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As the study of the customer preference towards the insurance sector plays a vital role in understanding the contribution of insurance industry.

I want to study the customer perception & preferences for the various facilities provided by the insurance policies. A comparison between private insurance industries will help in assessing the expectation of the customers about the services provided by them. Study of this project has been done in Dehradun .My questionnaire was designed based on the funnel approach.

The following data analysis tool is used for the primary data, which was collected using questionnaire. Percentage method.

MAJOR INSURANCE COMPANIES IN INDIA Life Insurance Corporation of India

The Life Insurance Corporation of India (LIC) (Hindi: ) is the largest state-owned life insurance company in India, and also the country's largest investor. It is fully owned by the Government of India. It also funds close to 24.6% of the Indian Government's expenses. It has assets estimated of 9.31 trillion (US$206.68 billion).[1] It was founded in 1956 with the merger of more than 200 insurance companies and provident societies.[2] Headquartered in Mumbai, financial and commercial capital of India,[3] the Life Insurance Corporation of India currently has 8 zonal Offices and 101 divisional offices located in different parts of India, at least 2048 branches located in different cities and towns of India along with satellite Offices attached to about some 50 Branches, and has a network of around 1.2 million agents for soliciting life insurance business from the public.


The Oriental Life Insurance Company, the first corporate entity in India offering life insurance coverage, was established in Calcutta in 1818 by Bipin Bernard Dasgupta and others. Europeans in India were its primary target market, and it charged Indians heftier premiums. The Bombay Mutual Life Assurance Society, formed in 1870, was the first native insurance provider. Other insurance companies established in the preindependence era included

Bharat Insurance Company (1896) United India (1906) National Indian (1906) National Insurance (1906) Co-operative Assurance (1906) Hindustan Co-operatives (1907) Indian Mercantile General Assurance Swadeshi Life (later Bombay Life)

The first 150 years were marked mostly by turbulent economic conditions. It witnessed, India's First War of Independence, adverse effects of the World War I and World War II on the economy of India, and in between them the period of world wide economic crises triggered by the Great depression. The first half of the 20th century also saw a heightened struggle for India's independence. The aggregate effect of these events led to a high rate of bankruptcies and liquidation of life insurance companies in

India. This had adversely affected the faith of the general public in the utility of obtaining life cover.

The Life Insurance Act and the Provident Fund Act were passed in 1912, providing the first regulatory mechanisms in the Life Insurance industry. The Indian Insurance Companies Act of 1928 authorized the government to obtain statistical information from companies operating in both life and non-life insurance areas. The subsequent Insurance Act of 1938 brought stricter state control over an industry that had seen several financially unsound ventures fail. A bill was also introduced in the Legislative Assembly in 1944 to nationalize the insurance industry.

SBI Life Insurance Company Limited

SBI Life Insurance is a joint venture life insurance company between State Bank of India (SBI), the largest state-owned banking and financial services company in India, and BNP Paribas Assurance. SBI owns 74% of the total capital and BNP Paribas Assurance the remaining 26%. SBI Life Insurance has an authorized capital of 2,000 crore (US$444 million)and a paid up capital of 1,000 crore (US$222 million).

In 2007, CRISIL Ltd, a subsidiary of global rating agency Standard & Poor's, gave the company a AAA/Stable/P1+ rating.


When the government of India opened the life insurance sector to private companies, SBI started SBI Life as a joint venture with BNP Paribas in 2001. While in its initial stage its business was mainly from bancassurance channel, now it is developing its own agency team for selling its life insurance products.


HDFC Standard Life, one of India's leading private life insurance companies, offers a range of individual and group insurance solutions. It is a joint venture between Housing Development Finance Corporation Limited (HDFC), India's leading housing finance institution and Standard Life plc, the leading provider of financial services in the United Kingdom.

HDFC Ltd. holds 72.43% and Standard Life (Mauritius Holding) Ltd. holds 26.00% of equity in the joint venture, while the rest is held by others.

HDFC Standard Life's product portfolio comprises solutions, which meet various customer needs such as Protection, Pension, Savings, Investment and Health. Customers have the added advantage of customizing the plans, by adding optional benefits called riders, at a nominal price. The company currently has 32 retail and 4 group products in its portfolio, along with five optional rider benefits catering to the savings, investment, protection and retirement needs of customers.

HDFC Standard Life continues to have one of the widest reaches among new insurance companies with 568 branches servicing customer needs in over 700 cities and towns. The company has a strong presence in its existing markets with a base of 2,00,000 Financial Consultants.


You have probably planned your life with great care, working slowly and steadily towards fulfilling your dreams and ambitions. Unfortunately you have no control over certain natural and man-made events that may overturn your plans.

At HSBC, we understand the importance you attach to protecting your family and yourself from the uncertainties of life. That's why we bring you a wide range of easy to understand insurance solutions that can be customised to meet your needs.

So, whether you are looking for a life insurance plan to protect your loved ones or plan for your retirement, you have come to the right place.

Life Needs
As an individual you are constantly evolving. Your dreams and aspirations today would be very different from when you were growing up or when you finally plan to retire.

As you change... so do your insurance needs. The insurance solution that is relevant to you today may be very different to the solution you require years from now. It is therefore critical for you to identify protection needs that are pertinent to you and your


From the options given below, please select the Life Stage most relevant to you to find out how we may help. If you already know what you need, please click on the appropriate product under the Insurance section on the left navigation panel.

The Insurance sector in India governed by Insurance Act, 1938, the Life Insurance Corporation Act, 1956 and General Insurance Business (Nationalization) Act, 1972, Insurance Regulatory and Development Authority (IRDA) Act, 1999 and other related Acts. With such a large population and the untapped market area of this population Insurance happens to be a very big opportunity in India. Today it stands as a business growing at the rate of 15-20 per cent annually. Together with banking services, it adds about 7 per cent to the countrys GDP .In spite of all this growth the statistics of the penetration of the insurance in the country is very poor. Nearly 80% of Indian populations are without Life insurance cover and the Health insurance. This is an indicator that growth potential for the insurance sector is immense in India. It was due to this immense growth that the regulations were introduced in the insurance sector and in continuation Malhotra Committee was constituted by the government in 1993 to examine the various aspects of the industry. The key element of the reform process was Participation of overseas insurance companies with 26% capital. Creating a more efficient and competitive financial system suitable for the requirements of the economy was the main idea behind this reform.

Since then the insurance industry has gone through many sea changes .The competition LIC started facing from these companies were threatening to the existence of LIC .Since the liberalization of the industry the insurance industry has never looked back and today stand as the one of the most competitive and exploring industry in India. The entry of the private players and the increased use of the new distribution are in the limelight today. The use of new distribution techniques and the IT tools has increased the scope of the industry in the long run.

In law and economics, insurance is a form of risk management primarily used to

hedge against the risk of a contingent, uncertain loss. Insurance is defined as the equitable transfer of the risk of a loss, from one entity to another, in exchange for payment. An insurer is a company selling the insurance; an insured, or policyholder, is the person or entity buying the insurance policy. The insurance rate is a factor used to determine the amount to be charged for a certain amount of insurance coverage, called the premium. Risk management, the practice of appraising and controlling risk, has evolved as a discrete field of study and practice.

The transaction involves the insured assuming a guaranteed and known relatively small loss in the form of payment to the insurer in exchange for the insurer's promise to compensate (indemnify) the insured in the case of a financial (personal) loss. The insured receives a contract, called the insurance policy, which details the conditions and circumstances under which the insured will be financially compensated.


Insurance involves pooling funds from many insured entities (known as exposures) to pay for the losses that some may incur. The insured entities are therefore protected from risk for a fee, with the fee being dependent upon the frequency and severity of the event occurring. In order to be insurable, the risk insured against must meet certain characteristics in order to be an insurable risk. Insurance is a commercial enterprise and a major part of the financial services industry, but individual entities can also self-insure through saving money for possible future losses.[1]

[] Insurability Main article: Insurability

Risk which can be insured by private companies typically share seven common characteristics:[2]

1. Large number of similar exposure units: Since insurance operates through pooling resources, the majority of insurance policies are provided for individual members of large classes, allowing insurers to benefit from the law of large numbers in which predicted losses are similar to the actual losses. Exceptions include Lloyd's of London, which is famous for insuring the life or health of actors, sports figures and other famous individuals. However, all exposures will have particular differences, which may lead to different premium rates. 2. Definite loss: The loss takes place at a known time, in a known place, and from a known cause. The classic example is death of an insured person on a life insurance policy. Fire, automobile accidents, and worker injuries may all easily meet this criterion. Other types of losses may only be definite in theory. Occupational disease, for instance, may involve prolonged exposure to injurious conditions where no specific time, place or cause is identifiable. Ideally, the time, place and cause of a loss should be clear enough that a reasonable person, with sufficient information, could objectively verify all three elements. 3. Accidental loss: The event that constitutes the trigger of a claim should be fortuitous, or at least outside the control of the beneficiary of the insurance. The loss should be pure, in the sense that it results from an event for which there is only the opportunity for cost. Events that contain speculative elements, such as ordinary business risks or even purchasing a lottery ticket, are generally not considered insurable.

4. Large loss: The size of the loss must be meaningful from the perspective of the insured. Insurance premiums need to cover both the expected cost of losses, plus the cost of issuing and administering the policy, adjusting losses, and supplying the capital needed to reasonably assure that the insurer will be able to pay claims. For small losses these latter costs may be several times the size of the expected cost of losses. There is hardly any point in paying such costs unless the protection offered has real value to a buyer. 5. Affordable premium: If the likelihood of an insured event is so high, or the cost of the event so large, that the resulting premium is large relative to the amount of protection offered, it is not likely that the insurance will be purchased, even if on offer. Further, as the accounting profession formally recognizes in financial accounting standards, the premium cannot be so large that there is not a reasonable chance of a significant loss to the insurer. If there is no such chance of loss, the transaction may have the form of insurance, but not the substance. (See the U.S. Financial Accounting Standards Board standard number 113) 6. Calculable loss: There are two elements that must be at least estimable, if not formally calculable: the probability of loss, and the attendant cost. Probability of loss is generally an empirical exercise, while cost has more to do with the ability of a reasonable person in possession of a copy of the insurance policy and a proof of loss associated with a claim presented under that policy to make a reasonably definite and objective evaluation of the amount of the loss recoverable as a result of the claim. 7. Limited risk of catastrophically large losses: Insurable losses are ideally independent and non-catastrophic, meaning that the losses do not happen all at

once and individual losses are not severe enough to bankrupt the insurer; insurers may prefer to limit their exposure to a loss from a single event to some small portion of their capital base. Capital constrains insurers' ability to sell earthquake insurance as well as wind insurance in hurricane zones. In the U.S., flood risk is insured by the federal government. In commercial fire insurance it is possible to find single properties whose total exposed value is well in excess of any individual insurer's capital constraint. Such properties are generally shared among several insurers, or are insured by a single insurer who syndicates the risk into the reinsurance market.

[] Legal

When a company insures an individual entity, there are basic legal requirements. Several commonly cited legal principles of insurance include:[3] 1. Indemnity the insurance company indemnifies, or compensates, the insured in the case of certain losses only up to the insured's interest. 2. Insurable interest the insured typically must directly suffer from the loss. Insurable interest must exist whether property insurance or insurance on a person is involved. The concept requires that the insured have a "stake" in the loss or damage to the life or property insured. What that "stake" is will be determined by the kind of insurance involved and the nature of the property ownership or relationship between the persons. 3. Utmost good faith the insured and the insurer are bound by a good faith bond of honesty and fairness. Material facts must be disclosed. 4. Contribution insurers which have similar obligations to the insured contribute in the indemnification, according to some method.

5. Subrogation the insurance company acquires legal rights to pursue recoveries on behalf of the insured; for example, the insurer may sue those liable for insured's loss. 6. Causa proxima, or proximate cause the cause of loss (the peril) must be covered under the insuring agreement of the policy, and the dominant cause must not be excluded

[] Indemnification Main article: Indemnity

To "indemnify" means to make whole again, or to be reinstated to the position that one was in, to the extent possible, prior to the happening of a specified event or peril. Accordingly, life insurance is generally not considered to be indemnity insurance, but rather "contingent" insurance (i.e., a claim arises on the occurrence of a specified event). There are generally two types of insurance contracts that seek to indemnify an insured:

1. an "indemnity" policy, and 2. a "pay on behalf" or "on behalf of"[4] policy.

The difference is significant on paper, but rarely material in practice.

An "indemnity" policy will never pay claims until the insured has paid out of pocket to some third party; for example, a visitor to your home slips on a floor that you left wet and sues you for $10,000 and wins. Under an "indemnity" policy the homeowner would have to come up with the $10,000 to pay for the visitor's fall and then would be "indemnified" by the insurance carrier for the out of pocket costs (the $10,000).[4][5]

Under the same situation, a "pay on behalf" policy, the insurance carrier would pay the claim and the insured (the homeowner in the above example) would not be out of pocket for anything. Most modern liability insurance is written on the basis of "pay on behalf" language.[4]

An entity seeking to transfer risk (an individual, corporation, or association of any type, etc.) becomes the 'insured' party once risk is assumed by an 'insurer', the insuring party, by means of a contract, called an insurance policy. Generally, an insurance contract includes, at a minimum, the following elements: identification of participating parties (the insurer, the insured, the beneficiaries), the premium, the period of coverage, the particular loss event covered, the amount of coverage (i.e., the amount to be paid to the insured or beneficiary in the event of a loss), and exclusions (events not covered). An insured is thus said to be "indemnified" against the loss covered in the policy.

When insured parties experience a loss for a specified peril, the coverage entitles the policyholder to make a claim against the insurer for the covered amount of loss as specified by the policy. The fee paid by the insured to the insurer for assuming the risk is called the premium. Insurance premiums from many insureds are used to fund accounts reserved for later payment of claims in theory for a relatively few claimants and for overhead costs. So long as an insurer maintains adequate funds set aside for anticipated losses (called reserves), the remaining margin is an insurer's profit.

[] Effects

Insurance can have various effects on society through the way that it changes who bears the cost of losses and damage. On one hand it can increase fraud, on the other it can help societies and individuals prepare for catastrophes and mitigate the effects of catastrophes on both households and societies.

Insurance can influence the probability of losses through moral hazard, insurance fraud, and preventive steps by the insurance company. Insurance scholars have typically used morale hazard to refer to the increased loss due to unintentional carelessness and moral hazard to refer to increased risk due to intentional carelessness or indifference.[6] Insurers attempt to address carelessness through inspections, policy provisions requiring certain types of maintenance, and possible discounts for loss mitigation efforts. While in theory insurers could encourage investment in loss reduction, some commentators have argued that in practice insurers had historically not aggressively pursued loss control measures - particularly to prevent disaster losses such as hurricanes - because of concerns over rate reductions and legal battles. However, since about 1996 insurers began to take a more active role in loss mitigation, such as through building codes.[7]

[] Insurers' business model

[] Underwriting and investing

The business model is to collect more in premium and investment income than is paid out in losses, and to also offer a competitive price which consumers will accept. Profit can be reduced to a simple equation: Profit = earned premium + investment income incurred loss - underwriting expenses.

Insurers make money in two ways:

1. Through underwriting, the process by which insurers select the risks to insure and decide how much in premiums to charge for accepting those risks; 2. By investing the premiums they collect from insured parties.

The most complicated aspect of the insurance business is the actuarial science of ratemaking (price-setting) of policies, which uses statistics and probability to approximate the rate of future claims based on a given risk. After producing rates, the insurer will use discretion to reject or accept risks through the underwriting process.

At the most basic level, initial ratemaking involves looking at the frequency and severity of insured perils and the expected average payout resulting from these perils. Thereafter an insurance company will collect historical loss data, bring the loss data to present value, and comparing these prior losses to the premium collected in order to assess rate adequacy.[8] Loss ratios and expense loads are also used. Rating for different risk characteristics involves at the most basic level comparing the losses with "loss relativities" - a policy with twice as money policies would therefore be charged twice as much. However, more complex multivariate analyses through generalized linear modeling are sometimes used when multiple characteristics are involved and a univariate analysis could produce confounded results. Other statistical methods may be used in assessing the probability of future losses.

Upon termination of a given policy, the amount of premium collected and the investment gains thereon, minus the amount paid out in claims, is the insurer's underwriting profit on that policy. An insurer's underwriting performance is measured in its combined ratio[9] which is the ratio of losses and expenses to earned premiums. A combined ratio of less than 100 percent indicates underwriting profitability, while

anything over 100 indicates an underwriting loss. A company with a combined ratio over 100% may nevertheless remain profitable due to investment earnings.

Insurance companies earn investment profits on "float". Float, or available reserve, is the amount of money on hand at any given moment that an insurer has collected in insurance premiums but has not paid out in claims. Insurers start investing insurance premiums as soon as they are collected and continue to earn interest or other income on them until claims are paid out. The Association of British Insurers (gathering 400 insurance companies and 94% of UK insurance services) has almost 20% of the investments in the London Stock Exchange.[10]

In the United States, the underwriting loss of property and casualty insurance companies was $142.3 billion in the five years ending 2003. But overall profit for the same period was $68.4 billion, as the result of float. Some insurance industry insiders, most notably Hank Greenberg, do not believe that it is forever possible to sustain a profit from float without an underwriting profit as well, but this opinion is not universally held.

Naturally, the float method is difficult to carry out in an economically depressed period. Bear markets do cause insurers to shift away from investments and to toughen up their underwriting standards, so a poor economy generally means high insurance premiums. This tendency to swing between profitable and unprofitable periods over time is commonly known as the underwriting, or insurance, cycle.[11]

[] Claims

Claims and loss handling is the materialized utility of insurance; it is the actual "product" paid for. Claims may be filed by insureds directly with the insurer or

through brokers or agents. The insurer may require that the claim be filed on its own proprietary forms, or may accept claims on a standard industry form, such as those produced by ACORD.

Insurance company claims departments employ a large number of claims adjusters supported by a staff of records management and data entry clerks. Incoming claims are classified based on severity and are assigned to adjusters whose settlement authority varies with their knowledge and experience. The adjuster undertakes an investigation of each claim, usually in close cooperation with the insured, determines if coverage is available under the terms of the insurance contract, and if so, the reasonable monetary value of the claim, and authorizes payment.

The policyholder may hire their own public adjuster to negotiate the settlement with the insurance company on their behalf. For policies that are complicated, where claims may be complex, the insured may take out a separate insurance policy add on, called loss recovery insurance, which covers the cost of a public adjuster in the case of a claim.

Adjusting liability insurance claims is particularly difficult because there is a third party involved, the plaintiff, who is under no contractual obligation to cooperate with the insurer and may in fact regard the insurer as a deep pocket. The adjuster must obtain legal counsel for the insured (either inside "house" counsel or outside "panel" counsel), monitor litigation that may take years to complete, and appear in person or over the telephone with settlement authority at a mandatory settlement conference when requested by the judge.

If a claims adjuster suspects under-insurance, the condition of average may come into play to limit the insurance company's exposure.

In managing the claims handling function, insurers seek to balance the elements of customer satisfaction, administrative handling expenses, and claims overpayment leakages. As part of this balancing act, fraudulent insurance practices are a major business risk that must be managed and overcome. Disputes between insurers and insureds over the validity of claims or claims handling practices occasionally escalate into litigation (see insurance bad faith).

[] Marketing

Insurers will often use insurance agents to initially market or underwrite their customers. Agents can be captive, meaning they write only for one company, or independent, meaning that they can issue policies from several companies. Commissions to agents represent a significant portion of an insurance cost and insurers such as State Farm that sell policies directly via mass marketing campaigns can offer lower prices. The existence and success of companies using insurance agents (with higher prices) is likely due to improved and personalized service.[12]

[] History of insurance Main article: History of insurance

In some sense we can say that insurance appears simultaneously with the appearance of human society. We know of two types of economies in human societies: natural or non-monetary economies (using barter and trade with no centralized nor standardized set of financial instruments) and more modern monetary economies (with markets, currency, financial instruments and so on). The former is more primitive and the

insurance in such economies entails agreements of mutual aid. If one family's house is destroyed the neighbours are committed to help rebuild. Granaries housed another primitive form of insurance to indemnify against famines. Often informal or formally intrinsic to local religious customs, this type of insurance has survived to the present day in some countries where modern money economy with its financial instruments is not widespread.

Turning to insurance in the modern sense (i.e., insurance in a modern money economy, in which insurance is part of the financial sphere), early methods of transferring or distributing risk were practised by Chinese and Babylonian traders as long ago as the 3rd and 2nd millennia BC, respectively.[13] Chinese merchants travelling treacherous river rapids would redistribute their wares across many vessels to limit the loss due to any single vessel's capsizing. The Babylonians developed a system which was recorded in the famous Code of Hammurabi, c. 1750 BC, and practised by early Merranean sailing merchants. If a merchant received a loan to fund his shipment, he would pay the lender an additional sum in exchange for the lender's guarantee to cancel the loan should the shipment be stolen or lost at sea.

Achaemenian monarchs of Ancient Persia were the first to insure their people and made it official by registering the insuring process in governmental notary offices. The insurance tradition was performed each year in Norouz (beginning of the Iranian New Year); the heads of different ethnic groups as well as others willing to take part, presented gifts to the monarch. The most important gift was presented during a special ceremony. When a gift was worth more than 10,000 Derrik (Achaemenian gold coin) the issue was registered in a special office. This was advantageous to those who

presented such special gifts. For others, the presents were fairly assessed by the confidants of the court. Then the assessment was registered in special offices.

The purpose of registering was that whenever the person who presented the gift registered by the court was in trouble, the monarch and the court would help him. Jahez, a historian and writer, writes in one of his books on ancient Iran: "[W]henever the owner of the present is in trouble or wants to construct a building, set up a feast, have his children married, etc. the one in charge of this in the court would check the registration. If the registered amount exceeded 10,000 Derrik, he or she would receive an amount of twice as much."[14]

A thousand years later, the inhabitants of Rhodes invented the concept of the general average. Merchants whose goods were being shipped together would pay a proportionally divided premium which would be used to reimburse any merchant whose goods were deliberately jettisoned in order to lighten the ship and save it from total loss.

The Talmud deals with several aspects of insuring goods. Before insurance was established in the late 17th century, "friendly societies" existed in England, in which people donated amounts of money to a general sum that could be used for emergencies.

Separate insurance contracts (i.e., insurance policies not bundled with loans or other kinds of contracts) were invented in Genoa in the 14th century, as were insurance pools backed by pledges of landed estates. These new insurance contracts allowed insurance to be separated from investment, a separation of roles that first proved

useful in marine insurance. Insurance became far more sophisticated in postRenaissance Europe, and specialized varieties developed.

Lloyd's of London, pictured in 1991, is one of the world's leading and most famous insurance markets

Some forms of insurance had developed in London by the early decades of the 17th century. For example, the will of the English colonist Robert Hayman mentions two "policies of insurance" taken out with the diocesan Chancellor of London, Arthur Duck. Of the value of 100 each, one relates to the safe arrival of Hayman's ship in Guyana and the other is in regard to "one hundred pounds assured by the said Doctor Arthur Ducke on my life". Hayman's will was signed and sealed on 17 November 1628 but not proved until 1633.[15] Toward the end of the seventeenth century, London's growing importance as a centre for trade increased demand for marine insurance. In the late 1680s, Edward Lloyd opened a coffee house that became a

popular haunt of ship owners, merchants, and ships' captains, and thereby a reliable source of the latest shipping news. It became the meeting place for parties wishing to insure cargoes and ships, and those willing to underwrite such ventures. Today, Lloyd's of London remains the leading market (note that it is an insurance market rather than a company) for marine and other specialist types of insurance, but it operates rather differently than the more familiar kinds of insurance. Insurance as we know it today can be traced to the Great Fire of London, which in 1666 devoured more than 13,000 houses. The devastating effects of the fire converted the development of insurance "from a matter of convenience into one of urgency, a change of opinion reflected in Sir Christopher Wren's inclusion of a site for 'the Insurance Office' in his new plan for London in 1667."[16] A number of attempted fire insurance schemes came to nothing, but in 1681 Nicholas Barbon, and eleven associates, established England's first fire insurance company, the 'Insurance Office for Houses', at the back of the Royal Exchange. Initially, 5,000 homes were insured by Barbon's Insurance Office.[17]

The first insurance company in the United States underwrote fire insurance and was formed in Charles Town (modern-day Charleston), South Carolina, in 1732. Benjamin Franklin helped to popularize and make standard the practice of insurance, particularly against fire in the form of perpetual insurance. In 1752, he founded the Philadelphia Contributionship for the Insurance of Houses from Loss by Fire. Franklin's company was the first to make contributions toward fire prevention. Not only did his company warn against certain fire hazards, it refused to insure certain buildings where the risk of fire was too great, such as all wooden houses. In the United States, regulation of the insurance industry is highly Balkanized, with primary responsibility assumed by individual state insurance departments. Whereas insurance

markets have become centralized nationally and internationally, state insurance commissioners operate individually, though at times in concert through a national insurance commissioners' organization. In recent years, some have called for a dual state and federal regulatory system (commonly referred to as the Optional federal charter (OFC)) for insurance similar to that which oversees state banks and national banks.


Insurance has a long history in India. Life Insurance in its current form was introduced in 1818 when Oriental Life Insurance Company began its operations in India. General Insurance was however a comparatively late entrant in 1850 when Triton Insurance company set up its base in Kolkata. History of Insurance in India can be broadly bifurcated into three eras: a) Pre Nationalization b) Nationalization and c) Post Nationalization. Life Insurance was the first to be nationalized in 1956. Life Insurance Corporation of India was formed by consolidating the operations of various insurance companies. General Insurance followed suit and was nationalized in 1973. General Insurance Corporation of India was set up as the controlling body with New India, United India, National and Oriental as its subsidiaries. The process of opening up the insurance sector was initiated against the background of Economic Reform process which commenced from 1991. For this purpose Malhotra Committee was formed during this year who submitted their report in 1994 and Insurance Regulatory

Development Act (IRDA) was passed in 1999. Resultantly Indian Insurance was opened for private companies and Private Insurance Company effectively started operations from 2001.


Life Insurers:

Allianz Bajaj Life Insurance Co. Ltd AMP Sanmar Assurance Co. Ltd. Birla Sun Life Insurance Co. Ltd. Dabur CGU Life Insurance Company Pvt. Ltd. HDFC Standard Life Insurance Co. Ltd. ICICI Prudential Life Insurance Co. Ltd. ING Vysya Life Insurance Co. Pvt. Ltd. ING Vysya Life Insurance Co. Pvt. Ltd. Life Insurance Corporation of India. Max New York Life Insurance Co. Ltd. Metlife India Insurance Co. Pvt. Ltd.

Om Kotak Mahindra Life Insurance Co. Ltd. SBI Life Insurance Co. Ltd. Tata AIG Life Insurance Co. Ltd.

Non-Life Insurers:

Bajaj Allianz General Insurance Co. Ltd. ICICI Lombard General Insurance Co. Ltd. IFFCO Tokyo General Insurance Co. Ltd. National Insurance Co. Ltd. New India Assurance Co. Ltd. Oriental Insurance Co. Ltd. Reliance General Insurance Co. Ltd. Royal Sundaram Alliance Insurance Co. Ltd. Tata AIG Life Insurance Co. Ltd. United India Insurance Co. Ltd.


General Insurance Corporation of India.


Currently, the insurance sector size is estimated at Rs.500 billion. On account of intense marketing strategies adopted by private insurance players, the market share of state owned insurance companies like GIC, LIC and others have come down to 70% in last 4-5 years from over 97%. The private insurance players despite the sector is still regulated has been offering rate of return (RoR) to its policy holders which is estimated at about 35% as against 20% of domestic insurance companies. Private insurance companies offer many policies and the premium amount as well as the maturity period is much competitive as against those of government insurance companies. LIC and GIC have limited number of policies to offer to their subscribers The private sector insurance players have started exploring the rural markets in which until recently, the state owned companies had the monopoly. Indias life insurance premium, as a percentage of GDP is 1.8%


Indian insurance sector is likely to register unprecedented growth of 200% and attain a size of Rs. 2000 billion by 2009-10 A private sector insurance business will achieve a growth rate of 140% as a result of aggressive marketing technique being adopted by them against 3540% growth rate of state owned insurance companies.

In rural markets, the share of private insurance players would increase substantially as these have been able to generate a faith among their rural consumers.


1. Market potential for Insurance in Rural Areas

By: S. Brindha


The country has benefited enormously from the reforms process. The average annual growth of GDP has been steadily rising and the 8% plus growth rate that is the present norm speaks volumes of how India has been progressing. In spite of the inflation threat, the foreign exchange reserves present a very healthy picture and foreign debt is being paid ahead of schedule. India has become a production base and an export hub for diverse goods for agricultural products to automobile components to high end services. Indian firms are now a part of global product chains. Large

international corporations have established R&D centers in India. With such a constant support and development, it is quite feasible to tap the existing market potential of the insurance sector in the rural and the weaker sections of the society.

2. Information Technology in Insurance An outlook

By: J. Udhayakumar, M. Thyagarajan and A. Sivakumar

Conclusion The use and application of information technology in wide variety of insurers operations has now become strategic in the sense that it has direct impact on the productivity of resources, and a sweepening impact on reducing cost of various activities. The greatest impact in online technology has been achieved by ecommerce. E-commerce is attractive both to buyers and sellers as it reduces search cost for the buyers and inventory cost for seller. The recent growth of Internet infrastructure and introduction of economic reforms in the insurance sector have opened up the monopolistic Indian insurance market to competition from foreign alliances.

3. Insurance Industry Opportunities, Challenges and Strategies

By: K.K. Saradha


Over the past three years, around 40 companies have expressed interest in entering the sector and many foreign and Indian companies have arranged anticipatory alliances. The threat of new players taking over the market has been overplayed. As is witnessed in other countries where liberalization took place in recent years, we can safely conclude that nationalized players will continue to hold strong market share positions, but there will be enough business for entry to be profitable. Competition will surely cause the market to grow beyond current rates, create a bigger pie, and offer additional consumer choices through the introduction of new products, services and price options. Yet, at the same time, public and private sector companies will be working together to ensure healthy growth and development of the sector. Challenges such as developing a common industry code of conduct, contributing agreements between insurers to settle claims to the benefits of the consumers will require concentrated effort from both the sectors. However, everyone is quite excited about the opportunities, growth and development of the insurance industry in India. This market has the potential to grow into one of the largest markets in the world in the foreseeable future. However, if appropriate steps are not taken now to get the structural aspects right, this industry will face many challenges that might adversely affect its growth.



1. To know the Investors awareness about the Insurance products. 2. To study the customer preference among various Insurance companies.

Research Design
I carried out the research using a combination of primary and secondary data. Thus the research is designed with a combination of: Exploratory Research design Descriptive Research design


As I was unaware of the Insurance market, exploratory research helped me to gather information from the secondary resources. I referred to various magazines, Internet, and industry association reports etc. and was able to gather information on Insurance market.


After conducting the exploratory research, for further concrete details regarding various Insurance players, I resorted to the Descriptive Design of market research. Under this I have analyzed the consumer behavior on different parameters. The Descriptive design has given me a better insight of scope of Insurance by bringing to the fore many minute details regarding the consumer preferences. It has further helped me in a careful analysis of the secondary data and also refining the desired data by making the objective clearer.

Descriptive Design using the following methods:

Questionnaire Survey Talking to the customers


Data Collection
The whole research is based on primary data as well as secondary data.

Primary Data:
Primary data collected through the questionnaire from the various insurance investors.

Secondary Data:
Secondary data collected through the magazines, newspapers, shopkeepers catalogue and the advertisement.

Sample Size

Appox. 100 customers/respondents These 100 respondents are selected randomly. The Age of respondents is approximately between 18-45 yrs. It is based on the random sampling

Limitations Of Research
The results through the questionnaire not always correct.

Random sampling some time leads to the distortion in results. The sample size of 100 consumers not sufficient for exact results

Regional limitations In conducting the market survey I found regional limitations as our research was limited to Dehradun region.

Sample size The sample size taken for this market research was 100. But this sample size is too small to be a true representative for population size. The data collected from this sample size cannot be generalized for the population.

Target population
The target population for this market group was 18 and above. But while conducting the research I found that the respondents were in the age category of 18-25, which limited the boundaries of our research.

Gaining knowledge about the Insurance Market: Reading about the Insurance market was the first step undertaken. This gave not only in depth knowledge about what is been offered by the insurance companies but also proved useful while developing the questionnaire.

Steps in the Development of the Survey Instruments: The main instruments required for survey was a well-developed questionnaire. The questionnaire development took place in a series of steps as described below:

Step 1

Research objectives are being transformed into information objectives.

Step 2

The Appropriate data collection methods have been determined

Step 3

The information required by each objective is being determined.

Step 4

Specific Questions/Scale Measurement format is developed.

Question/Scale Measurements is being evaluated.

Step 5

The number of information needed is being determined.

Step 6
The questionnaire and layout is being evaluated.

Step 7

Revise the questionnaire layout if needed.

Step 8 Step 9

The Questionnaire format is being finalized.

Step 10

The selected customers have filled the questionnaires.

Filled questionnaire are being analyzed .

Step 11

Conclusion and Recommendations are drawn after the analysis.

Step 12



1. Number of life insurance policies customer holds: Option 0-1 2-3 4-5 5&above Number of respondents 48 39 10 3 Percentage 48% 39% 10% 3%

Figure-1 .

3 10

0-1 48 3-Feb 5-Apr 5&above 39


Interpretation :-

Figure 1 shows that among 100 respondents, 48% are having 0-1 policies, 39% are having 2-3 policies, 10% are having 4-5 policies and 3% are having 5 or more policies. So, major respondents are 0-1 policy holder.


2. Rationale behind holding the Life insurance policies:-

options Tax saving instrument Necessity of life Both of the above Safety for loan

Number of respondents 4 3 74 13

Percentage 7% 6% 74% 13%



7% 6%

Tax saving instrument Necessity of life Both of the above Safety for loan



Interpretation :-

Figure 2 shows that among 100 respondents, i.e.74 (74%) consider insurance as tax saving, safety and Security instrument and i.e.13 (13%) consider it as for safety for a loan and 7 i.e. (7%) consider it for tax saving and 6 i.e. (6%) consider it as a necessity of life for safety and security. So, most of the respondents consider it both as tax saving instrument and as necessity of life for safety and security as rationale behind holding a life insurance policy.


3. Type of insurance policies preferred by customers:-

Options Endowment (long term)

Number of respondents 20

Percentage 20%

Cash back(returns in regular intervals)



Unit linked(equity based) 40 Single premium(short term) 15

40% 15%

Figure -3



Endowment (long term)

Cash back(returns in regular intervals) Unit linked(equity based) 25 40 Single premium(short term)


Interpretation :-

Figure 3 Figure 3 shows that among 100 respondents according to Mean taken most preferred life insurance policy is Unit linked (Mean-50)


4. According to customer, what should be the moderate return from the investment in the life insurance policies?

Option Less than 5% 5-8% 8-11% 11&above

Number of respondents 12 14 29 45

Percentage 12% 14% 29% 45%



14 45

Less than 5% 5-8% 8-11% 11&above



Interpretation :-

Figure 4 shows that among 100 respondents, 45% preferred a return of 11% and above, 29% liked to have a return of 8-11% while 14% and 13% respondents preferred it to be 5-8% and less than 5% respectively. So, most preferred return from the investment in the life insurance policies is 12% and above.


5. In which income group customer belongs?

Option 20-30 30-40 40-50 50&above

Number of respondents 11 46 25 18

Percentage 11% 46% 25% 18%




20-30 30-40 40-50 25 46 50&above


Interpretation :-

Figure 5, shows that among 100 respondents, 46% respondents are of the age group 30-40 years while 25% and 18% of respondents are of age group 40-50 and 50-60 years respectively and only 11% belong to age group 20-30 years. So, maximum number of respondents belongs to age group 30-40 years.

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6. In which income group customer belongs?

Option Less than 3lacs 3-5lacs 5-8lacs 8lacs&above

Number of respondents 24 27 34 15

Percentage 24% 27% 34% 15%


15 24

Less than 3lacs 3-5lacs 5-8lacs 8lacs&above 34 27

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Interpretation :-

Figure 6 shows that among 100 respondents, 34% belong to income group of 5-8 lacs while 27% and 24% respondents are from income group 3-5 lacs and less than 3 lacs resp. and only 15% respondents belong to income group 8 lacs and above. So, maximum no. of respondents belongs to income group of 5-8 lacs

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7. Sum total of insurance policies customer holds:

Option Less than 50000 50000-1lacs 1-1.5lacs 1.5&above

Number of respondents 9 51 19 21

Percentage 9% 51% 19% 21%


9 21

Less than 50000 50000-1lacs 1-1.5lacs 19 51 1.5&above

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Interpretation :. Figure 7 shows that among 100 respondents sum total of amount of insurance policy premium of 51% policy holders is between 50,000-1 lac while for 21% and 19% policy holders sum total of amount of insurance policy premium is 1.5 lacs and more and between 1 lac-1.5 lacs resp. and only 9% policy holders sum total of amount of insurance policy premium is less than 50,000. So, maximum no. of policy holders are having sum total of amount of insurance policy premium as 50,000-1 lac.

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8. Type of life insurance policy customer prefers is recommended by.

Option Family Friends Advisor Others

Number of respondents 53 27 13 7

Percentage 53% 27% 13% 7%


60 53 50




20 13 10 7

0 Family Friends Advisor Others

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Interpretation :-

Figure -8 shows that among 100 respondents 53% respondents have taken life insurance policies by the recommendation of family, 27% have taken by the recommendation of friends, 13% & 7% by the recommendation of advisor &others, so maximum no. of life insurance policies is recommended by family.

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9. The customer have taken the life insurance policy through:

Option Agent Online Self Others

Number of respondents 64 9 15 12

Percentage 64% 9% 15% 11%




Agent Online Self

Others 64

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Figure-9 shows that among 100 respondents, 64% respondents have taken life insurance policies through agent, 9% have taken through online, 15% & 12% have taken through self & other means. So , maximum no. of respondents have taken through agent.

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10 .Which companies provide better facility in the life insurance policy:


Number of respondents 23 14 16 8 36 3

Percentage 23% 14% 16% 8% 36% 3%




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Interpretation :-

Figure-10 shows that among 100 respondents, 23% respondents thinks that LIC provides better facilities, 14% & 16% thinks that SBI & HDFC provides better facilities, 8% & 3% thinks that HDFC & others provides better facilities. So maximum no. of respondents preferred ICICI for providing better facilities.

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The buying of Life insurance policies is dependent on income. There is no impact of age on the rationale behind holding life insurance policy. Unit linked life insurance policy is preferred the most. Among 100 respondents maximum no. of policy holders are having sum total of amount of insurance policy premium as 50,000-1 lac.

Among 100 respondents maximum no. of respondents belongs to income group of 58 lacs.

Most of the life insurance policies is recommended by the family of respondents. Among 100 respondents maximum number of respondents belongs to age group 3040 years.

Among 100 respondents most of the respondents consider life insurance both as tax saving instrument and as necessity of life for safety and security as rationale behind holding a life insurance policy.

Among 100 respondents most preferred return from the investment in the life insurance policies is 11% and above.

According, to the customer major market player who offer better facilities in the life insurance policies is ICICI .

Most of the respondents have taken life insurance policies through agents.

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Life insurance companies should be more reliable and stable towards their investors by providing better facilities.

Life insurance companies should give emphasis on their after-sale-service. The promotional activities of insurance companies should be good. Life insurance companies should provide the necessary information and the importance of life insurance to the customers.

They should adopt better marketing techniques to increase awareness among the customers.

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Some of the difficulties and limitations faced by me during my research work, which are as follows:

Lack of awareness among the people Bad image of the people towards Insurance sector Lack of awareness about the earning opportunity in the Insurance sector The sample size chosen for the questionnaire was only 100 and that may not represent the true picture of the consumer perception about the Life Insurance sector.

Customers do not like their money locked up for many years. Many people do not agree to fill the questionnaire because of lack of time

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I have come to know about the customer perception about the insurance sector and how it varies with their age group and income.

The buying of Life insurance policies is dependent on income. There is no impact of age on the rationale behind holding life insurance policy. Unit linked life insurance policy is preferred the most. All the insurance company must advertise more in the market because not all people know more about life insurance policy.

Most number of people wants guaranteed returns so company must focus on this for the customer investment.

The unit linked concept must be specifically promoted. People should not be afraid to invest money in insurance and must use it as an effective tool for tax planning and long term.

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TEXT BOOKS 1. PHILIP KOTLER (2001) Marketing Management, Prentice Hall Pvt.Ltd., New Delhi, Millennium ion.

2. KOTHARI C.R. (1999) Research Methodology, Wishwa Prakashan, New Delhi, 2nd ion.

3. LEON G. SCHFFMAN and LESLIE LAZAR KANUK (2007) Consumer Behavior, Prentice Hall Pvt.Ltd., New Delhi, 9th ion.

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APPENDICES Questionnaire Dear respondents, I am a student of Shri Shankracharya institute of management & technology. As a part of my curriculum I am conducting a study on CUSTOMERS PERCEPTION TOWARDS LIFE INSURANCE POLICIES IN BHILAI/DURG It would be a great help if you please spare some of your time to fill this questionnaire. The responses would be kept strictly confidential & use to data analysis.

Q .1 Please tick the appropriate option.






Annual income





Q .2 Number of Life insurance policies you hold?




5& above

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Q.3 According to you, what is the rationale behind holding the Life insurance policy? (Please tick one) As a tax instrument.

As a necessity of life for safety and security.

Both of the above.

As a safety for loan.

Q .4 According to you, what should be the moderate return from the investment of the life insurance policies?

Less than 5%




Q .5 which type of life insurance policies do you prefer?

Endowment (long term)

Cash back(returns in regular intervals)

Unit linked(equity based)

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Single premium(short term)

Q .6 what is the sum total of all life insurance policies you hold?

Less than 50,000


1-1.5lacs Q .7 How have you taken your life insurance policies?






Q .8 The life insurance policies you have taken is recommended by:





Q .9 according to you which company provides better facilities in their life insurance policies? Please tick any one on the scale given below.





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