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Indian Insurance industry is emerging rapidly after year 2000. To survive in this highly competitive scenario, managers are being pressured to improve quality, recruit quality, give the best training and skilled people and eliminate inefficiency. The collective efforts of the employer, managers and other relative people assume relevance in this context. And this is where marketing management and human resources play important role. Recruitment and selection is very important in today’s scenario. But still it is ignored and considered as a secondary aspect. In case of insurance industry recruitment and recruitment only decide success or failure of company. I have made an attempt to study this aspect of Insurance industry in my project. In this project, I have tried to learn, what is the impression of recruitment in MNYL? I have tried to find out how exactly recruitment is very important for this firm as well as this industry, which are the different strategies firm use to train quality people and so on. It is more qualitative rather than a quantitative data. To get knowledge of above questions and to fulfill the requirements for my project on “A Study on recruitment and selection at max new york life for various levels’. I have worked in MNYL and searched some internet sites.
1.1 Brief History of Insurance Sector in India
The insurance sector in India has come a full circle from being an open competitive market to nationalization and back to a liberalized market again. Tracing the developments in the Indian insurance sector reveals the 360-degree turn witnessed over a period of almost 190 years. The business of life insurance in India in its existing form started in India in the year 1818 with the establishment of the Oriental Life Insurance Company in Calcutta. Some of the important milestones in the life insurance business in India are: 1912 - The Indian Life Assurance Companies Act enacted as the first statute to regulate the life insurance business. 1928 - The Indian Insurance Companies Act enacted to enable the government to collect statistical information about both life and nonlife insurance businesses. 1938 - Earlier legislation consolidated and amended to by the Insurance Act with the objective of protecting the interests of the insuring public. 1956 - 245 Indian and foreign insurers and provident societies taken over by the central government and nationalized. LIC formed by an Act of Parliament, viz. LIC Act, 1956, with a capital contribution of Rs. 5 crore from the Government of India.
The General insurance business in India, on the other hand, can trace its roots to the Triton Insurance Company Ltd., the first general insurance company established in the year 1850 in Calcutta by the British. Some of the important milestones in the general insurance business in India are: 1907 - The Indian Mercantile Insurance Ltd. set up, the first company to transact all classes of general insurance business. 1957 - General Insurance Council, a wing of the Insurance Association of India, frames a code of conduct for ensuring fair conduct and sound business practices. 1968 - The Insurance Act amended to regulate investments and set minimum solvency margins and the Tariff Advisory Committee set up. 1972 - The General Insurance Business (Nationalization) Act, 1972 nationalized the general insurance business in India with effect from 1st January 1973. 107 insurers amalgamated and grouped into four companies viz. the National Insurance Company Ltd., the New India Assurance Company Ltd., the Oriental Insurance Company Ltd. and the United India Insurance Company Ltd. GIC incorporated as a company.
Indian Insurance Industry:
Learn About Insurance may be described as a social device to reduce or eliminate risk of life and property. Under the plan of insurance, a large number of people associate themselves by sharing risk, attached to individual. The risk, which can be insured against include fire, the peril of sea, death, incident, & burglary. Any risk contingent upon these may be insured against at a premium commensurate with the risk involved. Insurance is actually a contract between 2 parties whereby one party called insurer undertakes in exchange for a fixed sum called premium to pay the other party happening of a certain event. Insurance is a contract whereby, in return for the payment of premium by the insured, the insurers pay the financial losses suffered by the insured as a result of the occurrence of unforeseen events. With the help of Insurance, large number of people exposed to a similar risk make contributions to a common fund out of which the losses suffered by the unfortunate few, due to accidental events, are made good.
Functions of Insurance
The functions of Insurance can be bifurcated into two parts: • • • Primary Functions Secondary Functions Other Functions
The primary functions of insurance include the following: Provide Protection - The primary function of insurance is to provide protection against future risk, accidents and uncertainty. Insurance cannot check the happening of the risk, but can certainly provide for the losses of risk. Insurance is actually a protection against economic loss, by sharing the risk with others. Collective bearing of risk - Insurance is a device to share the financial loss of few among many others. Insurance is a mean by which few losses are shared among larger number of people. All the insured contribute the premiums towards a fund and out of which the persons exposed to a particular risk is paid. Assessment of risk - Insurance determines the probable volume of risk by evaluating various factors that give rise to risk. Risk is the basis for determining the premium rate also Provide Certainty - Insurance is a device, which helps to change from uncertainty to certainty. Insurance is device whereby the uncertain risks may be made more certain.
The secondary functions of insurance include the following: Prevention of Losses - Insurance cautions individuals and businessmen to adopt suitable device to prevent unfortunate consequences of risk by observing safety instructions; installation of automatic sparkler or alarm systems, etc. Prevention of losses cause lesser payment to the assured by the insurer and this will encourage for more savings by way of premium. Reduced rate of premiums stimulate for more business and better protection to the insured. Small capital to cover larger risks - Insurance relieves the businessmen from security investments, by paying small amount of premium against larger risks and uncertainty. Contributes towards the development of larger industries - Insurance provides development opportunity to those larger industries having more risks in their setting up. Even the financial institutions may be prepared to give credit to sick industrial units which have insured their assets including plant and machinery. The other functions of insurance include the following: Means of savings and investment - Insurance serves as savings and investment, insurance is a compulsory way of savings and it restricts the unnecessary expenses by the insured's For the purpose of availing income-tax exemptions also, people invest in insurance. Source of earning foreign exchange - Insurance is an international business. The country can earn foreign exchange by way of issue of marine insurance policies and various other ways.
Risk Free trade - Insurance promotes exports insurance, which makes the foreign trade risk free with the help of different types of policies under marine insurance cover. The end of the year 2000 marks a significant change and growth of 'India Insurance' industry scenario. Monopoly of Public Sector Insurance company marks an end and Private companies makes inroad. Foreign companies, both Life and General flocked, collaborated and helped astronomical growth of 'Insurance Industry in India'. 'India Insurance' growth was long overdue. Within 1st 12 months of liberation of 'Indian Insurance Industry' 10 licenses for selling life insurance products and 6 licenses for selling non-life products were issued to private companies. The Public sector giant LIC started losing its market share at the cost of stupendous growth of private players. Now 'India Insurance' industry has more than a dozen private life insurance players and 9 private general insurance companies. Aggressive and penetrative marketing strategy coupled with wide product bandwidth was an instant success among the ignorant masses. Most of the private companies registered more than 100% growth till then and are still continuing with such monstrous growth figures. Although, 'Insurance in India' is not regarded as a basic need but it is getting popular among semi urban to rural masses. Top rank private companies like ICICI Prudential Life Insurance, Tata AIG, Bajaj Allianz etc are aggressively researching and innovating products for huge untapped rural 'India Insurance' market. Collaboration with micro finance companies, post offices, rural banks and village management authorities for selling insurance is doing wonders. Life insurance products covers risk for the insurer against eventualities like death or disability. Non-life insurance products covers risks against natural calamities, burglary, etc. They are not as popular as life
products in the ' Insurance India's' portfolio. Until very recently it had only corporate buyers, but with natural disasters like, earth quakes, tsunamis, storms and floods becoming more frequent and damaging there has been a sudden spurt in sales of general insurance amongst individuals. Consumerism of life style goods and modern amenities has also contributed to its growth. With more awareness and wide bandwidth of insurance product portfolio the growth for 'India Insurance' story will only get more competitive and more affordable to all sections of Indian society.
The Government of India liberalised the insurance sector in March 2000 with the passage of the Insurance Regulatory and Development Authority (IRDA) Bill, lifting all entry restrictions for private players and allowing foreign players to enter the market with some limits on direct foreign ownership. Under the current guidelines, there is a 26 percent equity cap for foreign partners in an insurance company. There is a proposal to increase this limit to 49 percent. The opening up of the sector is likely to lead to greater spread and deepening of insurance in India and this may also include restructuring and revitalizing of the public sector companies. In the private sector 12 life insurance and 8 general insurance companies have been registered. A host of private Insurance companies operating in both life and non-life segments have started selling their insurance policies since 2001.
IRDA has so far granted registration to 12 private life insurance companies and 9 general insurance companies. If the existing public
sector insurance companies are included, there are currently 13 insurance companies in the life side and 13 companies operating in general insurance business. General Insurance Corporation has been approved as the "Indian reinsurer" for underwriting only reinsurance business.
1.2 Company profile of MAX NEWYORK LIFE :
Max New York Life Insurance
“Max New York Life wants people to view insurance as a financial protection and wealth creation instrument and not just a tax-saving tool.” Max New York Life Insurance Company Ltd. is a joint venture between New York Life, a Fortune 100 company and Max India Limited, one of India's leading multi-business corporations. The company has positioned itself on the quality platform. In line with its vision to be the most admired life insurance company in India, it has developed a strong corporate governance model based on the core values of excellence, honesty, knowledge, caring, integrity and teamwork. The strategy is to establish itself as a trusted life insurance specialist through a quality approach to business. New York Life is a Fortune 100 company that has over 160 years of experience in the life insurance business. Max India Limited is a multibusiness corporate dealing in Clinical Research, IT and Telecom Services, and Specialty Plastic Products businesses.
Max New York Life Insurance started its operations in India in 2000. It is the first life insurance company in India to be awarded the IS0 9001:2000 certification. Max New York offers customized products tailored to suit individual's needs. With its various Products and Riders, there are more than 400 product combinations to choose from. Today, Max New York Life Insurance has a network of 57 offices spread over 37 cities all over India. In line with its values of financial responsibility, Max New York Life has adopted prudent financial practices to ensure safety of policyholder's funds. The Company's paid up capital is Rs. 657 crore, which is more than the norm laid down by IRDA. Max New York Life has identified individual agents as its primary channel of distribution. The Company places a lot of emphasis on its selection process, which comprises four stages screening, psychometric test, career seminar and final interview. The agent advisors are trained in-house to ensure optimal control on quality of recruitment. Max New York Life invests significantly in its recruitment program and each agent is trained for 152 hours as opposed to the mandatory 100 hours stipulated by the IRDA before beginning to sell in the marketplace. Recruitment is a continuous process for agents at Max New York Life and ensures development of skills and knowledge through a structured program spread over 500 hours in two years. This focus on continuous quality recruitment has resulted in the company having amongst the highest agent pass rate in IRDA examinations and the agents have the highest productivity among private life insurers. It has established a wide agency distribution network with 172 offices and representatives across 120 cities in India. The company has
established additional channel with 22 bancassurance relationships, corporate tie-ups and a strong Direct Sales Team. Through its wide network of highly competent life insurance agent advisors, flexible product solutions and strong customer focus, Max New York life is creating a partnership for life with its customers in India. Max New York Life, one of India’s leading life insurance companies, expanded its presence in the southern region by opening its first general office in the city of Mysore. Max New York Life now has established a countrywide network of 172 offices and representatives across 120 cities in India. Max New York Life, which has till date sold over 1.53 million policies and recorded a sum assured of over Rs. 46,000 crore, has positioned itself on the quality platform. The company has developed a strong corporate governance model based on defined core values of caring, knowledge, excellence and honesty. Its strategy is to establish itself as a trusted life insurance specialist on the bedrock of quality of advice. The company has over 25,300 agent advisors, who are widely considered the best in the business. Max New York Life aspires to be the "life insurance brand of first choice" amongst Indian consumers. To achieve this the company will draw on New York Life's demonstrated competence in developing and managing a superior personal sales network. For the last 46 years consecutively, the largest number of agents qualifying for membership to the Million Dollar Round Table (MDRT) have been from New York Life. The MDRT is the industry's most prestigious organization comprising the world's most successful insurance agents. Max New York Life, a merit oriented and equal opportunities employer, is looking for a few good men and women who will spearhead the effort to realize this vision.
“Max New York Life wants people to view insurance as a financial protection and wealth creation instrument and not just a tax-saving tool. Since the launch of our operations, our focus has always been on providing risk protection and long-term wealth creation solutions to our customers. With a diverse product portfolio to meet customer requirements, it is evident that we are setting benchmarks in the marketplace and are well on course of realizing our vision to become India’s most admired Life Insurance Company.” “An ever expanding presence of Max New York Life offices across India reinforces our commitment to serving the nation. We are extremely pleased with our progress in the region and feel that opening an office in Mysore would help us educate people about the true potential and benefits of life insurance. As life insurance specialists, Max New York Life will continue to help consumers make the right choices to meet their financial goals, both for the short and long-term, through sound quality advice offered by our agent advisors and a right mix of product offerings.” he added. Max New York Life has been instrumental in changing the paradigm of life insurance in India. It is the first life insurance company in India to introduce cause related marketing. Children are at the very heart of Max New York Life's strategy. SOS Children's Villages of India is internationally recognized for its work in giving underprivileged children a wholesome life. The mission of SOS is "to help orphaned and abandoned children, by providing them with a family, a permanent home, education and strong foundation for an independent life." It's mission ties in with Max New York Life's philosophy of helping people secure the future of their near and dear ones.
Vision statement is India". "Most Admired Life Insurance Company in
• • • • • Become one of the top quartile life insurance companies in India Be a national player Be the brand of first choice Be the employer of choice Become principal of choice for agents
Max New York Life Values and Beliefs
Excellence "In every aspect of work. Ranging from the in-house training institute to the detailed Personal Insurance Plan. Max New York Life is focused on achieving the highest standards of quality in every aspect of their business". Honesty "Is the heart of the Life Insurance business. Max New York believes that above all, Life Insurance is based on trust. Transparency, Dependability and Integrity will form the cornerstones of the Max New York Life experience." Knowledge "Is what makes experts. Max New York Life is focused on the Life Insurance business. Perfectly combining global expertise with local knowledge, Max New York Life is the Indian Life Insurance specialist."
Caring "For the customer. Max New York Life is redefining the Life Insurance paradigm to focus on the needs of the customers. The Max New York service process is responsive, personalized, humane and empathetic." Culture: Our "in house culture recipe" has some of the finest ingredients going into its making. Some of the more prominent aspects of our culture are stated below: • • • • • • • • • • Customer comes first Do it right the first time Bias for result oriented action Financial strength and discipline Clarity of purpose International quality standards Inclusive Meritocracy Learning opportunities Fun at work Commitment to published value system
Products of Max New York Life
Max New York Life Insurance offers an inangible product that is an insurance cover. Max New York Life offers a suite of flexible products. It now has 43 life insurance products and 8 riders that can be customized to over 800 combinations enabling customers to choose the policy that best fits their need. The products that are offered by Max New York Life are broadly divided into: Various types of life insurance policies: Endowment policies:
This type of policy covers risk for a
specified period, and at the end of the maturity sum assured is paid back to policyholder with the bonuses during the term of the policy.
Money back policies:
This type of policy is for periodic
payments of partial survival benefits during the term of the policy as long as the policy holder is alive.
This type of insurance offers life insurance
protection under group policies to various groups such as employers-employees, professionals, co-operatives etc it also provides insurance coverage for people in certain approved occupations at the lowest possible premium cost.
Term life insurance policies:
This type of insurance covers
risk only during the selected term period. If the policy holder survives the term, risk cover comes to an end. These types of policies are for those people who are unable to pay larger premium required for endowment and whole life policies. No surrender, loan or paid up values are in such policies.
Whole life insurance policies: This type of policy runs as long
as the policyholder is alive and is covered for the entire life of
the policyholder. In this policy the insured amount and the bonus is payable only to nominee on the death of policy holder.
Joint life insurance policies:
These policies are similar to
endowment policies in maturity benefits and risk cover, but joint life policies cover two lives simultaneously such as married couples. Sum assured is payable on the first death and again on the death of survival during the term of the policy.
Pension plan: a pension plan or annuity is an investment over
a certain number of years but does not provide any life insurance cover. It offers a guaranteed income either for a life or certain period.
Unit linked insurance plan:
ULIP is a kind of insurance plan
which provides life cover as well as return on premium paid over a certain period of time. The investment is denoted as units and represented by the value called as net asset value (NAV). The products offered by Max New York are : Life Partner Plus Plan Life Gain Plus Participating Plan Life Gain Endowment Plan Children Plan SMART Invest Pension Plan 20 year Endowment (Par) Plan Life Gain Plus 25 Participating Plan Endowment to Age 60 (Par) Plan Whole Life Participating Plan Five Yr Renewable and
Convertible Plan (Non - Par) Level Term Plan LifeLine Wellness Plan LifeLine MediCash Plus Plan LifeLine MediCash Plan
LifeLine-Safety Net Plan Life Maker Gold Plan Smart Assure Life Maker Premium
Life Pay Money Back Smart Assure Life Invest Plan SMART EXPRESS
Investment Plan The latest product that MNLY has come up with is known as the SMART EXPRESS where the minimum premium is 50,000 but the benefit of this policy if taken on a yearly mode is since it being a ULIP product and the markets trend not looking too great the value of the fund freezes when the stock price increases hence it to an extent offers a fixed return it can say that one who invest in this plan is assured of a positive return. This product was introduced since it had to discontinue its very famous product Life Invest again this was due to the guidelines of IRDA when it says if the plan crosses a certain limit of sum assured offered it has to close the product.
Max New York Life is the first life insurance company in India to be awarded the IS0 9001:2000 certifications. Max New York Life was among the top 25 companies to work with in India, according to 2003 Business World magazine, "Great Workplaces in India", Max New York Life was ranked at the 20th position. This survey is the local version of the "Great Places to Work" survey carried out every year in 22 countries. Been among top five most respected private life insurance companies in India according to a 2004 and 2006 Business World survey.
Have truly built an enviable sales force. With 345 agents becoming members of the MDRT in 2006, Max New York Life has moved up to 21st rank in MDRT global list.
A career at Max New York Life has innumerable advantages. With low start up investment you can become a part of a world-class organization and make a positive difference to people’s lives. Our agents sell more policies and make more money than agents of any other life insurance company. The financial rewards are in the form of
• • • • •
Commissions on new sales Ongoing renewal commissions Performance linked bonus Referral commissions Training reimbursement
1.3 SWOT ANALYSIS
A scan of the internal and external environment is an important part of the strategic planning process. Environmental factors internal to the firm usually can be classified as strengths (S) or weaknesses (W), and those external to the firm can be classified as opportunities (O) or threats (T). Such an analysis of the strategic environment is referred to as a SWOT analysis. Strengths The intense competition brought about by deregulation has encouraged keeping. Aggressive marketing strategies by private sector insurers will buoy consumer awareness of risk and expand the markets for products. Competition in a deregulated environment will allow market forces to set premiums that are appropriate for exposures and push insurers to differentiate their products and services. the industry to innovate in all areas; from underwriting, marketing, policy holder servicing to record-
Weaknesses Premiums rates will remain under pressure due to intense competition on the more profitable lines. Falling premium income without a corresponding reduction in claims is likely to drive down profits.
Reinsurance is likely to cost more as treaty reinsurers reduce ceding commissions to compensate for the lower rates following deregulation.
Opportunities Innovations in distribution and improvements in market
penetration will follow as public and private insurers compete to market their products. Allowing insurers to issue their own policy wordings and set their own rates will enable underwriters to tailor products to meet client needs. The existence of stringent licensing requirements ensures that only adequately capitalized and professionally managed companies are eligible to carry out insurance and reinsurance.
Public and private sector insurers‟ greater reliance on their
investment portfolios to generate sufficient income and gains for net profits would subject them to the volatility of the financial markets.
Private insurers need to raise more capital; otherwise growth
could be constrained since reliance on reinsurance for capital relief is not always viable or available. Traditional distribution channels, especially tied agents, need to be improved to match the new product offerings.
Like all developing economies on a fast track, the shortage of trained insurance professionals and technicians at all levels cannot be remedied in the short term.
This study was undertaken to identify which type of insurance plans MNYL should market to beat other LIC in India. A survey was undertaken to understand the preferences of Indian consumers with respect to insurance. While marketing policies the sole duty of an advisor/ agent is to provide insurance plans as per customer requirements. In effect plans (insurance products) should be flexible to suit individual requirements. This research tries to analyze some key factors which influence the purchase of insurance like the term of the policy, the type of company, the amount of annual premium payable (capacity and willingness to spend), risk taking ability and the influence of advertising. Solutions and recommendations are made based on qualitative and quantitative analysis of the data.
To analysis the product details of MNYL and other life Insurance Company Limited. To find ‘Points of Parity’ and ‘Points of Difference’ of MNYL and other Life Insurance Company Limited. To find out factors that influence customers to purchase insurance policies and give suggestions for further improvement.
2.3 Research Methodology:
TYPE OF DATA COLLECTED There are two types of data used. They are primary and secondary data. Primary data is defined as data that is collected from original sources for a specific purpose. Secondary data is data collected from indirect sources. (Source: Research Methodology, By C. R. Kothari) PRIMARY SOURCES These include the survey or questionnaire method, telephonic
interview as well as the personal interview methods of data collection. SECONDARY SOURCES These include books, the internet, company brochures, product brochures, the company website, competitor’s websites etc, newspaper articles etc.
SAMPLING Sampling refers to the method of selecting a sample from a given universe with a view to draw conclusions about that universe. A sample is a representative of the universe selected for study. SAMPLE SIZE The sample size for the survey conducted was 270 respondents. This sample size was taken on 95% confidence level and 6 significant level. Data universe for this sample is 10,00,000 which is approx population of Delhi excluding people below age of 18 years. SAMPLING TECHNIQUE Random sampling technique was used in the survey conducted. PLAN OF ANALYSIS Tables were used for the analysis of the collected data. The data is also neatly presented with the help of statistical tools such as graphs and pie charts. Percentages and averages have also been used to represent data clearly and effectively.
Every study has certain limitations. In my study, also there were certain limitations, which I could not able to solve. 1. The research was conducted in a very small area. 2. Time factor was also important for me. I had only 60 days to complete my research, for which a full-fledged report was insufficient for me. 3. The respondents filled the questionnaire mostly in careless manner, so it was difficult to make them hold for time. 4. The sample size is also very small which represent my research on behavior My study is not recognizable in whole INDIA as well as outside Delhi due to the above limitations and less area coverage.
LIFE INSURANCE CORPORATION OF INDIA (LIC) LIC has an excellent money back policy which provides for periodic payments of partial survival benefits as long as the policy holder is alive. 20% of the sum assured is payable after 5, 10, 15 and 20 years and the balance 40% is payable at the 20th year along with accrued bonus. (www.lic.com) For a 25 years term , 15% of the sum assured becomes payable after 5,10,15 and 20 years and the balance 40% plus the accrued bonus becomes payable at the 25th year. An important feature of these types of policies is that in the event of the death of the policy holder at any time within the policy term the death claim comprises of full sum assured without deducting any of the survival benefit amounts which have already been paid. The bonus is also calculated on the full sum assured. HDFC SLIC does not have a money back policy. It could offer a money back plan and capture some portion of this market. While marketing insurance products I found that many customers wanted to purchase these plans. LIC offers 66 different plans; plans are formulated for specific occasions – whole life plans, term assurance plans, money back plan for women, child plans, plans for the handicapped individuals, endowment assurance plans, plans for high worth individuals, pension plans, unit linked plans, special plans, social security schemes – diversified portfolio of products. HDFC SLIC could diversify its product portfolio. It could add more plans for high worth individuals and women.
ICICI PRUDENTIAL ICICI Prudential is a stiff competitor for HDFC SLIC. The company is a merger between ICICI Bank which is the biggest private bank in India and Prudential Plc which is a global life insurance company. The company has an investment plan which is market related – Invest Shield Life. In this plan even if the market falls, the premium will be returned to investors. It is a guaranteed plan which ensures the company carefully invests your money. The stock market performance of ICICI Prudential is much better than HDFC SLIC. The returns on the growth fund were 46.28% compared to the 42.70% offered by HDFC SLIC. Customers are attracted by higher returns and this is a plus point for Prudential. The company is very well advertised. The advertisements are showcased in movies, television, newspapers, magazines, bill boards, radio etc. The company has an excellent brand ambassador – Mr. Amitabh Bacchan. His promotion of the company builds trust and faith in the minds of our people. However the charges are very high in the plans offered by ICICI Prudential. It is 35% during the first year, 15% in the next year and 3% from the third year onwards. Also a higher minimum premium of Rs. 8000 is charged. Hence the policies are not accessible to the lower strata of the society. (Source: www.iciciprulife.com)
BIRLA SUN LIFE Birla Sun Life Insurance Company Limited is a joint venture between The Aditya Birla Group, one of the largest business houses in India and Sun Life Financial Inc., a leading international financial services organization. The local knowledge of the Aditya Birla Group combined with the expertise of Sun Life Financial Inc., offers a formidable protection for your future. (Source: www.birlasunlife.com) The Aditya Birla Group has a turnover close to Rs. 33000 crores with a market capitalization of Rs. 53400 crores (as on 31st March 2007). It has over 72000 employees across all its units worldwide. It is led by its Chairman - Mr. Kumar Mangalam Birla. Some of the key organizations within the group are Hindalco and Grasim. Sun Life Financial Inc. and its partners today have operations in key markets worldwide, including Canada, the United States, the United Kingdom, Hong Kong, the Philippines, Japan, Indonesia, India, China and Bermuda. It had assets under management of over US$343 billion, as on 31st March 2007. The company is a leading player in the life insurance market in Canada. Being a customer centric company, BSLI has invested heavily in technology to build world class processing capabilities. BSLI has covered more than a million lives since inception and its customer base is spread across more than 1000 towns and cities in India. All this has assisted the company in cementing its place amongst the leaders in the industry in terms of new business premium income. The company has a capital base of 520 crores as on 31st July, 2007. Its Flexi Life Line Plan offers life long insurance cover till the policy holder is 100 years of age. There are guaranteed returns of 3% p.a. net of policy charges after every 5 years from the eleventh policy year onwards. However the charges are very high. The initial charges for the first year are 65%. Hence the fund value is greatly reduced.
BAJAJ ALLIANZ Bajaj Allianz is a joint venture between Allianz AG with over 110 years of experience in over 70 countries and Bajaj Auto, a trusted automobile manufacturer for over 55 years in the Indian market. Together they are committed to offering you financial solutions that provide all the security you need for your family and yourself. Bajaj Allianz is the number one private life insurer for the year 2005 – 2006. It is leading by 78 crores. It has experienced a whopping growth of 216% in the last financial year. The company has sold 13, 00,000 policies and is backed by 550 offices across India. It offers travel insurance, motor insurance, home insurance, health and corporate insurance. The mortality charges are lower than HDFC SLIC. The entry age could be zero years which allow even new born babies to be insured. (Source: www.bajajallianz.com)
TATA AIG Tata AIG Life Insurance Company Limited (Tata AIG Life) is a joint venture company, formed by the Tata Group and American International Group, Inc. (AIG). Tata AIG Life combines the Tata Group’s pre-eminent leadership position in India and AIG’s global presence as the world’s leading international insurance and financial services organization. The Tata Group holds 74 per cent stake in the insurance venture with AIG holding the balance 26 percent. Tata AIG Life provides insurance solutions to individuals and corporate. Tata AIG Life Insurance Company was licensed to operate in India on February 12, 2001 and started operations on April 1, 2001.
THE TATA GROUP
The Tata Group is one of India's largest and most respected business conglomerates, with revenues in 2004-05 of $17.8 billion (Rs. 799,118 million), the equivalent of about 2.8 per cent of the country's GDP. Tata companies together employ some 215,000 people. The Group's 32 publicly listed enterprises - among them standout names such as Tata Steel, Tata Consultancy Services, Tata Motors and Tata Tea - have a combined market capitalization that is the highest among Indian business houses in the private sector, and a shareholder base of over 2 million. The Tata Group has operations in more than 40 countries across six continents, and its companies export products and services to 140 nations.
American International Group, Inc. (AIG), world leaders in insurance and financial services, is the leading international insurance organization with operations in more than 130 countries and jurisdictions. AIG companies serve commercial, institutional and individual customers through the most extensive worldwide property-casualty and life insurance networks of any insurer. In addition, AIG companies are leading providers of retirement services, financial services and asset management around the world. AIG's common stock is listed on the New York Stock Exchange as well as the stock exchanges in London, Paris, Switzerland and Tokyo.
Tata AIG has strong brand name and recall factor which most of its competitors lack in. Other than the public behemoth Life Insurance Corporation (LIC) of India which has a major hold in the market share (of approximately 79%), the private players too are having more and more opportunities to tighten their hold of the market. Of the private players, ICICI Prudential comes first with an almost 4.50% of the market share followed by Tata AIG with about 2.10% of the pie. The private players have everything to work for, especially with LIC not meeting the needs of its clientele with respect to the services they need. This provides a prospect for the private sector players to increase their share of the market. Companies with a familiarity such as Tata AIG can especially achieve their targets due to the brand image that the Tata group has. (Source: www.tata-aig-life.com) A recent survey conducted by the Voluntary Organization in Interest of Consumer Education (VOICE) revealed Tata AIG Life Insurance Company (Tata AIG Life) as the clear winner in terms of customer satisfaction in the life insurance category. This is India's first-ever customer satisfaction study for the insurance sector. The survey also revealed that Tata AIG Life had a high recall as a reputed brand name. The ability to provide innovative and customer-focused service such as allowing the maximum grace period for premium payment has not only further distinguished Tata AIG Life from other life insurance companies but also appealed to consumers.
The old and out dated technique of tele marketing is used to prospect customers. More modern techniques must be adopted. The company must sponsor shows and give presentations in corporate houses. The financial health check must be performed for every prospect to assess his/her true financial position and needs. Some of the advisors skip this vital step and the prospect ends up with a plan they do not appreciate and soon surrender or discontinue. Some of the main problems in marketing the policies are: Large amount of competition (18 players in the market) Other brands are well advertised and have higher recall value LIC is considered a safer option Face competition from banks and mutual funds High premium policies are difficult to market Incorrect perception about insurance Interested prospects might have a lack of time and postpone investments Customers get defensive if you cold call Short term plans are available only at large premium Customers do not have risk appetite to invest in shares Some prospects have already invested and are not interested in further investments Consumers don’t want to undertake medical examinations Large amount of documentation
Customers do not like their money locked up for many years Lack of awareness about the unit linked funds in the market No money back plan present in the product portfolio
SUGGESTIONS FOR IMPROVEMENT Advertise about the company and its products – it motivates individuals to purchase insurance Create a positive perception about insurance Speak about the good features a plan offers like high returns, life cover, tax benefits, indexation, accident cover while prospecting customers Try to sell the product/plan which the consumer requires and not the plan where the advisors benefit is higher Improve the efficiency in operations Bring out policies with small premiums payable for short periods of time – Rs. 5000 – Rs. 10000 per annum for 10 years Attract the youth of India with higher returns on investment as returns are the motivating factor which influence purchase of insurance Promote insurance in colleges and corporate houses Promote MNYL as an Indian Company to build trust MNYL could have a brand ambassador or a mascot to promote its services Should have partial withdrawals from the first year onwards Tap the rural market where there is large potential
Diversify product portfolio Make products more straight forward – reduce complexities
ANALYSIS & INTERPRETATION
“A SURVEY ON THE LIFE INSURANCE INDUSTRY IN INDIA” AGE GROUP OF SURVEYED RESPONDENTS TABLE 1:
Age group 18 - 25 years 26 - 35 years 36 - 49 years 50 - 60 years More than 60 years
No. of Respondents 127 67 46 24 6
Analysis: From the chart above we find that 47% of the respondents fall in the age group of 18 – 25 years, 25% fall in the age group of 26 – 35 years and 17% fall in the age group of 36 – 49 years. Therefore most of the respondents are relatively young (below 26 years of age). These individuals could be induced to purchase insurance plans on the basis of its tax saving nature and as an investment opportunity with high returns. Individuals at this age are trying to buy a house or a car. Insurance could help them with this and this fact has to be conveyed to the consumer. As of now many consumers have a false perception that insurance is only meant for people above the age of 50. Contrary to popular belief the younger you are the more insurance you need as your loss will mean a great financial loss to your family, spouse and children (in case the individual is married) who are financially dependent on you.
GENDER CLASSIFICATION OF SURVEYED RESPONDENTS TABLE 2: Particulars Male Female No. of Respondents
CUSTOMER PROFILE OF SURVEYED RESPONDENTS TABLE 3: Customer profile
Student Housewife Working Professional Business Self Employed Government service employee
No. of respondents
62 5 116 49 24 14
From the chart above it can clearly be seen that 43% of the respondents are working professionals, 23% are students and 18% are into business. Therefore the target market would be working individuals in the age group of 18 – 25 years having surplus income, interested in good returns on their investment and saving income tax.
NO. OF RESPONDENTS WHO HAVE LIFE INSURANCE POLICY IN THEIR NAME TABLE 4: Person who have life insurance policy Yes No
ANALYSIS: This graph shows that out of total 270 respondents only 103 or 38% respondents have life insurance policy in their name. Rest all don’t have a single policy in their name. So there is a very big scope for life insurance companies to cover these people. So in future business of life insurace will gro further.
MARKET SHARE OF LIFE INSURANCE COMPANIES TABLE 5:
HDFC STANDARD LIFE BIRLA SUN LIFE AVIVA LIFE INSURANCE BAJAJ ALLIANZ LIC TATA AIG ICICI PRUDENTIAL ING VYSYA BHARTI AXA OTHERS
NUMBER OF POLICIES
4 3 6 7 55 6 12 6 2 2
Analysis: In India, the largest life insurance company is Life Insurance Corporation of India. It has been in existence in India since 1956 and is completely owned by the Government of India. Today the organization has grown to 2048 offices serving 18 crore policies and has a corpus of over 340000 crore INR.
ANNUAL PREMIUM PAID BY INDIVIDUALS FOR LIFE INSURANCE TABLE 6: Premium paid (p.a.) Rs. 5000 - Rs. 10000 Rs. 10001 - Rs. 15000 Rs. 15001 - Rs. 24900 Rs. 25000 - Rs. 50000 Rs. 50001 - Rs. 60000 Rs.60001 - Rs. 80000 Rs. 80001 - Rs. 100000 No. of respondents 40 26 18 10 4 2 3
CHART 6: ANNUAL PREMIUM PAID BY INDIVIDUALS FOR LIFE INSURANCE
Analysis: From the chart above we find that, 39% of the respondents surveyed pay an annual premium less than Rs. 10001 towards life insurance. 25% of the respondents pay an annual premium less than Rs. 15001 and 17% pay an annual premium less than Rs. 25000. Hence we can safely say that HDFC SLIC would be able to capture the market better if it introduced products/plans where the minimum premium starts at Rs. 5000 per annum. Only 19% of the respondents pay more than Rs. 25000 as premium and most products sold by HDFC SLIC have Rs.12000 as the minimum annual premium amount. They should introduce more products like Easy Life Plus and Safe Guard where the minimum premium is Rs.6000 p.a. and Rs. 12000 p.a. respectively. This would definitely increase their market share as more individuals would be able to afford the policies/plans offered.
POPULAR LIFE INSURANCE PLANS TABLE 7:
Type of Plan Term Insurance Plans Endowment Plans Pension Plans Child Plans Tax Saving Plans
No. of Respondents 105 122 16 8 19
CHART 7: POPULAR LIFE INSURANCE PLANS
Analysis: From the chart given above we can clearly see that 45% of the respondents hold endowment plans and 39% of the respondents hold term insurance plans. Endowment plans are very popular and serve two purposes – life cover and savings. If the policy holder dies during the policy term the nominee gets the death benefit that is, sum assured and accumulated bonus. On survival the policy holder receives the survival benefit with a bonus. A term plan is a pure risk cover plan wherein the insured pays a lower premium for a higher sum assured. Term insurance is the cheapest form of insurance and helps the policy holder insure himself for a relatively low premium. For the returns sensitive investor term plans do not find favor as they do not offer a return in case the individual does not die during the policy term.
AWARENESS OF UNIT LINKED INSURANCE PLANS TABLE 8:
Awareness of Unit Linked Plans Yes No No. of Respondents 154 116
CHART 8: AWARENESS OF UNIT LINKED INSURANCE PLANS
Analysis: From the chart given above we find that 57% of the respondents are aware of unit linked life insurance plans and 43% are not aware of such plans. These plans should be promoted through advertising. The company can advertise through television, radio, newspapers, bill boards and pamphlets. This would increase awareness and arouse curiosity in the minds of the consumer which would enable the company to market its products more effectively. Unit – linked plans are those where the benefits are expressed in terms of number of units and unit price. They can be viewed as a combination of insurance and mutual funds. The number of units a customer would get would depend on the unit price when they pay the premium. When the policy matures the individual gets his fund value. The value of his fund is calculated by multiplying the net asset value and number of units held by them on that day.
CONSUMER WILLINGNESS TO SPEND ON LIFE INSURANCE PREMIUM TABLE 9:
No. of respondents 41 73 110 41 5
Willingness to spend on premium Less than Rs. 6,000 Rs. 6,001 - Rs. 10,000 Rs. 10,001 - Rs. 25,000 Rs. 25,001 - Rs. 50,000 Rs. 50,001 - Rs. 1,00,000
Percentage 15% 27% 41% 15% 2%
CHART 9: CONSUMER WILLINGNESS TO SPEND ON LIFE INSURANCE PREMIUM
Analysis: From the graph above, we can clearly see that 41% of the respondents would be willing to spend between Rs. 10001 – Rs. 25000 for life insurance. 27 % would be willing to spend between Rs. 6001 – Rs. 10000 per annum. Only 15% would be willing to spend more than Rs. 25000 per annum as life insurance premium. We could say that the maximum premium payable by most consumers is less than Rs. 25000 p.a. This is further reduced as most customers have already invested with LIC, ICICI Prudential, Birla Sun Life, Bajaj Allianz etc. HDFC SLIC is faced with a large amount of competition. There are 18 insurance companies in India inclusive of LIC. Hence to capture a larger part of the market the company could introduce more reasonable plans with lesser premium payable per annum.
CHART SHOWING IDEAL POLICY TERM TABLE 10:
Ideal policy term 3 - 5 years 6 - 9 years 10 - 15 years 16 - 20 years 21 - 25 years 26 - 30 years More than 30 years Whole life Policy
No. of respondents 51 41 95 38 24 5 3 13
CHART 10: CHART SHOWING IDEAL POLICY TERM
From the chart given above it can be seen that 35% of the respondents prefer a policy term of 10 – 15 years, 19% prefer a term of 3 – 5 years and 15% prefer a term of 6 – 9 years. This means that HDFC SLIC could introduce more plans wherein the premium paying term is less than 15 years. The outlook of insurance as a product should be changed from something which you pay for your whole life (whole life policy) and do not receive any benefit (the nominee only receives the benefit in case of your death) to an extremely useful investment opportunity with the prospects of good returns on savings, tax saving opportunities as well as providing for every milestone in your life like marriage, education, children and retirement.
FACTORS THAT MOTIVATE RESPONDENTS TO PURCHASE INSURANCE TABLE 11:
Parameter Advertisements High returns Advice from friends Family responsibilities Others No. of Respondents 35 84 46 89 16
Analysis: From the chart above it can be seen that 33% of the respondents purchase life insurance to secure their families, 33% take life insurance to get high returns, 17% purchase insurance on the advice of their friends and 13% purchase insurance because of the influence of advertisements. The main purpose of insurance is to cover the financial or economic loss that occurs to the family in case of the uncertain death of the policy holder. But now a days this trend is changing. Along with protection (life cover), a savings element is being added to insurance. With the introduction of the new unit linked plans in the market, policy holders get the option to choose where their money will be invested. They can invest their money in the equity market, debt market, money market or a combination of these. The debt and money markets usually have low risk attached whereas the equity market is a high risk investment option.
PREFERRED COMPANY TYPE OF THE RESPONDENTS TABLE 12:
Type of Company Government Owned Company Public Limited Company Private Company Foreign Company No. of Respondents 127 62 49 32 Percentage 47% 23% 18% 12%
CHART 12: PREFERRED COMPANY TYPE OF THE RESPONDENTS
Analysis: From the graph above we find that 60% of the respondents preferred to purchase insurance from a government owned company, 29% of the respondents preferred to purchase insurance from a public limited company and only 4% of the respondents preferred a foreign based company. Heavy advertising through television, newspapers, magazines and radio is required.
MINIMUM EXPECTED RETURN ON INVESTMENT TABLE 13:
Expected Returns Less than 5% 5% - 10% 11% - 15% 16% - 20% 21% - 25% 26% - 30% 31% - 40% 41% - 50% More than 50% No. of respondents 5 39 46 49 46 27 22 14 22
Analysis: From the chart above it can clearly been seen that 18% of the respondents would like 16 – 20% returns, 17% would like returns between 21 – 25% and 17% would like returns of 11 – 15% on their investments. Therefore the average return on investment should be at least 16 – 20 %. Most consumers are willing to adapt to some amount of risk but still want some guaranteed returns. Therefore the bulk of investment should be made in the balanced fund with 50% debt and 50% equity. The returns on the Secure Fund are guaranteed as these involve investment is government securities and the debt market. But the returns on these instruments are low (8 – 10%). If the company invests in shares, returns are higher (39%) but correspondingly risk borne by the policy holder is also higher. Therefore a good combination of the two instruments is often a wise choice.
FUTURE LINE OF RESEARCH
The future topics for research in the organization could be setting up of an appropriate ad campaign. It is very vital to the companies’ success that the people of India know about MNYL, its products and their special features and how insurance in general can help them in their future. The advertisements have to be emotionally appealing. They might also include a celebrity. The brand name of MNYL could be used to give a push to MNYL and its products. The general perception of insurance as “inauspicious” should be done away with and individuals and corporations accept insurance on power with other investment opportunities.
The other area of research could be in the management of funds MNYL possesses and how it can maximize returns for its investors. A research project could be undertaken on how to ensure that the money gets invested in the right companies and earns a medium – high return on investment. Another area of research could be an analysis of the sales and marketing techniques used by MNYL. A large number of changes could be introduced and this would help in saving operating costs and improving the efficiency of the firm.
HDFC standard life insurance is first life insurance company in India. It has businesses spread out across the globe. It was registered on 23rd December 2000. It currently ranks number 4 amongst the insurers in India (Source: annual premium provided by the company) The company faces a large amount of competition. To sustain itself it must promote its products through advertising and improve its selling techniques. Consumers must be aware of the new plans available at HDFC SLIC. The medium of advertising used could be television since most of its competitors use this tool to promote their products. The company must be promoted as an Indian company since consumers seem to have more trust in investing in Indian firms. The unit linked concept must be specifically promoted. The general perception of life insurance has to change in India before progress is made in this field. People should not be afraid to invest money in insurance and must use it as an effective tool for tax planning and long term savings. HDFC SLIC could tap the rural markets with cheaper products and smaller policy terms. There are individuals who are willing to pay small amounts as premium but the plans do not accept premiums below a certain amount. It was usually found that a large number of males were insured compared to females. Individuals below the age of 30 (mostly male) were interested in investment plans. This was a general conclusion drawn during prospecting clients.
• • •
www.maxnewyorklife.com www.google.com www.encylopedia.com IC 33 book of max newyork life Lynton, R.P. and Pareek, U. “Training for development”, 2nd Ed., New Delhi: Vistaar publication, 2002. Bhatnagar, O.P. “Evaluation methodology for training”, New Delhi: Oxford and IBH publishing co.pvt.ltd. Rae, L. “The art of training and development, effective
• • •
planning”. Vol. 1, New Delhi. Tannenbaum, S. “A strategic view of organizational training and learning”. A hand book of human resource management practice, 8th ed., 2001.
A SURVEY ON ‘INSURANCE INDUSTRY’ Dear Sir/Madam,
I am a student of Management. As part of the requirements for my Post Graduation Diploma in Management I am required to do a research based project. Kindly spend a few minutes of your valuable time and fill in this questionnaire.
Do you have a life insurance policy/investment plan in your name?
If yes which company’s insurance policies do you hold? o o o o o o HDFC Standard Life Insurance Birla Sun Life Insurance Tata AIG Life Insurance ICICI Prudential Life Insurance Others (specify name) o o o o Aviva Life Insurance Bajaj Allianz Life Insurance LIC ING Vysya Life Insurance Bharti Axa Life Insurance
What is the approximate premium paid by you annually (in Rupees)?
o o o
Rs. 5,000 – Rs. 10,000 Rs. 10,001 – Rs. 15,000 Rs. 15,001 – Rs. 25,000
o o o
Rs. 25,001 – Rs. 50,000 Rs. 50,001 – Rs. 60,000 Rs. 60,001 – Rs. 80,000
Rs. 80,001 – Rs. 1,00,000 More than Rs. 1,00,000 (specify premium)
What kind of insurance policy would suit you best in your current stage of life? o o o Life Insurance Life Insurance and Investment Plans Tax saving plans o o Pension Plans Child Plans
Are you aware of the new insurance plans in the market?
How much would you be willing to spend per annum if you were to go for an investment/insurance plan?
Less than Rs. o Rs. 25,001 – Rs. 6,000 50,000 o Rs. 6,001 – Rs. o Rs. 50,000 – Rs. 10,000 1,00,000 o Rs. 10,001 – Rs. o More than Rs. 25,000 1,00,000 Which according to you is an ideal policy term? (Number of years you would be willing to pay premium) o
o o o o
3 to 5 years 6 to 9 years 10 to 15 years 16 to 20 years
o o o o
21 to 25 years 26 to 30 years More than 30 years Whole life policy
What motivates you insurance/investment plans?
o o o
Advertisements High Returns Others (specify)
Advice from friends Family responsibilities
In which kind of company would you prefer to make a purchase of insurance?
Government owned company Public Limited Company
Private Company Foreign based company
Typically what kind of returns would you look at from your investments? (Please note: Higher returns involve greater risk)
o o o o o
Less than 5% 6% - 10 % 11% - 15 % 16% - 20 % 21% - 25%
o o o o
26% - 30% 31% - 40% 41% - 50% More than 50%
Contact No. :
Profile of respondent: • • • Student Housewife Working Professional • • • Business Self – Employed Government Service Employee
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