 1850, which was a wholly British-owned company. The first general insurance company to be set up by an Indian was Indian Mercantile Insurance Co. Ltd., which was established in 1907. There emerged many a player on the Indian scene thereafter. The general insurance business was nationalised after the promulgation of General Insurance Business (Nationalisation) Act, 1972. The post-nationalisation general insurance business was undertaken by the General Insurance Corporation of India (GIC) and its 4 subsidiaries: 1. Oriental Insurance Company Limited; 2. New India Assurance Company Limited; 3. National Insurance Company Limited; 4. United India Insurance Company Limited. The Life Insurance Corporation (LIC) was established on 01.09.1956 and had been the sole corporation to write the life insurance business in India. The Indian insurance industry saw a new sun when the Insurance Regulatory & Development Authority (IRDA) invited the applications for registration as insurers in August, 2000. With the liberalisation and opening up of the sector to private players, the industry has presented promising prospects for the coming future. The transition has also resulted into introduction of ample opportunities for the professionals including Chartered Accountants.
THE INDIAN INSURANCE INDUSTRY IS FEATURED BY THE FOLLOWING ATTRIBUTES:

Low market penetration; Ever-growing middle class component in population. Growth of consumer movement with an increasing demand for better insurance products; inadequate application of information technology for business. Adequate fill up from the Government in the form of tax incentives to the insured, etc.
BRIEF HISTORY OF INSURANCE:

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POST PURCHASE BEHAVIOUR OF CONSUMER OF LIC The story of insurance is probably as old as the story of mankind. The same instinct that prompts modern businessmen today to secure themselves against loss and disaster existed in primitive men also. They too sought to avert the evil consequences of fire and flood and loss of life and were willing to make some sort of sacrifice in order to achieve security. Though the concept of insurance is largely a development of the recent past, particularly after the industrial era past few centuries yet its beginnings date back almost 6000 years. Life Insurance in its modern form came to India from England in the year 1818. Oriental Life Insurance Company started by Europeans in Calcutta was the first life insurance company on Indian Soil. All the insurance companies established during that period were brought up with the purpose of looking after the needs of European community and Indian natives were not being insured by these companies. However, later with the efforts of eminent people like Babu Muttylal Seal, the foreign life insurance companies started insuring Indian lives. But Indian lives were being treated as sub-standard lives and heavy extra premiums were being charged on them. Bombay Mutual Life Assurance Society heralded the birth of first Indian life insurance company in the year 1870, and covered Indian lives at normal rates. Starting as Indian enterprise with highly patriotic motives, insurance companies came into existence to carry the message of insurance and social security through insurance to various sectors of society. Bharat Insurance Company (1896) was also one of such companies inspired by nationalism. The Swadeshi movement of 1905-1907 gave rise to more insurance companies. The United India in Madras, National Indian and National Insurance in Calcutta and the Co-operative Assurance at Lahore were established in 1906. In 1907, Hindustan Co-operative Insurance Company took its birth in one of the rooms of the Jorasanko, house of the great poet Rabindranath Tagore, in Calcutta. The Indian Mercantile, General Assurance and Swadeshi Life (later Bombay Life) were some of the companies established during the same period. Prior to 1912 India had no legislation to regulate insurance business. In the year 1912, the Life Insurance Companies Act, and the Provident Fund Act were passed. The Life Insurance Companies Act, 1912 made it necessary that the premium rate tables and periodical valuations of companies should be certified by an actuary. The first two decades of the twentieth century saw lot of growth in insurance business. From 44 companies with total business-in-force as Rs.22.44 crore, it rose to 176 companies with total business-in-force as Rs.298 crore in 1938. During the mushrooming of insurance companies many financially unsound concerns were also floated which failed miserably. The Insurance Act 1938 was the first legislation governing not only life insurance but also non-life insurance to provide strict state control over insurance business. The demand for nationalization of life insurance industry was made repeatedly in the past but it gathered momentum in 1944 when a bill to amend the Life Insurance Act 1938 was introduced in the Legislative Assembly. However, it was much later on the 19th of January, 1956, that life insurance in India was nationalized. About 154 Indian insurance companies, 16 non-Indian companies and 75 provident were operating in India at the time of nationalization. Nationalization was accomplished in two stages; initially the management of the companies was taken over by means of an Ordinance, and later, the ownership too by means of a comprehensive bill.

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SOME OF THE IMPORTANT MILESTONE IN THE LIFE INSURANCE BUSINESS IN INDIA ARE:
1818: Oriental Life Insurance Company, the first life insurance company on Indian soil started functioning. 1870: Bombay Mutual Life Assurance Society, the first Indian life insurance company started its business. 1912: The Indian Life Assurance Companies Act enacted as the first statute to regulate the life insurance business. 1928: The Indian Insurance Companies Act enacted to enable the government to collect statistical information about both life and non-life insurance businesses. 1938: Earlier legislation consolidated and amended to by the Insurance Act with the objective of protecting the interests of the insuring public. 1956: 245 Indian and foreign insurers and provident societies are taken over by the central government and nationalised. LIC formed by an Act of Parliament, viz. LIC Act, 1956, with a capital contribution of Rs. 5 crore from the Government of India.

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GROWTH OF INDIAN LIFE INSURANCE SECTOR:
The life insurance sector of India has added up to 4.1% of the GDP in 2009, a considerable growth was recorded since the time the sector was opened for the private companies. The contribution in FDI by the life insurance segment was recorded at US $ 1.3 billion, even though the government is likely to increase the FDI cap limit from 26% to 49%. The year 2009-10 also saw private sector insurance company, Aviva Life Insurance establishing nine unit-linked plans; in line with the recent IRDA guidelines featuring enhanced and higher IRR. As per the data provided by the IRDA, the businesses of the life insurance companies had a growth of 22% at US$ 12 billion in April-November 2009-10, in comparison to the US$ 9.8 billion during the same period last year. Such a huge sale of single premium policies led the industry to record a raise of 53.25% in November 2009 alone. With the registration of India First Life Insurance Company Limited, a joint stake life insurance company encouraged by Bank of Baroda and Andhra Bank of India and Legal & General Middle East Limited, UK, the total number of life insurers registration with the IRDA has increased to 23. According to industry body, Life Insurance Council, The life insurance industry had earlier been anticipated to grow by 15% in the year 2009 - 10 and surpass the US$ 54.1 billion mark in total premium income by March-end. This growth in premium income includes new business as well as renewals, driven by increasing awareness on the value of getting insured. The US$ 41-billion Indian insurance industry made a grand return with better performances in the April-November 2009 period. Life insurance in India recorded the first year premium (inclusive of Single Premium) segment accounting to US$ 24 billion.
BASIC FUNCTIONS OF THE INSURANCE INDUSTRY:
1. Risk Perception and Evaluation:

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POST PURCHASE BEHAVIOUR OF CONSUMER OF LIC The fundamental function of an insurer is to provide a cover against the detriment caused to the insured due to the happening of certain specified and agreed events. Thus, prior to providing such umbrella through a product, the insurer has to assess the risk involved in the transaction. The insurer has to identify the element of risk prevalent in the concerned industry or a particular unit. The perception of risk requires the study of variables through various methods including the application of scientific and statistical techniques and correlation thereof with the industry or unit under study in light of their basic environmental and infra-structural characteristics. After the identification and categorisation of the risks perceived, the probability of happening of the losscausing events and the severity of the loss has to be assessed.
2. Designing the Insurance Product:

On the basis of the risks perceived, the insurer develops a product to cover the stipulated risks. While designing an insurance product, an insurer decides its cost to be charged from the insured in the form of premium, reduction thereof in certain cases like not lodging any claim during the previous covered period(s), suggesting the implementation of risk-mitigating measures, etc. The features of a product should be flexible enough to provide for the determination of premiums, rebates, additional premiums, etc. depending upon the risk benchmarks as determined.
3. Marketing of the Product:

The core function of the marketing force of an insurance company is to generate awareness about the insurance products among the target market. But in the Indian scenario, where the insurance penetration is too low as compared to the other nations, the marketing force needs to perform the pro-active role in developing an insurance culture. It is through the efficiency of the sales force of an insurance company that the desirability and the success of a product are determined. In Indian insurance market, the function is, basically performed by the agents. The persons desiring to function as insurance agents have to obtain license to act as such from the IRDA or an officer authorised by the Authority in this behalf. The agents approach the prospective buyers and apprise them of the basic features of the products. In order to dispense with the functions, the agents need to possess adequate knowledge of the insurance industry, products and the modalities attached therewith.
4. Selling of the Products:

The term selling in the context of insurance industry connotes the issuance of policies to the applicant proposer. The non-life insurance policy basically embodies the covenant between the insurer and the insured wherein the former agrees to indemnify the latter for the loss caused to him on the happening of the certain agreed events up to a specified limit. The life insurance policy generally contains the agreement whereby the insurer agrees to pay to the insured or the beneficiary of the policy an agreed amount on the expiry of the term of the policy or in the event

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POST PURCHASE BEHAVIOUR OF CONSUMER OF LIC of the death of the insured respectively. The additional benefits in the shape of Riders viz. Accidental Death Benefit, Double Sum Assured, Critical Illness benefits, Waiver of Premiums, etc. can also be appended with the policy on the payment of an additional premium. In Indian industry, the function is, generally performed by the insurer. In addition, the insurance companies depute their Direct Selling Representatives to look after the function. They receive the proposal documents, vet them and issue policies to the proposers.
5. Management of Portfolio:
The management of the portfolio includes the assessment of requirement of funds, identification of various sources of finance, the evaluation of the sources in the light of their cost, availability, timing, etc., reconciling the features of various sources with the needs of the company and the selection of appropriate conjunction of sources. The insurer possesses huge amount of funds, which need proper management. The management of the portfolio of an insurance company requires the identification of investment avenues, evaluation thereof and the selection of the most appropriate mix of alternatives where the funds of the company can be invested. The selection requires the knowledge of finance related functions and techniques apart from the in-depth know of the patterns of requirement of funds in the company as well as in the industry as a whole.

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LIFE INSURERS IN INDIA

1. 2. 3. 4. 5. 6. 7. 8.
9.
10. 11. 12.

13.
14.
15.
16. 17. 18. 19. 20. 21. 22. 23.
Bajaj Allianz Life Insurance Company Limited Birla Sun Life Insurance Co. Ltd HDFC Standard Life Insurance Co. Ltd ICICI Prudential Life Insurance Co. Ltd India First Life Insurance Company Ltd ING Vysya Life Insurance Company Ltd Life Insurance Corporation of India Max New York Life Insurance Co. Ltd Met Life India Insurance Company Ltd Kotak Mahindra Old Mutual Life Insurance Limited SBI Life Insurance Co. Ltd Tata AIG Life Insurance Company Limited Reliance Life Insurance Company Limited Aviva Life Insurance Company India Limited Sahara India Life Insurance Co, Ltd Shriram Life Insurance Co, Ltd Bharti AXA Life Insurance Company Ltd Future Generali India Life Insurance Company Limited IDBI Fortis Life Insurance Company Ltd Canara HSBC Oriental Bank of Commerce Life Insurance Company Ltd Aegon Religare Life Insurance Company Limited DLF Pramerica Life Insurance Company Limited Star Union Dai-Ichi Life Insurance Company Limited
The above is the list of the life insurance players till December 2009, according to the IRDA (Insurance Regulatory Development Authority of India). From that LIC (Life Insurance Corporation of India) is the market leader with strong fundamentals.
INTRODUCTION OF SOME LIFE INSURERS.

ALLIANZ BAJAJ LIFE INSURANCE COMPANY LTD: Allianz Bajaj life insurance company ltd with a capital base of RS.1.5 billions is a joint venture between ALLIANZ AG and BAJAJ AUTO LTD. The company was incorporated on MARCH 12, 2001 and received the IRDA certificate of registration on august 3, 2001 to conduct life insurance business in India. Bajaj auto ltd. The flagship company of Bajaj group is one of the largest two and three- wheeler manufactures, and forth-largest manufacturer of two- wheelers in the world, with annual turnover of RS. 42.16 billion. The company enjoys a very strong brand image in this industry. Founded in 1890, the Allianz Group is one of the worlds leading insurance companies with over a 100 years experience in insurance and related services. With a

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POST PURCHASE BEHAVIOUR OF CONSUMER OF LIC presence in over 70 countries, it is also the largest insurer in Europe. The key business areas of Allianz group include General Insurance (property, engineering, marine, motor, casualty and miscellaneous), reinsurance, risk management, life and health insurance, asset management and pension funds management. Rated AAA by Standard & Poor, it has assets over 670 billion DM (Rs 17,160 billion) under its management. AVIVA LIFE INSURANCE COMPANY LTD: The Aviva Life Insurance Company, a joint venture between Dabur India and CGU, a wholly owned subsidiary of Aviva Plc., is capitalized at Rs 1 billion. Established in 1884, Dabur India Limited is one of Indias oldest groups of companies, with interests in ayurvedic specialties, pharmaceuticals, personal care and health-care products, the annual sales turnover of the group is over Rs 12 billion. Aviva plc. Is the largest life and general insurance group of the UK, and the worlds seventh largest insurer with world-wide premium income and retail investment sales of 28 billion and more than 200 billion in assets under management. Aviva plc. is the holding company of the Aviva group of companies which is involved in the life assurance business, longterm savings, all classes of general insurance business and fund management. BIRLA SUN LIFE INSURANCE COMPANY LTD: The Birla Sun Life Insurance Company, is a 74.26 joint venture between the Aditya Birla Group and Sun Life Financial Services of Canada, and has an equity capital of Rs 1.5 billion. The Aditya Birla Group is one of Indias largest business houses, with a turnover of over $4.75 billion and an asset base of $3.8 billion. The Group is a well diversified conglomerate spanning 40 companies spread across 17 countries. Sun Life Assurance Co., of Canada, established in 1871, has a strong presence in Canada, the USA, the Philippines, Hong Kong, and the UK. Its major lines of business are life insurance, annuities and mutual fund and investment services. In Canada, the company is especially strong in the corporate life and health insurance and savings markets. HDFC STANDARD LIFE INSURANCE COMPANY LTD: HDFC Standard Life Insurance Company Ltd. was incorporated o August 14,2000. HDFC is the majority stakeholder with an 81.4 per cent stake. Standard Life holds a stake of 18.6 per cent. Incorporated in 1977 with a share capital of Rs 100 million, HDFC has since emerged as the largest residential mortgage finance institution in the country, raising its capital to Rs 1.19 billion and an asset base of Rs 150 billion. It operates through 75 locations throughout India, and has an international office in Dubai, UAE, with service associates in Kuwait, Oman and Qatar. Standard Life, which has been in the life insurance business for the past 175 years, is Europes largest mutual life assurance company. With an asset base of Rs 6000 billion, it has the distinction of being accorded the AAA rating by Standard & Poor for the past six years. ICICI-PRUDENTIAL LIFE INSURANCE COMPANY LTD: The ICICI-Prudential Life Insurance Company ltd, with ICICI s share at 74 per cent and Prudential plc. UKs share of 26 per cent was incorporated o July 20, 2000, with an authorized capital of Rs 2.3 billion. The paid up capital is Rs 1.9 billion. It commenced commercial operations on December 19, 2000, becoming one of the first few private sector players to enter the liberalized arena. The World Bank, the Government of India and the Indian Industry, to B.M. COLLEGE OF BUSINESS ADMINISTRATION
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POST PURCHASE BEHAVIOUR OF CONSUMER OF LIC promote industrial development in India by providing project and corporate finance to the Indian industry, established ICICI LTD., in 1944. Since its inception, it has grown from a development band to a financial conglomerate and has become one of the largest public financial conglomerates and has become one of the largest public financial institutions in India, financing all the major sectors of the economy. Founded in 1848, Prudential plc. has grown to become one of the largest providers of a wide range of savings products for the individual, including life insurance, pensions, annuities, unit trusts and personal banking. It has a presence in over 15 countries, and manages assets of over US $259 billion (approximately Rs 11, 3956 billion) as of December 31, 1999. in fact, Prudentials first overseas operation was in India, way back in 1923, to establish life and general insurance branch agencies. ING-VYSYA LIFE INSURANCE COMPANY PVT. LTD: As per the joint venture agreement, Vysya Bank holds 49 per cent, ING 26 per cent, and the GMR Group, which has wide ranging interests in fields which as power generation, infrastructure, manufacturing, software and banking, holds 25 per cent. This joint venture is expected to be the first Banc assurance venture in the country. The Vysya Bank, which has equity participation from Bank Brussels Lamberts, is one of the largest private banks in India with 480 retail outlets, the bank, given its significant branch penetration, has a high degree of retail focus. The ING Group, with an asset base of over Rs 284.2 billion is a global financial institution of Dutch origin, which is active in the field of banking, insurance and asset management in over 60 countries. ING Insurance is the worlds second largest life insurance company as per the latest Fortune rankings. It is the third largest financial services company in Europe, and the tenth largest financial services company in the world. MAX NEW YORK LIFE INSURANCE COMPANY LTD : Max New York Life is a partnership between Max India Limited, one of Indias leading multi-business corporations and New York Life. The paid-up capital of the joint venture is Rs 2.5 billion. Max India has significant presence in the most vital and fast growing sectors of the Indian economy, viz., telecommunication services, Electronic components distribution, specialty plastic films and bulk pharmaceuticals. It is also active in the emerging knowledge-based areas of health care, financial services and IT. In 1998, New York Life International Inc., had total revenues amounting to almost US $20 billion, and was rated the number one provider of new life insurance policies in the USA. In the same year, New York Life was also the leader in insurance sales to the growing Indian community in the USA.
MET LIFE INDIA INSURANCE COMPANY LTD: The Met Life India Insurance Company, joint venture between the US insurance major Metropolitan Life Insurance Co., the Jammu and Kashmir Bank Ltd the Pallonji Group and some high net worth individuals, was incorporated in India on April 11, 2001. The company started its operation with an initial capital of Rs 1.25 billion. The Metropolitan Life Insurance Co., established in 1867a, is a member of the Metropolitan Life Group and is licenses in the USA, Canada and a few other countries. Its major lines of business are individual and group life

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POST PURCHASE BEHAVIOUR OF CONSUMER OF LIC insurance. Pallonji & Co. Pvt. Ltd., is primarily engaged in contracting and has under taken major contract for power generating situation, chemical and fertilizer factories petroleum refineries and gas platform. Ti has also diversified outside in their main life of business in to the field of non- convention energy source. OM KOTAK MAHINDRA LIFE INSURANCE COMPANY LTD. The joint venture OM KOTAK MAHINDRA life insurance started off with an initial capital of Rs. 1.5 billions, with a 74:26 stake between Kotak Mahindra life insurance and old mutual plc. Kotak Mahindra finance ltd is one of the Indias premier financial groups, with a range of highly specialized products and services, and a very large client base of Indian and international firms. Starting as are non-product company in the mid eighties, it has evolved into a full service financial conglomerate, covering auto and consumer finance, assets management, investment banking, securities trading and equity research. It operates across 30 centers in India and in Dubai, London, New York and Mauritius. Old mutual plc. is a leading global financial services provider, providing a broad range of financial services in the area of insurance, assets management and banking. It is a leading life insurer in South Africa, with more than 30% market share. SBI LIFE INSURANCE COMPANY LIMITED: This joint venture has 74% capital participation from the state bank of India (SBI), with Cardiff contributing 26% in the paid capital of Rs. 2.5 billion. The SBI is the largest bank in the country with more than 9000 branches. It has seven associate banks and together they have 30% of the Indian market share. It net worth as on March 2000 stood at Rs. 121.46 billion, with a deposit base of Rs. 196.803 billion. The insurance venture, SBI life, is a step aimed at being a universal bank as the SBI already as subsidiary for housing finance, merchant banking, mutual fund and primary dealership in government papers and factoring businesses.BNP paribus, which is one among the three largest banks in Europe, is the holding company of Cardiff, its insurance arm. It was set up in 1973 and specialized in long term savings, protection products and creditors insurance. In 1999, its premium income stood at US $ 4 billion, with assets worth over US $ 23 billion under its management. Based in France, it has the expertise for selling insurance products through bank and as operation in over 20 countries. TATA AIG LIFE INSURANCE COMPANY LIMITED:Tata AIG life insurance company ltd, is capitalized at Rs. 1.85 billion of which 74% has been brought in by Tata sons and 26% by the American partner. Tata enterprise with 82 companies, spread over 7 sectors, have an annual turnover exceeding US $ 8.8 billion. The Tata group has made pioneering contribution in various fields including insurance, aviation, iron and steel. The group has had a long association with Indias insurance sector, having set up the largest insurance company viz. new Indian assurance company ltd. (1919), prior to the nationalization of this sector. The American insurance group (AIG) is the leading US based international insurance

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POST PURCHASE BEHAVIOUR OF CONSUMER OF LIC and financial services organization and the largest underwriter of commercial and industrial insurance in the USA. Its member companies write a wide range of commercial and personal insurance products in over 130 countries and jurisdiction throughout the world.
ETOP Analysis of the Indian Insurance Industry.
Environmental threat and opportunity profile also known as environmental impact matrix is a summarized depiction of the environmental factors and their likely impact on organization. ETOP is the most useful way of structuring the result of environmental analysis. It can be prepared in the following way:
Environmental Factors
Environmental Analysis
Effect
Economic
(+) The Insurance industry is growing at the rate of 40 per cent per annum. (Average). (-) The global downturn has affected the Insurance Industry in a very bad manner.
Opportunity
Threats
Technological
(+) With the passage of time the Insurance industry is Opportunity expanding through technological aspects like Online Premium & Selling of Insurance Online. (+) Insurance Industry score over the Other service providers, in providing terms of technology implementation Industries, giving both cost and service advantages. (-) The political scenario of India is looking forward to Foreign Direct Investment in Insurance sector but with strict rules. Opportunity
Political & Legal
Threats

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Social
(+) Change in life style pattern in terms of savings and Opportunity investments. (+) Multinational Insurance Companies are now looking to Opportunity enter into India and trying to share their culture with us.

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CHAPTER 2 INTODUCTION OF COMPANY
HISTORY OF LIFE INSURANCE CORPORATION OF INDIA PROFILE MISSION, VISION,OBJECTIVES AND COMMITMENT NEED FOR STUDY TYPES OF INSURANCE TAXATION OF LIFE INSURANCE SWOT ANALYSIS AWARDS AND RECOGNITION MARKET SHARE OF THE COMPANIES

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HISTORY OF LIFE INSURANCE CORPORATION OF INDIA

The Parliament of India passed the Life Insurance Corporation Act on the 19th of June 1956, and the Life Insurance Corporation of India was created on 1st September, 1956, with the objective of spreading life insurance much more widely and in particular to the rural areas with a view to reach all insurable persons in the country, providing them adequate financial cover at a reasonable cost. LIC had 5 zonal offices, 33 divisional offices and 212 branch offices, apart from its corporate office in the year 1956. Since life insurance contracts are long term contracts and during the currency of the policy it requires a variety of services need was felt in the later years to expand the operations and place a branch office at each district headquarter. Re-organization of LIC took place and large numbers of new branch offices were opened. As a result of re-organisation servicing functions were transferred to the branches, and branches were made accounting units. It worked wonders with the performance of the corporation. It may be seen that from about 200.00 crores of New Business in 1957 the corporation crossed 1000.00 crores only in the year 1969-70, and it took another 10 years for LIC to cross 2000.00 crore mark of new business. But with re-organisation happening in the early eighties, by 1985-86 LIC had already crossed 7000.00 crore Sum Assured on new policies. Today LIC functions with 2048 fully computerized branch offices, 100 divisional offices, 7 zonal offices and the Corporate office. LICs Wide Area Network covers 100 divisional offices and connects all the branches through a Metro Area Network. LIC has tied up with some Banks and Service providers to offer on-line premium collection facility in selected cities. LICs ECS and ATM premium payment facility is an addition to customer convenience. Apart from on-line Kiosks and IVRS, Info Centres have been commissioned at Mumbai, Ahemdabad, Bangalore, Chennai, Hyderabad, Kolkata, New Delhi, Pune and many other cities. With a vision of providing easy access to its policyholders, LIC has launched its SATELLITE SAMPARK offices. The satellite offices are smaller, leaner and closer to the customer. The digitalized records of the satellite offices will facilitate anywhere servicing and many other conveniences in the future. LIC continues to be the dominant life insurer even in the liberalized scenario of Indian insurance and is moving fast on a new growth trajectory surpassing its own past records. LIC has issued over one crore policies during the current year. It has crossed the milestone of issuing 1,01,32,955 new policies by 15th Oct, 2009, posting a healthy growth rate of 16.67% over the corresponding period of the previous year. From then to now, LIC has crossed many milestones and has set unprecedented performance records in various aspects of life insurance business. The same motives which inspired our forefathers to bring insurance into existence in this country inspire us at LIC to take this message

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POST PURCHASE BEHAVIOUR OF CONSUMER OF LIC of protection to light the lamps of security in as many homes as possible and to help the people in providing security to their families.
MISSION, VISION,OBJECTIVES AND COMMITMENT

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."
Vision:
"A trans-nationally competitive financial conglomerate of significance to societies and Pride of India."
Objectives:
1. Spread Life Insurance widely and in particular to the rural areas and to the socially and economically backward classes with a view to reaching all insurable persons in the country and providing them adequate financial cover against death at a reasonable cost. 2. Maximize mobilization of people's savings by making insurance-linked savings adequately attractive. 3. Bear in mind, in the investment of funds, the primary obligation to its policyholders, whose money it holds in trust, without losing sight of the interest of the community as a whole; the funds to be deployed to the best advantage of the investors as well as the community as a whole, keeping in view national priorities and obligations of attractive return. 4. Conduct business with utmost economy and with the full realization that the moneys belong to the policyholders. 5. Act as trustees of the insured public in their individual and collective capacities. 6. Meet the various life insurance needs of the community that would arise in the changing social and economic environment. 7. Involve all people working in the Corporation to the best of their capability in furthering the interests of the insured public by providing efficient service with courtesy. 8. Promote amongst all agents and employees of the Corporation a sense of participation, pride and job satisfaction through discharge of their duties with dedication towards achievement of Corporate Objective.

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COMMITMENT TO CLIENTS - SETTLEMENT OF CLAIMS :
1. NO. 1 INSURANCE COMPANY IN THE WORLD in terms of settlement of claims.
PER SECOND LIC settles more than 2 claims!!! 2. LIC settled 149 lacs claims during the year 2008/2009. 3. Prompt settlement of claims - 97% maturity claims settled on or before Due date.93.22% Non-early death claims settled within 20 days of intimation. 4. Lowest outstanding claim ratio in the world (Maturity+SB = 0.26%) (Death Claim = 2.21%).
ADVANCED TECHNOLOGY - FOR BETTER CUSTOMER SERVICES.
1. Computerized and networked 2048 Branch Offices and 810 Satellite Offices throughout the country. 2. LIC is the SECOND largest PC user in the country. 3. Premium payment facility extended through network of 2048 Branches and 810 Satellite Offices, 9500 Empowered Agents and 510 Senior Business Associates,ECS,ATM of Corp. & Axis Banks, through internet, online portals, Collecting Bank (Axis Bank), AP online, MP online, Through SMS.
Market share Analysis:
MARKET SHARE ANALYSIS Life Insurance Corporation of India ICICI Prudential Life Insurance Co Ltd Bajaj Allianz Life Insurance Co Ltd SBI Life Insurance Co Ltd Reliance Life Insurance Co Ltd HDFC Standard Life Insurance Co Ltd Birla Sun Life Insurance Co Ltd Max New York Life Insurance Co Ltd Kotak Mahindra Old Mutual Life Insurance Ltd Aviva Life Insurance Company India Ltd Others
64% 8.93% 7.36% 5.35% 2.96% 2.88% 2.11% 1.98% 1.19% 1.05% 2.19%

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Need For Study:

The topic of the study Post Purchase Behaviour resembles the customers behaviour after the product what is there attitude towards it and it is helpful to the Life Insurance Corporation of India to get the exact reason for the lapsation of the policy and cases of surrendering the policy, which is day by day increasing. So to identify the basic problem why the insured is closing and ending the contracted policy. I have done the study of post purchase behaviour of the customer of LIC.

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Types of life insurance

Term Insurance:
Term life insurance provides for life insurance coverage for a specified term of years for a specified premium. The policy does not accumulate cash value. Term is generally considered "pure" insurance, where the premium buys protection in the event of death and nothing else. Term insurance premiums are typically low because both the insurer and the policy owner agree that the death of the insured is unlikely during the term of coverage. The three key factors to be considered in term insurance are: face amount (protection or death benefit), premium to be paid (cost to the insured), and length of coverage (term).
Limited-pay:
It is Limited-pay life insurance, in which all the premiums are paid over a specified period after which no additional premiums are due to keep the policy in force. Common limited pay periods include 10-year, 20-year, and paid-up at age 65.And at the time of maturity whole amount is given back in LIC it is in the form of Money Back Policy
Endowments:
Endowments are policies in which the cash value built up inside the policy, equals the death benefit (face amount) at a certain age. The age this commences is known as the endowment age. Endowments are considerably more expensive (in terms of annual premiums) than either whole life because the premium paying period is shortened and the endowment date is earlier.
Accidental death Insurance Policy:
Accidental death is a limited life insurance that is designed to cover the insured when they pass away due to an accident. Accidents include anything from an injury, but do not typically cover any deaths resulting from health problems or suicide. Because they only cover accidents, these policies are much less expensive than other life insurances. Joint life insurance is either a term or permanent policy insuring two or more lives with the proceeds payable on the first death. Survivorship life or second-to-die life is a whole life policy insuring two lives with the proceeds payable on the second (later) death. This policy is not there in LIC Single premium whole life is a policy with only one premium which is payable at the time the policy is issued. Modified whole life is a whole life policy that charges smaller premiums for a specified period of time after which the premiums increase for the remainder of the policy.

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Group Life Insurance:
It is term insurance covering a group of people, usually employees of a company or members of a union or association. Individual proof of insurability is not normally a consideration in the underwriting. Rather, the underwriter considers the size and turnover of the group, and the financial strength of the group. Contract provisions will attempt to exclude the possibility of adverse selection. Group life insurance often has a provision that a member exiting the group has the right to buy individual insurance coverage.
Investment policies With-profits policies:
Some policies allow the policyholder to participate in the profits of the insurance company these are with-profits policies. Other policies have no rights to participate in the profits of the company, these are non-profit policies. With-profits policies are used as a form of collective investment to achieve capital growth. Other policies offer a guaranteed return not dependent on the company's underlying investment performance; these are often referred to as without-profit policies which may be construed as a misnomer.LIC is giving the profit participation to the customer in the terms of Bonus issued on the date: 31/03 of every year.
Annuities:
An annuity is a contract with an insurance company whereby the purchaser pays an initial premium or premiums into a tax-deferred account, which pays out a sum at pre-determined intervals. There are two periods: the accumulation (when payments are paid into the account) and the annuitization (when the insurance company pays out).
Pension Term Insurance:
Pension Term Insurance is generally a term insurance in which the prospect is given a choice of paying premium one timely or the prospect can pay the premium in terms and at the time of the selected term or the age the prospect is given the monthly pension through ECS or by cheque or annual pension. Nowadays there exist a plan where in the prospect is investing in the unit link Insurance where at the maturity the fund is automatically transferred into pension policy and the pension is availed till the Prospect is living after the death the policy contract gets over and a certain amount is given to the nominee.
TAXATION OF LIFE INSURANCE:
In India the Insurance taken is exempted upto the limit of the premium amount 1, 00,000 .It is exempted under the Income Tax Act 80C, and the maturity amount is exempted through the Income Tax Act 10,10D.

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SWOT ANALYSIS
STRENGHTS 1. The ONE & ONLY - Government owned Life Insurance Company in India. 2. The most trusted & oldest insurance company in India since 1956. 3. Largest insurance company in the world on Customer Base (25 Crore customers). 4. Only 4 countries in the World have more population than LIC's policy holders!!! 5. No. I Insurance Company in the world in terms of agency force (13 lacs agents). And No. I Insurance Company in the world on selling of policies 3.59 crore policies. 6. 2nd Biggest Real Estate Owner next to Indian Railways. 7. LIC has highest number of Club Member Agents. 8. It is the pride taking fact that this PSU is working for 60 years and has not incur losses for a single year
WEAKNESS 1. Due to heavy customer base the management of it is not up to that level 2. It is over employed and so expenses are high 3. The infrastructure is not as advanced as other rivals 4. It is under the influence of government and mobilize their fund accordingly OPPORTUNITY 1. It can make use of its hefty funds properly in profitable area rather than following the traditional way 2. With the heavy team force and personnel can attain the new venture development 3. LIC has a good amount of funds which should be used for the development of the country. 4. It can start its subsidiaries in other companies and can expand the scope of development THREATS 1. New Private companies are emerging with a qualitative approach and customer oriented so LIC cannot posses the monopoly. 2. Due to availableness of newer product the lapsation of policies can be a major problem 3. Private companies are attracting the LIC employees and get through the strategy.

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AWARDS AND RECOGNITION

OUTLOOK MONEY -- NDTV PROFIT AWARD 2009 in " BEST LIFE INSURER CATEGORY " CNBC AWAAZ CONSUMER AWARD 2009 for " Most preferred insurance company "
World Brand Congress Award
NDTV PROFIT BUSSINESS LEADERSHIP, AWARDS 2009
ASIA PACIFIC HRM Congress, 2009 Award for INNOVATIVE HR PRACTICES Golden Peacock Innovative Product / Service Award 2009 Reader's Digest Trusted Brand Award, 2009 ( Platinum category ) NDTV Profit Business Leadership Award 2008 INDY's Silver Award for Best " In-house Magazine "
Brand Equity Most Trusted Brand 2009 Top in Insurance Category
Loyalty Award - 2009
CNBC Awaaz Consumer Awards 2008 INDY's Silver Award for Best Corporate Film NASCOM IT USER Award 2008
Business Super brand India 2009
ASIA BRAND CONGRESS BRAND LEADERSHIP AWARD, 2008

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CHAPTER 3 RESEARCH METHOLOGY

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Objectives of Study:
There are mainly two Objectives: Primary objective Secondary objective
Primary Objectives:
The primary objective of the study is to find out the post purchase behaviour of the customer and their activity after purchasing the policy.
Secondary Objectives:
The secondary objective of the study was to get the practical reasons for the problems faced by the customer after their acquisition of the policy. This will help to serve the customer well.
Steps of Study:
The study conducted in following distinguished steps:
Objectives of Study
Research Design
Collection of Data
Analysis of Data
Preparation of Project

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POST PURCHASE BEHAVIOUR OF CONSUMER OF LIC Research Design : Exploratory Research Approach Research Instrument Information Need Area of the survey Sample Size Sampling unit Interview method : Survey : Questionnaire : Primary Data : Surat. : 100 Respondents : Customer of LIC : Personal Telephone Interview

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Research Design:
Research Design constitutes the blueprint for the collection, measurement, and analysis of data. It also express both structure of research problem- the framework, organisation, or configuration of the relationships among variables of the study- and plan of investigation used to obtain empirical evidence on those relationships. Research Design is classified into main 3 types, out of them Exploratory Study is used. The purpose of choosing this method is to develop the hypothesis or question for further research and use of the data which is first hand for appropriate use.
Exploratory Stage:
The first stage in research design is the exploration of current situation. In this stage clarification of the specific problem is defined. Exploratory stage gives the answer of question that how it came to know about the problem statement.
Descriptive Studies:
In the second stage, descriptive research design has been used because it described the phenomena under the study and recommendation / findings were specific under this study. Descriptive studies are undertaken in many circumstances. When the researcher is interested in knowing the characteristics of certain groups such as age, sex, educational level, occupation, a descriptive study may be necessary.
Data Collection tools:

Sources of Data Collection:
There are 2 types of data collection techniques, which are as follows: Primary data Primary data are collected through direct contact with people in different areas of Surat city through PERSONAL&TELEPHONIC INTERVIEW method. Secondary data: Since Secondary Data is not available of particular Topic, No secondary data studied. Though some of the data is collected through the Internet medium and from the companys brochures and Articles.
Research Instrument:
Questionnaire was used for the purpose of the data collection as the instrument. Questionnaire consisted of both close ended and open ended questions. Here use of the Dichotomous questions was in secondary to the other two types.

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Sampling Design :
Defining the target population: Sampling element Sampling Units are Customers of Life Insurance Corporation Of India. Sampling size The size of the sample is 100 respondents. (To study the behaviour of the respondent clearly and is appropriate to know the exact findings and facts)
Duration of data collection:

Time duration from 19 February to 15 March 2010.
Analytical Techniques:
1. Survey:
The survey was conducted by me through personal interview and I took the help of telephone as the medium of conducting the survey in some of the areas I generally took the people under my survey from the age group of 20-55 as they are the ones who have buyed insurance product recently or in later years.And I have taken 100 as the sample size with no area restriction as there is no point of area here.
2.
Analysis:
Here I am giving the detailed analysis of the survey conducted by me and the detailed findings from the questionnaire. The following are the detailed analysis of my questionnaire in question wise analysis
1. What type of policy you have? (Multiple Ticks Allowed) 1. Endowment Plan 3. Unit Linked Plan The above was the first question asked by me here I have allowed multiple ticks as one customer can posses more than 1 type of product and here I find out that the person from the age group 20-35 has a combination of endowment and Term plan here in endowment plan they plan for their future generation and through term insurance they plan their returns and 2. Term Insurance

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POST PURCHASE BEHAVIOUR OF CONSUMER OF LIC thereby creating savings for their use and safety for their family. Where as in the age group of above 35 most of them prefer the Unit linked plans as they get more returns through this options only and even if they wanted to buy term or endowment insurance the company will take extra premium for any diseases or their returns through the policy they feel is not appropriate.
Statistical Data:
TYPE OF INSURANCE Endowment Plan Term Plan Ulip Plan
TOTAL RESPONSE 48 47 49 TOTAL 144 (as Multiple response allowed)
2. If Endowment Insurance Then What is the Premium paying Term Selected? 1.10-15 years 3.20-30 years Here I kept an option to know the selection of the prospect in Endowment Plan, here generally I examine that higher number of cases are paying the premium in less number of terms as it is to become free from the problem of every year premium payment early. The following is the Bar graph showing their response. 2.15-20 years
Statistical Data:
YEARS SELECTED FOR PREMIUM PAYING 10-15 years 15-20 years 20-30 years
TOTAL RESPONSE 22 16 10 TOTAL 48

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3. If Term Insurance Plan then what is the term selected for the maturity. 1.10-20 years 3.30-40 Years 2.20-30 years 4. Others ..
This question was to know the prospect selecting the term plan and its maturity normally in term plan the lower age group keeps higher maturity periods as to incur good amount with additional bonuses, but the people in the age bracket of 35 and above selecting early maturity as in their older age they become financially independent. The following are the response of them:
Statistical Data:
YEARS SELECTED FOR MATURITY 10to15 years 15to20 years 20to30 years
TOTAL RESPONSE 7 30 10
TOTAL 47
4. How much have you taken the risk cover? (Not for ulip plan) 1. 1, 00,000 - 5, 00,000 3. 10, 00,000 and above. This question was asked to them to know the risk cover the customer is willing and have taken as in India the priority to insurance is not prevailing in the family budgets which leads them to inappropriate amount of insurance here I have examined the problem of the dispersion of the benefits availed to the customer is negligible all are taking generally through force or for tax exemption. The following shows the data of risk coverage taken by the individuals, here there was exemption for the ulip holders and aggregate risk cover with combination of term and endowment insurance is covered. 2. 5, 00,000 10, 00,000
Statistical Data:

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RISK COVER TAKEN 100000-500000 500000-1000000 1000000and above
TOTAL RESPONSES 54 18 1 TOTAL 82
5. What is the motive of taking the policy? 1. Savings 3. Tax Benefits 2. Risk coverage 4. Other
This question was asked to know the reason and the motives of taking the policy here the perfect study of the motive can be derived here three motives was asked and multiple ticks was allowed so that the respondent can give their motives, most of them have their motive as savings which are middle class and the upper middle class generally take this cover for tax saving. The following is the analysis of the motive of taking the insurance product.

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Statistical Data:
MOTIVES OF TAKING POLICY Savings Risk coverage Tax Benefits Others
TOTAL RESPONSES 75 37 57 0 TOTAL 169
6. Rate your satisfaction level of the motive for what the insurance was taken? (Rate it on the scale 1= good to 5= very bad) 1 2 3 4 5
This question is based on the Thurston scale of attitude measurement where the degree of satisfaction is measured with the scale of strongly agree to strongly disagree here the ranks are assigned to get the information of their attitude here most of them are satisfied highly in their motive satisfaction but then to small amount of the respondent who bought the insurance are not satisfied.
Statistical Data:
MOTIVE SATISFACTION Highly Satisfied Satisfied Neutral
TOTAL RESPONSE 42 33 20

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POST PURCHASE BEHAVIOUR OF CONSUMER OF LIC Dissatisfied Highly dissatisfied 5 0 TOTAL 100
7. Is the service of the medium through which you have bought the policy in convenient? (Rate it on the scale 1= good to 5= very bad) 1 2 3 4 5
This question was asked to know that whether the medium like through agent or through corporate agent whichever is selected to take insurance is conviency to the prospects is analysed, normally
Statistical Data:
CONVINIENCY OF BUYING POLICY Highly Satisfied Satisfied Neutral Dissatisfied Highly dissatisfied
TOTAL RESPONSE 55 39 4 2 0
TOTAL 100
8. What is your convenient method of premium payment? 1. Through agent 2. Online payment 2.Through ECS 4.Others..

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POST PURCHASE BEHAVIOUR OF CONSUMER OF LIC This question was asked to know the customers convenient method of paying the insurance premium

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Limitation of study:
Some of the major limitations of study are mentioned below. The survey work was conducted in Surat and nearby areas only so, it cannot cover preference of other region. The sample size taken for the survey work was 100 because of the limited time period there is Chances of error in Data Analysis. There is a chance of mistake in the answer because of the limited knowledge of the respondent. Probability sampling was not used due to time and cost constraints and therefore the results cannot be generalized to the population. There is also possibility of giving wrong answer by respondents because of mood of Customers and due to the familiarity they cannot express their views correctly.

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CHAPTER 4 THEORETICAL ASPECTS

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Post-Purchase Consumer Behavior
Post-purchase Dissonance:
Doubt or anxiety experienced after taking a difficult purchase decision. Factors Affecting Post-Purchase Dissonance: No. of alternatives being considered Difficulty in choosing one of the alternatives Substitutability near equal alternatives to choose from Attractiveness of foregone alternatives Degree of familiarity with the product Information available at the time of purchase B.M. COLLEGE OF BUSINESS ADMINISTRATION
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POST PURCHASE BEHAVIOUR OF CONSUMER OF LIC Time and comfort with which the purchase was made Expected negative reactions from others Consumers may regret the purchase made due to: Product/brand purchased fails to live up to expectations Positive post-purchase information about foregone alternatives (upward comparison) Negative post-purchase information about alternative chosen consumers may actively look for information Consumption guilt for using products that may be potentially unhealthy or harmful in some way Product usage/non-usage influences post-purchase dissonance May use product incorrectly or in a new way May buy a product without much thought and may not use it or discontinue using it after a short period a product purchased is not necessarily a product consumed
Approaches to reduce dissonance:

Increase desirability of the brand purchased Decrease desirability of rejected brand Decrease importance of the purchase Reverse purchase decision (return before use)

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Disposal Alternatives:

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Expectations, Performance & Satisfaction:

Perceived Performance Relative to Expectation Consumer Reaction
Better Same Worse
Satisfaction Non-satisfaction (neutral) Dissatisfaction
Satisfaction is a function of expectation hence manage expectations; do not make false promises Satisfaction is not to be confused with repurchase intention & customer loyalty. Satisfied customers too switch brands in search of better alternatives Dissatisfied customers may make repeat purchases due to lack of better alternatives or resistance to /cost of switching Therefore focus on total customer satisfaction and not on immediate repurchase intention
Service Quality - Expectation & Satisfaction:

Zone of tolerance or zone of accommodation is the difference between desired and acceptable service levels If service falls below acceptable level, consumers are likely to switch Common reasons for switching to other brands in service industries: Failure of main service, including service delay Service counter failure impolite behavior Deceptive pricing or unfair price increase Inappropriate employee response to service failure Better service/pricing by competitors B.M. COLLEGE OF BUSINESS ADMINISTRATION
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POST PURCHASE BEHAVIOUR OF CONSUMER OF LIC Ethical issues unsafe & unhealthy services, etc.
Dissatisfaction Response Customer Complaint Behavior:

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Post Purchase Behaviour of Consumer of Lic

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POST PURCHASE BEHAVIOUR OF CONSUMER OF LIC

INTRODUCTION TO INSURANCE BRIEF HISTORY OF INSURANCE

BASIC FUNCTIONS OF THE INSURANCE INDUSTRY

ETOP ANALYSIS OF THE INDIAN INSURANCE INDUSTRY

B.M. COLLEGE OF BUSINESS ADMINISTRATION