CHAPTER 1

INTRODUCTION TO INSURANCE INDUSTRY

1. INSURANCE INDUSTRY IN INDIA
1.1 INDIAN INSURANCE MARKET – HISTORY
Insurance has a long history in India. Life Insurance in its current form wasintroduced in 1818 when
Oriental Life Insurance Company began its operations in India.General Insurance was however a comparatively late
entrant in 1850 when TritonInsurance company set up its base in Kolkata.
History of Insurance in India can be broadly bifurcated into three eras: a) Pre
Nationalization b) Nationalization and c) Post Nationalization.
Life Insurance was the first to be nationalized in 1956. Consolidating the
operations of various insurance companies formed Life Insurance Corporation of India.
General Insurance followed suit and was nationalized in 1973. General InsuranceCorporation of India was
set up as the controlling body with New India, United India,National and Oriental as its subsidiaries. The process of
opening up the insurance sectorwas initiated against the background of Economic Reform process, which
commencedfrom 1991. For this purpose Malhotra Committee was formed during this year whosubmitted their report
in 1994 and Insurance Regulatory Development Act (IRDA) waspassed in 1999. Resultantly Indian Insurance was
opened for private companies andPrivate Insurance Company effectively started operations from 2001.
1.2 INSURANCE MARKET - PRESENT
The insurance sector was opened up for private participation four years ago. Foryears now, the private
players are active in the liberalized environment. The insurancemarket has witnessed dynamic changes, which
include presence of a fairly large number ofinsurers both life, and non-life segment. Most of the private insurance
companies haveformed joint venture partnering well-recognized foreign players across the globe.
1.3 CAPITAL REQUIREMENTS AND FOREIGN PARTICIPATION
Minimum capital requirement for direct life and Non-life Insurance company isINR1000 million and that
for reinsurance company is INR2000 million. A maximum 26%foreign equity stake is allowed in direct insurance
and reinsurance companies. In the 2004-05 budget, the Government proposed for increasing the foreign equity stake
to 49%, this isyet to be effected
CHAPTER 2
THE TATA GROUP
2.1 THE TATA GROUP
The Tata Group is one of India's largest and most respected businessconglomerates, with revenues in
2006-07 of $28.8 billion (Rs.129,994 crore), theequivalent of about 3.2 per cent of the country's GDP, and a market
capitalisation of $72.2billion as on December 6, 2007. Tata companies together employ some 289,500 people.The
Tata Group has operations in more than 85 countries across six continents, and itscompanies export products and
services to 80 countries.[1]
2.2 AMERICAN INTERNATIONAL GROUP, INC. (AIG)
American International Group, Inc. (AIG), a world leader in insurance andfinancial services, is the leading
international insurance organization with operations inmore than 130 countries and jurisdictions. AIG companies
serve commercial, institutionaland individual customers through the most extensive worldwide property-casualty
and lifeinsurance networks of any insurer. In addition, AIG companies are leading providers ofretirement services,
financial services and asset management around the world. AIG'scommon stock is listed on the New York Stock
Exchange, as well as the stock exchangesin Paris and Tokyo.[1]
2.3 TATA AIG INSURANCE COMPANY LIMITED
Tata AIG Life Insurance Company Limited and Tata AIG General InsuranceCompany Limited
(collectively 'Tata AIG') are joint ventures of the Tata Group andAmerican International Group, Inc. (AIG). Tata
AIG combines the strength and integrity ofthe Tata Group with AIG's international expertise and financial strength.
Tata AIG LifeInsurance Company Limited (Tata AIG Life) is a joint venture company, formed by theTata Group
and American International Group, Inc. (AIG). Tata AIG Life combines theTata Group’s pre-eminent leadership
position in India and AIG’s global presence as theworld’s leading international insurance and financial services
organization. The TataGroup holds 74 per cent stake in the insurance venture with AIG holding the balance
26percent. Tata AIG Life provides insurance solutions to individuals and corporates. TataAIG Life Insurance
Company was licensed to operate in India on February 12, 2001 andstarted operations on
April 1, 2001.
Tata AIG Life Insurance Company Ltd. "Tata AIG Life" offers a broad array of lifeinsurance products to
individuals, associations and businesses of all sizes, with a widevariety of additional coverage to ensure our
customers can find an insurance product tomeet their needs
CHAPTER 3
INTRODUCTION OF THE RESEARCH STUDY
3.1 INTRODUCTION
The marketing of insurance policies involves unique practices when compared tomarketing of any other
product. Insurance policies are services and hence intangible innature. So people do not realize the need and
importance of insurance. The sales of anyparticular product depends on how the agents sells it, different agents sells
on basisdifferent parameter like commission gained, agent’s perception about the product, agent’sunderstanding
about the products, his convincing power etc.
3.2 OBJECTIVES OF THE STUDY
The following are the main objectives of the study.
1. To study the sales insurance service in Noida and Ghaziabad region.
2. To analyze the buying behavior of the policyholders in the study area with
respect to age for ULIPs.
3. To study about preference of the customer among the selected private insurancecompanies i.e. Aviva life
insurance, ING Vysaya life insurance, Bajaj Allainz lifeinsurance and Met life insurance
4. To study the comparison of the various products by the above mentioncompanies and to know in which
parameters does TATA AIG’s product is laggingbehind according to customers.
3.3 METHODOLOGY
The study was aimed at measuring the customer’s preference for life insurancecompanies and the
comparison of various ULIP insurance policies of the variouscompanies on basis of various parameters based on
customer’s responcse in Noida andGhaziabad region. The survey was done on 150 general residents of the selected
region.
Methods adopted for surveys
1. Field survey method
2. Personal interview technique
3. Secondary sources viz company database
The data collected are represented into suitable tabular forms for drawinginferences. Quantitative
techniques like averages, percentages, range, two-way tables, chi-square tests analysis are applied as per the
requirement. The level of preference, perceptionof th

3.4 FACTORS INFLUENCING THE BUYING OF UNIT LINKED

INSURANCE PLANS (ULIPs)
The degree of buying of ULIPs insurance varies from person to person. It dependsupon many factors. The
factors can be classified into personal, social, economic,psychological and company related variables. Age and
experience of policyholder arepersonal factors, while the co education is a social factor. Economic factors
includeoccupation, income and wealth, and the psychological factors consist of perception,satisfaction about the
services rendered by insurance companies, the impact ofadvertisement and personal selling made by insurance
companies on policyholders. Thecompany related variables are the promotional efforts to sell the policies to
prospectivebuyers. These include advertisement and personal selling. The questionnaire containssuitable questions
and the answers elicited from the respondents were presented into tablesin coming chapter.
 The factors influencing the buying of policies by the policyholders were identified.For this, eight factors
pertaining to policyholder’s personal economic and psychologicalaspects were chosen. The degree of influence of
these factors on buying the policies, bythe policyholders was studied with the help of two-way tables, percentages,
averages andchi-square () tests as found necessary. In order to find the relationship between thepersonal, socio-
economic and psychological variables, it was hypothesized that allbackground variables influence the value of
insurance purchased by the policyholders. Thevalue of insurance policy can be related to the amount of premium
paid by thepolicyholders. Hence, the amount of premium is taken as the variable and the backgroundvariable and the
background variables are treated as independent variables. Buyer behavioris the act of individuals directly involved
in obtaining and using goods and services. It is aprocess in which potential customers are subjected to various
stimuli. Hence, an attempt ismade to study the buying behavior of insurance policyholders in the study area-
especiallytheir profile, pattern of buying insurance policies, degree of awareness on different typesof policies,
renewal of policies, coinsurance, claims and settlement and problems faced bythe policyholder

lowest (42.3) among the middle-aged respondents. On the other hand, the percentage oflow preference of ULIP
insurance was the highest (24.19) among the young agedrespondents and the lowest (13.8) among the old aged
policyholders.
In order to find the relationship between the age of the respondents and the level ofpreference of ULIP
insurance, a chi-square test was used and result of the test is shown inthe following table.
Factor
Calculated χ2
Value
Table value
D.F.
Remarks
Age
2.33
9.488
4
Significant at
5% level
Table 4.3 Age and preference of ULIP (Chi-squares table)
It is noted from the above table that the calculated Chi-square value is less than thetable value and the
result is significant at 5% level. Hence, the null hypothesis “the age ofthe respondents and the preference of ULIP
insurance” holds good. From the aboveanalysis it is concluded that there is a close relationship between the age of
therespondents and the preference of the ULIP insurance plans.
 4.2
CHAPTER 5
RECOMMENDATIONS AND BENEFITS
5.1 RECOMMENDATIONS TO THE COMPANY
As in case of ULIP TATA AIG has one of the best products as compared to the fourprivate companies, but
still our survey result says that TATA AIG needs some minorimprovement regarding its premium charges and
advertisement to its target customers
1. Premium charges
Due to its high premium charges customers perception about the company’sproduct has become that its only for the
upper middle class people. Where as TATAAIG do has some policy with low premium but the charges of allocation
are toohigh. So we would like to suggest lowing down its premium charges to someextend by reducing
administration charges and other charges.
2. Advertisement
During surveys we have found that due to lack of advertisements about theproducts and agents selling the products
in which they get high commissionscustomers are somewhere mislead and they know about very few products
thoughTATA AIG has wide range of variety of the products. So we would recommendTATA AIG to invest more in
advertisement in form of TV commercials, pamphletsand hoardings
5.2 BENEFITS TO THE COMPANY AND US
With the valuable time spend on the surveys and sales done by us it is a win-winsituation for both
company and me. The benefits of this summer internship program arediscussed below
1.Benefit to the company
a)This survey done in Noida and Ghaziabad region on comparison of TATAAIG’s product and its competitor can give a
idea of this position in the market.As TATA AIG leads in most of the parameters so it should continue to serve inthe
same manner.
b)The survey also shows the customers perception about TATA AIG’s life ULIP
product with which it can improve its impression better than now.
c)The recommendation given in this report will help TATA AIG to position its
product properly to the target customers
d)Moreover the sales done during this internship of 2 lakhs have done a good
business for the compa
2.Benefit to us
a)Doing internship in TATA AIG have given me immense experience in the
insurance industry for these fourteen weeks.
b) Interaction with the customers for survey and sales has developed our
marketing skills.
c)Working in the office premises has given exposure to corporate world and an
experience in working in corporate pressure.
d)Commissions obtained from sales is the stipend received during this internshi
CHAPTER 6
CONCLUSION AND REFERENCE
6.1 CONCLUSION
Here I conclude that the summer internship program, done for partial fulfillment ofthe MBA course in
ICFAI University, in TATA AIG Life Insurance Co. Ltd. has beencompleted successfully.
Following are the achievements done during the summer internship from 24th
February 2008 to 24th May 2008
a.Survey done with interest of TATA AIG has been conducted successfully
and results are discussed above.
b.Sales done during the time have done great business to the company.
c.The experience gained during the internship has sharpen my skills and
given a corporate exposure
6.2 REFERENCE
The report have been made on the basis of following references
a. www.tata-aig-life.com
b. www.italic.com
c. www.indianinsuranceresearch.com
d. www.bimaonline.co