SAJMMR

Volume 2, Issue 2 (February, 2012)

Pu b l i s h ed b y : S o u th As i a n Aca d e m i c Re s ea r ch J o u rn a l s

ISSN 2249-877X

SAJMMR:
South Asian Journal of Marketing & Management Research A CUSTOMER SURVEY & PERCEPTION TOWARDS BANCASSURANCE (WITH REFERENCE TO LIFE INSURANCE INDUSTRY)
DR. ANSHUJA TIWARI*; MS. BABITA YADAV** *Assistant. Professor, Department of Commerce, Barkatullah University, Bhopal, India. **Research Scholar, Faculty of Commerce, Rani Durgawati University, Jabalpur, India. ABSTRACT The banking and insurance industry have changed rapidly in the changing economic environment through out the world. Together Banking and Insurance Industry contributes about seven percent GDP of our economy. The increased pace of market competition due to liberalization and privatization forced life insurers to be competitive by cutting cost and serving in a better way to the customers. In view to reach huge untapped market, the concept of Bancassurance was introduced by the IRDA. Banc assurance is a new and an emerging model of channel of distribution adopted by almost all the life insurance players to increase the market share and insurance penetration. .The present empirical based study was conducted with an objective to understand the role of banc assurance in Indian life Insurance Industry and to measure customer awareness, satisfaction and perception towards buying life insurance products from banks. The study was based on both primary and secondary data and simple percentage method was used for data analysis. The area of study confined to selected areas of Jabalpur district and total sample size was 100 selected through random and convenience sampling method. The various concepts related to banc assurance have been discussed in this paper. Banc assurance would accelerate the growth of life Insurance business, reduce cost, Low awareness of banc assurance among customers and second preferred distribution channel by customers are some of the main findings of study. The research findings will be useful for all the three segments including banks, life insurers and customers. The paper concludes that there is a tremendous scope and growth opportunity available for banc assurance in future in the Indian life Insurance market

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KEYWORDS: Banc assurance, Customer Awareness, Customer Satisfaction, Customer perception, Distribution channel, Marker Penetration, Life Insurance Industry. ___________________________________________________________________________ INTRODUCTION A sound financial sector is the backbone of healthy economy. The Insurance Industry as a financial service is considered as one of the important segments in an economy for its growth and development. Life Insurance Corporation of India has a complete monopoly over the life Insurance business for a very long period i.e. from 1956 to 1999, a period prior to the liberalization. In 1999, the Insurance sector was opened up for private participation to increase insurance penetration. The winds of liberalization and privatization have bought phenomenal changes in the financial sectors, particularly in life Insurance. Huge untapped population provides unlimited scope to life insurance companies for market expansion and premium growth. The success of life Insurance companies largely depends on the effectiveness of distribution channel. The appropriate selection of channel of distribution helps to increase the volume of sales, brand promotion and brand building by providing quality services to the customers. In spite of presence of multiple distribution channels and wide range of new products; the performance of life Insurance companies is unsatisfactory. Hence to improve insurance growth and market penetration of life Insurance business a new concept called Banc assurance were introduced by IRDA in late 2002 where insurance companies have tie ups with different bank through joint-venture for selling Insurance products. The concept of banc assurance based on win-win situation where both banks and insurers get benefited with the business partnership. CONCEPT & MEANING OF BANCASSURANCE It originated in India in the year 2000 when the Government issued notification under Banking Regulation Act which allowed Indian Banks to do insurance distribution. It started picking up after Insurance Regulatory and Development Authority (IRDA) passed a notification in October 2002 on 'Corporate Agency' regulations. Banc assurance accounts for a share of almost 35-40% of the premium income amongst the private players in India. It is a phenomenon where insurance products are offered through the distribution channels of the banking services along with a complete range of banking and investment products and services. Banc assurance tries to exploit synergies between both the insurance companies and banks. Some of the examples of Bancassurance are given below: Birla Sun Life Insurance Aviva Life Insurance HDFC Standard Life Insurance ICICI Prudential Bank of Rajasthan, Andhra Bank, Bank of Muscat, Development Credit Bank, Deutsche Bank and Catholic Syrian Bank Canara Bank, Lakshmi Vilas Bank, American Express Bank and ABN AMRO Bank Union Bank Of India

Lord Krishna Bank, ICICI Bank, Bank of India, Citibank, Allahabad Bank, Federal Bank, South Indian Bank, and Punjab and Maharashtra South Asian Academic Research Journals http://www.saarj.com

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Volume 2, Issue 2 (February, 2012)

Co-operative Bank.

ISSN 2249-877X

LIC

Corporation Bank, Overseas Bank of India, Vijaya Bank, Bank of Commerce. SBI, BNP Paribas

SBI Life

Tata AIG

HSBC, United Bank of India.

Syndicate Bank, Centurion Bank and Standard Charted bank. Bajaj Allianz (Source: www.bimaonline.com) Presently, 23 life insurance companies are operating in India and all have tie-up with one bank or the other. Banc assurance is type of agreement or partnership between bank and insurance company where banks get a fixed percentage or proportion of profit incentives depending on the volume of business. Most of the insurance company found banc assurance as a low cost attractive distribution channel as comparison to other channels. REASONS FOR ENTERING INTO BANCASSURANCE Insurance is an ideal option as banks feel they fulfill the three major requirements for a successful Insurance business that is asset management, investment skills and capital adequacy. Banks would also like to fulfill all the financial needs of their customers. For the following reasons banks are entering into Insurance business such as: 1. Wide network of branches- Banks can prove to be a vital distribution channel due to their existing wide network of branches all over. 2. Customer database- Banks can utilize their existing clientele, which includes corporate as well as retail clients to market insurance products. 3. Cross-selling products- In the current scenario banks can cross sell their products along with the insurance products. For example SBI Bank selling SBI life products along with their own core financial products. 4. Fee based service- Insurance products can be sold as a fee based service. It means by selling insurance products banks earn risk free fixed income which will be an additional source of revenue for the banks. 5. Rural Penetration- The existing wide network of banks in rural areas can be utilized for selling insurance products. It is easier for banks to tap rural market as the rural people have more awareness and faith over banks as compared to Insurance companies.

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Banc assurance in India - A SWOT Analysis Strength 1. Huge untapped population of India. Weakness 1. Low consumer awareness Inflexibility of products. Heavy premiums. Considered as an Investment not protection tool.

2. Product development & Innovation by insurance 2. companies. 3. 3. Large middle class households and trust on banks. 4. 4. Cheaper mode of distribution channel.

Opportunity 1. More than 70% population is uninsured.

Threat 1. Difficult to sell insurance products. Not suitable for complex products. Increased work pressure on bank employees. Availability of multiple Investment options.

2. People faith on banks which help in selling of insurance 2. products. 3. 3. Rising demand for new insurance products like ULIPS, Pension and Health plans. 4. 4. Introduction of new technology and speedy customer services. 5. Help in expansion of banking sector with additional revenue from insurance business.

LITERATURE REVIEW Anuja Banerjee (2009) in her article studied the concept of Bancassurance and its role in Insurance Industry. Bancassurance means selling insurance products by banks through their distribution channels has become one of the major para-banking activites of the banks. If marketing of insurance products by banks is done efficiently and ethically, than it ensures a win-win situation for all parties concerned, the bank, the insurance company as well as the customer. There is a large potential and future development of Bancassurance in India and many Insurers finding it as a attractive and profitable form of distribution channel for distribution of their products. Andhra Business Bureau (April 2010) in an article titled Bancassurance to touch 40 percent of premium income by 2012. Based on Towers Watson India Bancassurance Benchmarking South Asian Academic Research Journals http://www.saarj.com

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survey 2009-10, it is expected that that banc assurance would generate 40 per cent of private insurers premium income by 2012, Bright prospects for bank distribution in India, given the impressive branch banking architecture that reaches every part of the country and touches every economic segment of the population. Gupta. M May (2005), published in monthly Insurance World Magazine,Bancassurance: The Buzzword in Insurance, has clearly highlights significance of banc assurance for Insurance Industry in India and strategies to popularize the tool for betterment of Indian economy. Jay Narayan in IRDA Journal October 2008, Volume VI, No. 10, published an article which emphasis on role of Intermediaries that has a key role to play in the success of Insurance business. Selling of life Insurance products largely depends on the skill and efficiency of the distributor. The role of agent is very vital as compare to other forms of marketing channels like brokers, corporate agents and banc assurance etc. Banc assurance emerging as a new form of distribution channel where banks performed role of intermediary and sell policies directly to the customers. Kumar (2006),Banc assurance-Opportunities and Challenges in India, First Edition, Hyderabad ICFAI publication has clearly mentioned in his book that how banc assurance will be beneficial for banks, insurers and customers and also present challenges and opportunities of banc assurance in India. He identified cultural differences between banks and insurance companies could pose a major challenge to the growth of banc assurance. Large customer base and people trust on bank is the main opportunity for the banks as a distribution channel for insurance companies. M. Rajkumari (2007) in the paper titled A Study on Customers' Preference towards Insurance Services and Bancassurance examined the awareness, satisfaction and preferences of customers towards various Insurance services and bancassurance. The study has been undertaken by the researcher in order to identify the customer's attitude towards purchase of insurance products and also their knowledge on the banc assurance formats available through banks. He also gave suggestions to improve customer awareness on banc assurance and performance of banks in selling insurance policies. Pandey. N (2008) in his Dissertation report titled Bancassurance as a strategic management tool has explained the present status of bancassurance and how it is gaining world-wide acceptance and why in an Indian Insurance Industry it is seeing [as a strategic management tool. S Krishnamurthy, S V Mony, Nani Jhaveri, Sandeep Bakhshi, Ramesh Bhat and M R Dixit (2005), in the paper titled, Insurance Industry in India: Structure, Performance and Future Challenges, clearly explained the status and growth of Indian Insurance Industry after liberalization and also presents future challenges and opportunities linked with the Insurance. Insurance is the backbone of countrys risk management system and influence growth of an economy in several ways. Penetration of Insurance largely depends on availability of Insurance products, insurance awareness and quality of services. The future growth of this sector will depend on how effectively the insurers are meeting the expectations of their customers and able to change the perceptions of the Indian consumers and make them aware of the insurable risks. The paper has also drawn attention on emerging structure, role of banc assurance, agents and customer services in the success of life insurance business. South Asian Academic Research Journals http://www.saarj.com

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Volume 2, Issue 2 (February, 2012)

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THE PROBLEM STATEMENT The Indian insurance sector has started showing signs of significant changes after opening of Industry to private players. With a large population base and huge untapped market, Insurance industry is a big opportunity area in India for national as well as for foreign investors. A huge uninsured population and low market penetration are the two main challenges to the Indian Insurance Industry. It is really an attempt on the part of the researcher to examine the role of bancassurance and to analyze customer awareness, satisfaction and perception towards purchase of life Insurance products from banks. Life Insurance is completely a customer focused business and therefore it is very important to understand the role and future trend towards banc assurance in India. OBJECTIVES OF THE STUDY 1. To study the role of Bancassurance in Indian life Insurance business. 2. To study the customer perception and examine the factors affecting buying of life insurance policy from banks. 3. To measure awareness and satisfaction level towards services offered by banks. 4. SWOT analysis of Bancassurance in Indian perspective. 5. To offer suitable suggestions to overcome problems and challenges of bancassurance. HYPOTHESIS H0: There is no significant role of banks in the policies and premium growth of life Insurance business. Ha: There is a significant role of bank in the policies and premium growth of life Insurance business. NATURE & SCOPE OF THE STUDY The present empirical and descriptive study was based on both primary and secondary data. A well designed questionnaire was designed to collect primary data and various published literature, Journal, annual reports, websites has been used for the secondary data sources. The Sample size was chosen keeping in mind not only the time factor but also the area of coverage. The sample size was limited to 200 respondents and they were selected randomly from LIC, HDFC Standard and SBI Life Insurance companies. The area of study confined to selected areas of Jabalpur district, of Madhya Pradesh. The necessary data for the study was collected in a period of 6 months from July 2011 to December 2011. IMPORTANCE OF THE STUDY Insurance is one of the fastest growing industries and has a significant contribution in socioeconomic development of the economy. Huge untapped Indian market presents both opportunity and challenge to the Insurance Company. The success of insurers highly depends on the effectiveness of distribution channel. The rising market competition and demand for South Asian Academic Research Journals http://www.saarj.com

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innovative need based products by the customers has forces insurance companies to look for alternative cost effective distribution channel. The study is basically intended to know the level of customer awareness, satisfaction and perception towards buying life insurance products from banc assurance; a new model of distribution of insurance products. The findings and suggestions of the present study will improve the performance of bank and increase market penetration of life insurance companies. The Synergies between the life Insurers and banks will contribute more to the economy. Thus in this context, the present study will be highly useful and relevant. RESEARCH MERHODOLOGY Being a empirical and descriptive based study on customer perception towards bancassurance, the researcher has selected LIC, HDFC Standard and SBI life Insurance of both the sectors. The study is based on both primary and secondary data as well. The primary data is collected through a well- designed structured questionnaire and discussions with the bank customers with or without life Insurance policy. Samples of 100 respondents were identified randomly and through convenience sampling technique the questionnaire was filled by the respondents. Secondary data is collected from various publications, Journals, Insurance Magazines, official websites, Companys annual reports and newspapers. Researcher has used Simple percentage method for the purpose of analysis of data. Tables and graphs have been used at the appropriate places to present and classified the available data. Benefits of Bancassurance to Banks, Insurers and Customers: An Analysis FOR BANKS The first and the foremost benefit is that the banks get an additional product in their basket to reduce their risk of regular income. Secondly, by selling the insurance products, they tend to gain additional income in the form of fees. Thirdly, the banks will get to retain the customers with wider relationship with them by providing them a comprehensive service of banking and insurance at a single window. FOR INSURANCE COMPANY Selling their products through banks gave them access to the wide rural market. Many public sector banks have branches in the remote rural areas, these acts as a ready untapped market for the insurance companies at a nominal cost. The insurance companies could reach out to the highly endowed and growing middle class section of the society through the banks distribution network. FOR CUSTOMERS The Banc assurance model assists in terms of reduction price, diversified product quality in time, all services under one-roof and service at their doorstep service by banks. Innovative and better product ranges and products designed as per the needs of customers. Customers could also get a share in the cost savings in the form of reduced premium rate because of economies of scope, besides getting better financial counseling at single point.

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Volume 2, Issue 2 (February, 2012)

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TESTING OF HYPOTHESIS H0: There is no significant role of banks in the policies and premium growth of life Insurance business. The researcher has used secondary data for testing the null hypothesis. Total premium income & bancassurance: Premium income is the amount which is earned by insurance company in the form of premium from the policyholders. Total Premium Income is one of the important and main indicators of the performance of the insurance business. The table no. 2 presents the total contribution of Banks in collection of life Insurance premium income. The secondary data of last five years have been used from 2005 to 2010. TABLE NO. 2 TOTAL LIFE INSURANCE PREMIUM INCOME AND BANCASSURANCE FY ( 2005-2010) RS.(IN CRORES) Life Insurers 2005-2006 2006-2007 2007-2008 2008-2009 2009-2010

Total Premium Income ( in crores) Banks (in %)

105875.76

156065.32

201351.41

221785.47

265450.37

6.38

5.46

7.54

9.69

10.60

Total 6754.8 Contribution of bancassurance in premium Income

8521.16

15181.8

21491.01

28137.7

(Source: Various Issues of IRDA Annual Report)

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Volume 2, Issue 2 (February, 2012)

GRAPH NO. 1

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350000
Total Premium Income (in crores)

300000 250000 15181.8 200000 150000 100000 156065.32 50000 0 2005-2006 2006-2007 2007-2008 Year 2008-2009 105875.76 6754.8 201351.41 221785.47 8521.16 21491.01

28137.7

265450.37

2009-2010

Total Premium Income ( in crores)

Total Contribution of bancassurance in premium Income

Interpretation: It is clearly pointed out from the Table no. 2, that the contribution of bank in premium income has increase from Rs. 6754.8 crores in 2005-06 to Rs. 28137.7 crores in 2009-10. Percentage- wise it has increased from 6.38 % in 2005-06 to 10.60 % in 2009-10. Thus it can be depicted that the contribution of bank increased to almost double in a period of five years; which is a positive indication for a growth of life Insurance business. TABLE NO. 3 CHANNEL- WISE INDIVIDUAL NEW BUSINESS PERFORMANCE OF LIFE INSURERS FY (2006-2010) (IN PERCENTAGE) FY Private life Insurers 2006-07 2007-08 2008-09 2009-10 LIC CHANNEL-WISE DISTRIBUTION INDIVIDUAL AGENTS 65.80 53.46 54.94 50.67 INDIVIDUAL BANKS 16.58 18.12 20.78 24.88 BANKS REFERRALS 6.77 6.96 9.27 7.85 REFERRALS DIRECT SELLING 1.39 16.81 11.37 10.73 DIRECT BROKERS 1.05 1.61 2.00 3.44 BROKERS

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AGENTS

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SELLING 1.24 1.32 1.70 1.64 0.24 0.03 0.18 0.00 15.85 0.00 0.34 0.05 0.47 0.09

2006-07 2007-08 2008-09 2009-10

97.28 82.98 97.34 97.75

(Source: Compiled from various IRDA annual reports) Interpretation: It is revealed out from the above table no. 3, that the share of individual agents in LIC total life Insurance premium income has increased from 97.28 % in 2006-07 to 97.75% in 2009-10 and that of private insurers has increased from 65.80% in 2006-07 to 50.67% in 2009-10. Within the corporate agency channel, the banks share in LIC grew from 1.24% in 2006-07 to 1.64 % in 2009-10; and from 16.58 % to 24.88 % of private insurers. The share of others channel of distribution also get increased in the subsequent years. The share of direct selling in total premium income of private insurers has increased from 1.39 % in 2006-07 to 10.73 % in 2009-10 and was maximum (16.38 %) in the year 2007-08. There is no business from direct selling in LIC, except in the year 2007-08. INDIVIDUAL NEW BUSINESS PERFORMANCE & BANCASSURANCE Different insurance company have tie-up with on or the another bank through joint-venture. In banc assurance, banks are selling insurance products to the customers against some fixed percentage of fee or commission which adds profit to the earnings of bank. TABLE NO. 4 INDIVIDUAL NEW BUSINESS PERFORMANCE OF LEADING LIFE INSURERS & BANCASSURANCE (2008-2010) (IN NOS.) Life Insurer Policies nos.) (In 2008-09 Premium Bank Policies (In nos.) 2009-10 Premium ( In Rs. Crores)

ICICI Prudential

222138 (8.42)

1189.61 ( 22.17) 1181.22 ( 48.08)

187001 (10.68) 260476 (27.41)

1335.71 (25.62%) 1398.79 (50.80%)

HDFC life

Standard 256660 (23.90)

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Bajaj Allianz

Volume 2, Issue 2 (February, 2012)

54792 (2.12) 126.61 ( 3.01) 1153.79 ( 34.35) 685.53 ( 1.70) 27858 (1.25) 455356 (33.65) 465276 (1.20)

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51.0 (1.31%)

SBI Life

314004 (33.49)

1869.15 ( 41.58) 826.82 ( 1.64)

LIC

580256 (1.62)

(Source: IRDA annual report 2008 & 2010) Interpretation: It is revealed from the Table no. 4 indicates, total no. of policies sold and premium income accumulated through banc assurance in the year 2008-09 and 2009-2010 by some of the leading Indian life insurance companies. All the insurance players have shown positive growth in terms of no. of policies sold and premium income obtained from banks in the year 2009-10 against the previous year of 2008-09. But in case of Bajaj allianz and LIC no. of sold policies by banks have decreased from 2.12 % to 1.25 % and 1.62 % to 1.20 % respectively. DATA ANALYSIS & INTERPRETATION FACTORIAL ANALYSIS IN JABALPUR DISTRICT A survey was conducted in Jabalpur district on 200 respondents of bank customers of selected life insurers. A questionnaire based survey was designed to understand penetration of banc assurance in the Indian market and perception of customers towards buying life insurance policy from banc assurance. 1. Awareness about banc assurance. Consumer awareness refers to a buyer's knowledge of a particular product or company, allows the buyer to get the most from what he buys. The table given below shows the awareness level of customers about banacassurance. Data shows respondents awareness level towards bancassurance. TABLE NO. 5 Responses Yes No Total No. of Respondents 37 63 100 Share (%) 37 63 100

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GRAPH NO. 2

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37

63

Yes

No

Interpretation: From table no. 5 and graph no. 2 it is revealed that, majority (63%) of the respondents are not aware with the concept of banc assurance and only 37% respondents are aware with this new form of distribution channel. Hence there is a strong need to spread bancassurance awareness among the customers. 2. Reason for buying life Insurance policy: There are different reasons for buying life Insurance policy and it depends on the individual needs, income and other influencing factors. Some buys for tax benefit and others for security and so on. Data shows reason for buying life Insurance policy. TABLE NO.6 Response No. of respondents Share (%)

A saving tool A tax saving device A tool to protect your family Return Total

17 34 27 22 100

17 34 27 22 100

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GRAPH NO. 3

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40 35
No. of respondents

30 25 20 15 10 5 0 A saving tool A tax saving device A tool to protect your family Return 17 34 27 22

Reason for buying Life Insurance policy

Interpretation: It has been clearly depicted from the Table no. 6 and graph no. 3, which a majority (34%) of respondents purchase life policy for tax benefit followed by 27% buys for protection purpose. 22% and 17% buy for the return and saving purpose respectively. Advantages of buying insurance policy through banks: There are various services offered to the customers at the time of selling policy and customer gets some advantages of taking policy through banks. Data shows advantages to respondents of buying policy through banks. TABLE NO. 7 Response No. of Respondents Share (%)

Trust and loyalty Easy accessibility Experts advice Convenience Total

41 19 16 24 100

41 19 16 24 100

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GRAPH NO. 4

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45 40
No. of respondents

41

35 30 25 20 15 10 5 0 Trust and loyalty Easy accessibility Experts advice 19 16

24

Convenience

Advantages of buying policy through banks No. of Respondents

Interpretation: Table no. 7 and graph no. 4, tells about various advantages for which respondents are buying life policy through banks. A majority of the respondents (41%) have trust and loyalty on banks as compare to insurance companies and 24% respondents out of 100 buy for easy accessibility and 19% respondents thinks that they easily get experts advice on investment plans and rest 16 % respondents feel that it is more convenient to buy policy from bank. 3. Channel to obtain life Insurance policy- Life Insurance products are distributed through multiple channels such as agent, banks, brokers, referrals, corporate agency etc. Distribution channel has an important role in the life Insurance business. TABLE NO. 8 Response No. of Respondents Share (%)

Agents Brokers Banks Internet Total

44 17 32 7 100 South Asian Academic Research Journals http://www.saarj.com

44 17 32 7 100

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GRAPH NO. 5
Agents Brokers Banks Internet

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32

44

17

Interpretation: It is revealed out from the table no. 8 and graph no. 5, that a majority of the respondents (44%) are buying insurance policy from agents and 32%, 17% respondents are taking policy through banks and brokers respectively. The remaining 7% respondents are buying from Internet. Therefore it is concluded that agents and banks are the two widely used distribution channel by life Insurance companies. 4. Familiar with type of policies offered by banks: A variety of products are offered by life insurance companies through banks. Due to low awareness, many customers are not familiar with the types of policies sold by the banks. Data Shows the extent to which respondents are familiar with various types of policies offered by bank. TABLE NO. 9 Response No. of Respondents Share (%)

Yes No No response Total

29 51 20 100

29 51 20 100

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GRAPH NO. 6

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No response

Responses of respondents

No

Yes 0 10 20 30 40 50 60

No. of respondents

Interpretation: Table no. 9 and graph no.6 has clearly pointed out, that a majority of the respondents (51%) are not familiar with the type of polices offered by bank and only 29 respondents are familiar with the policy and rest 20% respondents have not given any responses. 7. Satisfaction with bank services: Now a days, customer satisfaction is the most important element in the business. Bank provides various services to the customers. Both pre and post sales services are important in service-based industry as their business mainly depends on the satisfaction of the customers. TABLE NO. 10 RESPONSE NO. OF RESPONDENTS SHARE (%)

Satisfied Highly satisfied Moderately satisfied Dissatisfied Highly dissatisfied Total

23 13 34 21 10 100

23 13 34 21 9 100

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GRAPH NO. 7

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40 35

No. of respondents

30 25 20 15 10 5 0 Satisfied Highly satisfied Moderately satisfied Dissatisfied Highly dissatisfied Satisfaction w ith bank services 23 13 34 21 10

Interpretation: Table no. 10 and graph no. 7 has shown that, a majority of the respondents (34%) are moderately satisfied with the bank services and 23 respondents are satisfied. Out of 100, only 21 and 10 percent respondents are dissatisfied and highly dissatisfied with the services provided by bank respectively. Hence bank need to improve quality of its services to get more customer for business and to retain them in the long run. 8. Future plan to take life Insurance policy: Many people are interested to buy life policy; but they have postponed it for future. The future planning of investment in life insurance policy will help in knowing the actual status of the Industry. Data shows respondents future planning towards Investment in Life Insurance. TABLE NO. 11 Responses Yes No Not decided Total No. of Respondents 39 28 33 100 Share (%) 39 28 33 100

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GRAPH NO. 8

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No. of Respondents

45 40 35 30 25 20 15 10 5 0

39 33 28

Yes

No

Not decided

Future planning towards Investment in Life Insurance No. of Respondents

Interpretation: Table no. 11 and graph no. 8, has revealed out the fact, that a majority of the respondents (51%) are not in favor of buying policy in future and only 29% respondents are willing to buy policy in future and rest 20 have not taken any future buying decision. FINDINGS 1. A large no. of respondents (63%) are not aware of the concept of Banc assurance. Hence there is a need to spread awareness about banc assurance among the general public. 2. A majority of the respondents (34%) are buying life insurance policy for tax benefits. Hence Insurance Company should communicate right message to the people and motivate people for buying policy for life protection. 3. Trust & safety is the main reason for which most of the respondents (41%) are buying life policy through banks. People have more faith on bank in comparison to other modes of distribution channel. 4. A majority of the respondents (44%) are buying life policy from agents and than 32% from banks. Hence agent is the most acceptable and popular mode of distribution channel in Indian life Insurance Industry. 5. Most of the respondents (51%) are not familiar with type of policies offered by banks. 6. Most of the respondents (34%) are only moderately satisfied with various services of banks. Therefore bank need to improve the quality of its services to get more customer and high satisfaction. . 7. Only 39% respondents out of 100 are planning to take life insurance policy in future. Hence it means that the other investment options are more preferred by customers than the insurance. South Asian Academic Research Journals http://www.saarj.com

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8. Analysis of Hypothesis: The null hypothesis is rejected and alternative hypothesis which states that bank has an important contribution in the policies and premium growth of life insurance business has proved to be correct based on the secondary data sources. SUGGESTIONS 1. High emphasis need to laid on performance appraisal and sales training of bank managers which will help to actively promote the insurance products in banc assurance. 2. Insurance companies need to come up with simple IT solutions to enable the bank staff to record sales details at the branch itself. 3. Attractive incentives and proper motivation should be given to the marketing personnel of the bank in order to sell insurance products in a bigger way. 4. Insurance companies should come out with more customized products for banc assurance. 5. Banks should improve the quality of services and need to be more aggressive in selling the insurance products. 6. To offer best product to the customers in a low cost effective way. 7. Banks should also do the settlement of claims which will increase the trust and reliability of the customers on the banks. 8. Need to spread awareness among the customers about banc assurance and its benefits. FUTURE PROSPECTS OF BANCASSURANCE IN INDIA Insurance is basically a customer-focused concept selling business where a policy is being sold to the customer through appropriate channel of distribution. In the present days, agents and banks are the two widely and important source of distribution to sell Insurance products. The shape of the Insurance Industry is being changed by developments in distribution. It is the distributor who makes the differences in terms of product quality, customer services in terms of after-sale and claim settlement. Multi-channel distribution and marketing of insurance products will be the smart strategy for the Indian market. Alternative channels like corporate agents, brokers and banks will play a greater role in insurance distribution. Bancassurance is one such distribution channel that offers huge source of untapped opportunities. Bancassurance is a cost-effective and more customer-friendly than other sources of distribution. In Insurance, nearly 35-40% premium income is generated through bancassurance and second most important channel after agents. In India around more than 67,000 branches are there for PSU banks alone and if all branches sell insurance products than the reach of insurance can be significantly increased at the lowest possible cost. Huge uninsured Indian market offers abundance future scope for the growth and expansion of bancassurance. CONCLUSION Insurance is basically a customer-focused concept selling business where a policy is being sold to the customer through appropriate channel of distribution. In the present days, agents South Asian Academic Research Journals http://www.saarj.com

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and banks are the two widely and important source of distribution to sell Insurance products. Bancassurance was a completely unknown insurance distribution channel in India when the insurance sector opened up a decade ago. Today, it is expected to generate 40 per cent of private insurers premium income by 2012, which is significantly higher than the current 25 per cent to 28 per cent. The shape of the Insurance Industry is being changed by developments in distribution. It is the distributor who makes the differences in terms of product quality, customer services in terms of after-sale and claim settlement. Multi-channel distribution and marketing of insurance products will be the smart strategy for the Indian market.The size of the country, a diverse set of people combined with problems of connectivity in rural areas, makes insurance selling in India a very difficult proposition. Life insurance companies require immense distribution strength and tremendous manpower to reach out to such a huge customer base. Huge uninsured Indian market offers abundance future scope for the growth and expansion of bancassurance. REFERENCES 1. Anuja Banerjee (April 2009), Bancassurance: a major para-banking activity, ICFAI Insurance chronicle magazine. 2. Andhra Business Bureau (April 2010), Bancassurance to touch 40 percent of premium income by 2012, Hyderabad 28th April 2010. 3. Kumar, R (2006) Bancassurance-Opportunities and Challenges in India, Bancassurance: Trends and Opportunities, First Edition, Hyderabad, ICFAI publication, 2006, pp-176178. 4. Kothari, C.R. (2007) Research Methodology, Wishwa Prakashan, Third Edition, Prentice Hall of India, New Delhi. 5. Pandey.N (2008), Bancassurance as a strategic management tool, Dissertation SMS Management College Varanasi, Page no.51-62 6. Krishnamurthy. S, Jhaveri. Nani, Bakshi. S (July-Sept 2005), Insurance Industry in India: Structure, performance and future challenges, Vikalpa, IIMA Volume 30, No. 3, Pg no. 93-95 5. David. C (May 2009), Marketing of life Insurance, IRDA Journal, Volume VII, No. 5, May 2009, Pg. no. 18-19. 7. Narayan .J (October 2008), Role of Intermediaries in Life Insurance, IRDA Journal, Volume VI, No. 10. 8. Rajkumari.M (2008), A Study on customers preference towards Insurance Services and Bancassurance, ICFAI Journal of Risk and Insurance October 2007. 9. Gupta. M (May 2005), Bancassurance: The Buzzword in Insurance, Insurance World Magazine, May 2005, Page no. 18-22. 10. Sigma report, Bancassurance: emerging trends, opportunities and challenges, Swiss Re, 2007 11. Ravikumar. V.V (2006), The emerging structure of Bancassurance in India, First Edition, Hyderabad ICFAI publication. South Asian Academic Research Journals http://www.saarj.com

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12. IRDA, Annual Report, 2004-2005. 13. IRDA Annual Report, 2009-2010 14. www.towerwatson.com 15. www.citehr.com 16. www.scribd.com 17. www.google.com 18. www.irda.com

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ANNEXURE QUESTIONNAIRE

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Name:___________________ Gender___________ Age: ______ Occupation___________ Designation________________ E: mail ________________ Q1. Do you have any life Insurance policy? a) b) Yes No

Q2. Which companys Insurance policy you prefer the most? (Rank them from 1 to 5) a) b) c) d) e) f) Life Insurance Corporation HDFC Standard life Insurance ICICI Prudential life Insurance SBI Life Insurance Bajaj Allianz Any other_____________________ (please specify the name of company)

Q3. Are you aware of the concept of Banc assurance? a) b) Yes No

Q4. What is the main reason for buying life Insurance policy? a) b) c) d) e) A saving tool A tax saving tool A tool to protect family Return Any other reason _______________________ (please specify)

Q5. Which benefits influenced you most for buying life policy through banks? a) b) c) Trust and loyalty Easy accessibility Experts advice South Asian Academic Research Journals http://www.saarj.com

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d) Convenience

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Q6. According to you which is the most preferred channel to obtain life Insurance policy? a) b) c) d) e) Agents Brokers Banks Internet Any other_________________( Please specify)

Q7. Are you aware with the type of policies sold by the banks? a) b) c) Yes No No response

Q8. Are you satisfied with the services of banks? a) b) c) d) e) Satisfied Highly satisfied Moderately Satisfied Dissatisfied Highly Dissatisfied

Q9. What is your future plan to take life Insurance policy? a) b) c) Yes No Not decided

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