Chapter 1

INTRODUCTION
CONCEPT OF INSURANCE
Life has always been an uncertain thing. To be secure against unpleasant
possibilities, always requires the utmost resourcefulness and foresight on the
part of man. To pray or to pay for protection is the spirit of the humanity. Man
has been accustomed to pray God for protection and security from time
immemorial. In modern days Insurance Companies want him to pay for
protection and security. The insurance man says "God helps those who help
themselves"; probably he is correct. Too many people in this country are not
in employment; and work for too many no longer guarantees income security.
Several millions are part-time, self employed and low-earning workers living
under pitiable circumstances where there is no security cover against risk.
Further the inherent changing employment risks, the prospect of continual
change in the work place with its attendant threats of unemployment and low
pay especially after the adoption of New Economic Policy and the imminent
life cycle risks - a new source of insecurity which includes the changing
demands of family life, separation, divorce and elderly dependents are
tormenting the society.
Risk has become central to one's life. It is within this background life insurance
policy has been introduced by the insurance companies covering risks at
various levels. Life insurance coverage is against disablement or in the event
of death of the insured, economic support for the dependents. It is a measure
of social security to livelihood for the insured or dependents. This is to make
the right to life meaningful, worth living and right to livelihood a means for
sustenance. Therefore, it goes without saying that an appropriate life
insurance policy within the paying capacity and means of the insured to pay
premium is one of the social security measures envisaged under the Indian
Constitution. Hence, right to social security, protection of the family,
economic empowerment to the poor and disadvantaged are integral part of
the right to life and dignity of the person guaranteed in the constitution. Man
finds his security in income (money) which enables him to buy food, clothing,
shelter and other necessities of life. A person has to earn income not only for
himself but also for his dependents, viz., wife and children. He has to provide
legally for his family needs, and so he has to keep aside something regularly
for a rainy day and for his old age. This fundamental need for security for self
and dependents proved to be the mother of invention of the institution of life
insurance.

WHAT IS INSURANCE
The business of insurance is related to the protection of the economic values
of assets. Every asset has a value. The asset would have been created through
the efforts of the owner. The asset is valuable to the owner, because he
expects to get some benefit from it. The benefit may be an income or
something else. It is a benefit because it meets some of his needs. In the case
of a factory or a cow, the product generated by is sold and income generated.
In the case of a motor car, it provides comfort and convenience in
transportation. There is no direct income. Every asset is expected to last for a
certain period of time during which it will perform. After that, the benefit may
not be available. There is a life-time for a machine in a factory or a cow or a
motor car. None of them will last forever. The owner is aware of this and he
can so manage his affairs that by the end of that period or life-time, a
substitute is made available. Thus, he makes sure that the value or income is
not lost. However, the asset may get lost earlier. An accident or some other
unfortunate event may destroy it or make it no functional. In that case, the
owner and those deriving benefits from there would be deprived of the
benefit and the planned substitute would not have been ready. There is an
adverse or unpleasant situation. Insurance is a mechanism that helps to
reduce the effect of such adverse situations. Insurance, in law and economics,
is a form of risk management primarily used to hedge against the risk of a
contingent loss. Insurance is defined as the equitable transfer of the risk of a
potential loss, from one entity to another, in exchange for a premium. Insurer,
in economics, is the company that sells the insurance.
Insurance rate is a factor used to determine the amount, called the premium,
to be charged for a certain amount of insurance coverage. Risk management,
the practice of appraising and controlling risk, has evolved as a discrete field
of study and practice.
THE BIRTH OF MORDERN INSURANCE
The Age of Reason or Enlightenment of the 17th and 18th centuries provided
the grounds for accepting actuarial science as a rational means to conduct
better business. Insurance, and especially life insurance, resonated with the
search for laws, the statistical recording of natural events and the calculation
of future developments. Behind this innovation was the conviction that the
world, and its possible future states, could be predicted and computed.
Insurance created a vital counter balance to the new and potentially
destabilizing forces that were transforming the division of labor, urbanization,
and the economics of trade. Insurance was thus an ideal laboratory for
enlightened business ideas. The process of collecting different types of
institutional and personal information and using underwriting to transform it
into quantifiable costs was important. It created a vital counterbalance to the
new and potentially destabilizing forces that were transforming the division of
labor, urbanization, and the economics of trade. Insurance also helped money
become the means of communication within the economy and contributed to
more and more problems being expressed in terms of costs and time. Not all
cultures adopted such thinking from the start. In Southern Europe, it took a
catastrophe to change the perception of risk and the views on destiny. The
Great Lisbon Earthquake in 1755 challenged the traditional interpretation of
divine omnipotence. Almost the entire city was destroyed, including churches
and municipal buildings, but, much to the concern of many survivors, the red-
light district was left intact. Insurance is nothing but a system of spreading the
risk of one onto the shoulders of many.
Whilst it becomes somewhat impossible for a man to bear by himself 100%
loss to his own property or interest arising out of an unforeseen contingency,
insurance is a method or process which distributes the burden of the loss on a
number of persons within the group formed for this particular purpose.
ORIGIN OF INSURANCE
Although not in the present day form of insurance, the concept of such a
philosophy of grouping together or risk sharing developed in very ancient
times.
We can probably go back to the 4th century which witnessed the practice of
BOTTOMRY BONDS and RESPONDENTIA BONDS in maritime trade.
If at a time of distress in mid-ocean, the master of the vessel used to be in
need of fund/money for completion of the journey, but could not manage the
same at an intermediary port either on his own account or on the account of
the owner of the vessel, he (master) was empowered to raise such fund by
pledging the vessel. Such a system was known as BOTTOMRY BOND, as the
loan was used to be given by signing a bond. The term of the agreement was
that the loan was required to be repaid only if the ship reached destination
safe and sound. In case of total loss of the ship, nothing was required to be
repaid. It was quite obvious, therefore, that the creditors used to charge a
premium, in addition to interest to protect themselves against the possibility
of total losses when they lose the principal amount.
Similar loans could also be raised on the pledge of cargo and this was used to
be done on RESPONDENTIA BONDS. The terms of repayment were exactly the
same. The practice has been abandoned since the 19th century because of
tremendous advancement in a communication system.
Another practice which is still in existence is known as GENERAL AVERAGE
which has in itself the element of sharing the loss of one by all. It is a very old
custom and can be traced back to 916 B. C. during the time of Rhoda’s. In a
maritime adventure, it is probable that the ship along with cargo and other
interests is in great distress in mid-ocean and it may be required of the master
of the vessel to take a bold decision on the spot aiming at the safety of the
venture. Such an action may involve incurring of expenditure or sacrifice (for
example throwing overboard of the cargo to lighten the vessel).As this
expenditure or sacrifice relates to some interest by which the rest of the
interests are saved, it is quite natural that all interests involved (saved & lost)
should contribute to this loss. This is known as General Average and it should
be understood that an element of sharing the loss by many is involved in the
system.
Up until the 18th century, we also experience, amongst the merchant
community, a system of sharing risks with each other. They used to form a
group wherein one of the merchants, in a particular voyage, used to accept
the risk against a premium from others whilst the others used to trade. On a
different occasion, another from the group used to accept the risk whilst the
rest used to trade, and so on. So at one time or the other each had to take the
responsibility of risk bearing and the collection (premium) was such which
could reasonably take care of a probable loss.
As the group was indeed small and the professional expertise on risk
management was rather very limited, the rate of premium used to be
necessarily high. Here also it is necessary for the students to appreciate that
even though, this is not the present day system of insurance as an isolated
specialized entity. But nevertheless, the concept of insurance, that is to say, a
system of sharing or spreading risks gradually developed because of need,
which was ultimately replaced by modern insurance approach.
Considering that a knowledge of historical development on any branch of
study provides for the reader a useful background information as to how that
particular branch gradually developed as a separate entity, it has been felt
that in so far as insurance is concerned such a knowledge is also indispensable
for the students studying this branch.
With this aim in view a brief chronological historical development of the
various branches of insurance is given below:
History and Development Marine Insurance
Marine is the oldest form of insurance and came first on the list. This type of
insurance probably began in Northern Italy sometime during the 12th & 13th
Century and gradually the concept was rather transferred to or taken over by
the United Kingdom.
During the 13th/14th century, the Italian merchants went to U. K. and along -
with’ the merchandise carried with them the trading customs including, the
concept of marine insurance. Marine insurance as such was not being
practiced as a separate specialized entity during that time since it was the
merchants who used to transact marine insurance business side by side with
their general trading activities.
Gradually the Lombard Street of England (named after the merchants of
Lombardy of Italy) started becoming the nerve- center of marine insurance
activities as it was here where the merchants used to assemble for the
purpose of trade and insurance protection. However, problems used to arise
as there were no set rules or regulations for settling disputes arising out of
marine policies and it was the Lombard street customs that used to influence
the settlement of such disputes. Practices were there to refer disputes to
Admiralty Court but it had the drawback of not having special knowledge of
the Law Merchants or of Lombard Street customs. Subsequently in 1575
Chamber of Assurances was established for the registration of insurance
policies and the advantage it has had in it was this that the disputes were
minimum because such registration was the evidence of the contract and
various terms and conditions under it. In 1601, Court of Arbitration was
established through enactment for settling disputes on marine policies. The
Bubble Act, 1720 saw the granting of Charter to two insurance companies,
viz., Royal Exchange and London Assurance, for transacting marine insurance
business side by side with the individuals.
The coffee houses of London have indeed played a very vital role in the
development of trade and commerce of the U.K. It is in such houses that the
merchants and traders used to congregate for their business transactions. One
such coffee house was opened by Edward LLOYD in 1680 where the
merchants used to frequent their visits. Auctions of ships, insurance coverage
etc. used to take place here and gradually it became a place of shipping
intelligence.
Since later part of the 17th century and early 18th century, this coffee house
virtually turned into the most famous LLOYD’S which can boast of being the
strongest and soundest insurance organization all over the world.
The monopolies granted to two insurance companies previously by the Bubble
Act 1720 were subsequently repealed and now numbers of insurance
companies and individual insurers are operating as marine insurers in the U. K.
The present Act regulating the marine insurance business is The Marine
Insurance Act, 1906 and this Act is followed in our country also.
History and Development of Fire Insurance
Fire insurance came second in the list of development. The insurers who had
hitherto been doing marine were contemplating about starting the fire
insurance business also.
The Great Fire of London in 1666 practically demonstrated the necessity and
urgency of fire insurance. About 7 insurance companies came forward to
provide fire insurance protection. But due to the introduction of newer types
of hazards arising out of Industrial Revolution of the 19th century and because
of the increased demand for such type of insurance, some more companies
had to come into the picture. The Toole Street Fire, 1861 had an influence in
improving the business of fire insurance as it demonstrated that classification
of risk was necessary for the sound rating system. Subsequently also
developed various other bodies, such as. Joint Fire Research Organization,
Salvage Corporations and more who are directly and indirectly helping the fire
insurance business on a sound scientific line.

History and Development Life Insurance

The third in the list of development is the life insurance business. The earliest
policy of which there is a record dates back to 1583.During this period only
short-term policies were used to be issued meaning that only at the death of
the life assured during the term period the money was to be paid. On survival
nothing was payable. More so, there was no fixed sum-assured and the
amount payable used to vary depending on the fund available. Life insurance
virtually did not have any scientific basis at that time. There was no mortality
table through which the risk could be scientifically assessed. The legal backing
was also not there for sound and systematic conduct of business.
In 693 Hailey introduced the mortality table giving a definite value to risk of
death. Subsequently, Dodson demonstrated that it was possible to charge
level premium throughout the duration of the policy period. In 1774, the Life
Assurance Act was passed in the British parliament requiring the presence of
insurable interest before one could affect a life policy on the life of another.
All these gradually gave life assurance a sound, systematic and scientific basis
as we see in the present day.
 History and Development Accident Insurance
The last in the list of development is the accident insurance business, it is still
an open branch in the sense that any new type of insurance that is not cared
for under marine, fire, and life would fall under accident branch.
Therefore, we see a number of various types of policies coming under
accident department. Examples are a personal accident, burglary, fidelity,
workmen’s compensation, liability policies, engineering, erection all risk, cash
in safe and transit, crop, cattle, bond, credit guarantee schemes, motor,
aviation etc.
Accident insurance basically started from personal accident insurance. The
effect of the industrial revolution in the 19th century, particularly the
invention of steam power and railway, was responsible for numbers of
accidental deaths and bodily injuries.
Some specialized insurance companies started operating in this field side by
side with the existing companies doing fire, marine and life business. With the
increased demand from the public for protecting themselves against various
other types of risks associated with rapid industrialization, gradually
developed other types of business already indicated.
Common Features of Development
If we analyze the gradual development in the sphere of insurance, we shall
come across certain common features associated with such development.
These are:
1. Insurance developed basically in response to a demand created by the
insuring community.
2. The industrial revolution of the 19th century was largely responsible for rapid
growth of the insurance business.
3. In the early days, there was the absence of reliable statistical data and
theoretical soundness. Gradually this vacuum was filled in by various
theoretical approaches and concerted actions of various associations. This
ultimately gave legal, technical, scientific and theoretical soundness to the
business of insurance.
4. In the earliest days, insurers started as specialist offices (i.e., doing one type of
business only), but gradually with multifarious demands they turned into
composite offices (i.e., doing more than one class of business).
TYPES OF INSURANCE FOR THE INDIVIDUAL
Life Insurance
Life insurance provides for your family or some other named beneficiaries on
your death. Two general types are available: term insurance provides
coverage only during the term of the policy and pays off only on the insured’s
death; whole-life insurance provides savings as well as insurance and can let
the insured collect before death.
Health Insurance
Health insurance covers the cost of hospitalization, visits to the doctor’s
office, and prescription medicines. The most useful policies, provided by many
employers, are those that cover 100 percent of the costs of being hospitalized
and 80 percent of the charges for medicine and a doctor’s services. Usually,
the policy will contain a deductible amount; the insurer will not make
payments until after the deductible amount has been reached. Twenty years
ago, the deductible might have been the first $100 or $250 of charges; today,
it is often much higher.
Disability Insurance
A disability policy pays a certain percentage of an employee’s wages (or a
fixed sum) weekly or monthly if the employee becomes unable to work
through illness or an accident. Premiums are lower for policies with longer
waiting periods before payments must be made: a policy that begins to pay a
disabled worker within thirty days might cost twice as much as one that defers
payment for six months.

Homeowner’s Insurance
A homeowner’s policy provides insurance for damages or losses due to fire,
theft, and other named perils. No policy routinely covers all perils. The
homeowner must assess his needs by looking to the likely risks in his area—
earthquake, hailstorm, flooding, and so on. Homeowner’s policies provide for
reduced coverage if the property is not insured for at least 80 percent of its
replacement costs. In inflationary times, this requirement means that the
owner must adjust the policy limits upward each year or purchase a rider that
automatically adjusts for inflation. Where property values have dropped
substantially, the owner of a home (or a commercial building) might find
savings in lowering the policy’s insured amount.
Automobile Insurance
Automobile insurance is perhaps the most commonly held type of insurance.
Automobile policies are required in at least minimum amounts in all states.
The typical automobile policy covers liability for bodily injury and property
damage, medical payments, damage to or loss of the car itself, and attorneys’
fees in case of a lawsuit.
Other Liability Insurance
In this litigious society, a person can be sued for just about anything: a slip on
the walk, a harsh and untrue word spoken in anger, an accident on the ball
field. A personal liability policy covers many types of these risks and can give
coverage in excess of that provided by homeowner’s and automobile
insurance. Such umbrella coverage is usually fairly inexpensive, perhaps $250
a year for $1 million in liability.

Types of Business Insurance

Workers’ Compensation
Almost every business in every state must insure against injury to workers on
the job. Some may do this through self-insurance—that is, by setting aside
certain reserves for this contingency. Smaller businesses purchase workers’
compensation policies, available through commercial insurers, trade
associations, or state funds.
Automobile Insurance
Any business that uses motor vehicles should maintain at least a minimum
automobile insurance policy on the vehicles, covering personal injury,
property damage, and general liability
Property Insurance
No business should take a chance of leaving unprotected its buildings,
permanent fixtures, machinery, inventory, and the like. Various property
policies cover damage or loss to a company’s own property or to property of
others stored on the premises.
Malpractice Insurance
Professionals such as doctors, lawyers, and accountants will often purchase
malpractice insurance to protect against claims made by disgruntled patients
or clients. For doctors, the cost of such insurance has been rising over the past
thirty years, largely because of larger jury awards against physicians who are
negligent in the practice of their profession.
Business Interruption Insurance
Depending on the size of the business and its vulnerability to losses resulting
from damage to essential operating equipment or other property, a company
may wish to purchase insurance that will cover loss of earnings if the business
operations are interrupted in some way—by a strike, loss of power, loss of
raw material supply, and so on.
Liability Insurance
Businesses face a host of risks that could result in substantial liabilities. Many
types of policies are available, including policies for owners, landlords, and
tenants (covering liability incurred on the premises); for manufacturers and
contractors (for liability incurred on all premises); for a company’s products
and completed operations (for liability that results from warranties on
products or injuries caused by products); for owners and contractors
(protective liability for damages caused by independent contractors engaged
by the insured); and for contractual liability (for failure to abide by
performances required by specific contracts).
Some years ago, different types of individual and business coverage had to be
purchased separately and often from different companies. Today, most
insurance is available on a package basis, through single policies that cover the
most important risks. These are often called multiple peril policies.
FEATURES OF INSURANCE
With the above explanation, we can find these following characteristics, which
are generally celebrating in the case of life, sea, fire, and general insurance.
A large number of insured persons:
To spread the damage easily and easily, a large number of individuals should
be insured. A small number of individuals can also be co-operative insurance,
but it is limit to a small area. The cost of insurance for each member can be
high. So, it can be impossible. Therefore, to make the insurance cheaper, it is
important to ensure a large number of individuals or property because the
cost of the insurance company will be the cost and therefore, the lower
premiums will be.
Sharing risks:
Insurance is an event that is a person to share a financial event that may occur
when a specific incident occurs on a person or his family. This event may be
the death of a breadwinner for the family in case of life insurance, marine
insurance in the fire, fire in fire insurance and other events in general
insurance, for example, theft in theft insurance, accident in motor insurance,
And so on. The loss arising from these incidents, if the insured person is
sharing by all insured persons in the form of premium.
Price of Risk:
The amount of the insured’s share, the risk is evaluated before considering
the idea, consideration or the premium. There are several ways to evaluate
risks. If the higher loss is expected, then a higher premium can be charged.
Therefore, the probability of loss is calculated at the time of insurance.
Cooperative Equipment:
The most important feature of each insurance plan is the cooperation of a
large number of individuals who in reality agree to share the financial loss
arising from any particular risk of the insured. This group of individuals can be
brought through voluntary or publicity or through the request of agents. An
insurer will be unable to fill all the losses due to its loss. Therefore, by
ensuring or underwriting a large number of persons, he is able to pay the
amount of loss. Like all cooperative pieces of equipment, there is no
obligation on anyone to buy an insurance policy.
Payment on contingency:
Payment is made on a certain casualty insured. If contingency happens then
payment is made. Since the life insurance contract is the contract of certainty,
because the termination, death or expiry of the term will definitely be,
payment is definitely fixed. In other insurance contracts, contingency is fire or
marine hazard etc., may or may not be. Therefore, if contingency happens,
payment is made; otherwise, no amount is given to the policyholder. Similarly,
in certain types of policies, payment is not guaranteed due to the uncertainty
of any particular contingency within a particular period. For example, in term-
insurance, payments are made only when the death of the assured is within
the specified period, maybe one or two years. Similarly, pure endowment
payments are done only in the existence of the insured at the end of the term.
Payment of forty losses:
Another feature of insurance is the cordial loss of payments. An amicable loss
is that which is unpredictable and unpredictable and as a result of
opportunity. In other words, the loss should be casual. The law of a large
number is based on the assumption that the losses are casual and occur
randomly. For example, a person can slip on the snowy path and break a leg.
The loss will be lucky. The insurance policy does not deliberately cover issues.
Amount of Payment:
The amount of payment depends on the value of the loss due to special
insured exposure, provided the insurance is up to that amount. In life
insurance, the objective is not good to face financial loss. The insurer promises
to pay a fixed amount upon the occurrence of an event. If event or accident
occurs, the payment fails if the policy is valid and applies at the time of the
incident, such as property insurance, the dependents will not need to prove
the loss of loss and the amount of loss. It is infinite in life insurance what was
the amount of loss at the time of contingency. But in the property and general
insurance, the amount of loss, as well as the event of loss, is required to
prove.
ADVANTAGES
1. Can provide peace of mind. The most evident benefit of insurance is the
peace of mind knowing that you or your property is protected from any
unfortunate event that could happen in your life. For example, life insurance
can protect your beneficiaries in the event of your death, income protection
insurance can provide you with benefits if you become unable to work, auto
insurance can protect your car in the event of automobile accidents, disasters,
or theft, etc.

2. Short- term coverage. Another good thing about insurance is that you can
adjust the length of coverage. You could choose a shorter duration for your
short- term needs. For example, if you have present mortgage payments or
loans and are planning to buy life insurance, you may only get coverage that
lasts until those financial obligations are over. This means you can avoid
overbuying.

3. Long- term coverage. On the other hand, depending on your unique

situation, you might find yourself looking for longer or even lifetime coverage.
In some cases, this could be more cost- effective in the long run, compared to
renewing short- term coverage regularly.

4. Tax- free money. Another benefit with insurances is that most of the time,
the funds are tax- deferred. Meaning the benefits and any other earnings you
may get under the policy is free of tax, unless in cases of employer- scheme
insurances wherein benefits are treated as regular taxable income.
DISADVANTAGES

1. Can be expensive. A major fear of insurance buyers is the price they have to
pay. Sometimes, depending on the policy and certain factors that affect the
cost, such as credit score and other potential risks to the insurance company,
buying insurance can be expensive. But if bought at a right time, with the right
reason and right amount of coverage, you might actually get the right price.

2. Rising premiums. Most types of insurances have varying rates of premiums,

and you should be very careful about it. Before buying a policy, make sure you
know from the beginning if you have a guaranteed premium throughout the
policy, or if it changes from time to time in relation to inflation. You should
weigh out if you prefer a fixed premium or you’€™d like to take the risk, and
more importantly, determine the amount you can afford to spare on the
contract.

3. Claims might not be paid out. Sometimes, this issue also becomes a public
misconception which drives insurance buyers away. While it’€™s true that
there are cases of denied claims, there’€™s a ground for this to happen and
thus should’€™t scare you away. For one, you might have presented wrong
information during the underlying process. Or you weren’t’€™t able to satisfy
some requirements, or performed certain actions that could lead to
nullification of your contract. To avoid this from happening, you need to be
honest from the very beginning with your provider, and clarify any limitations
or exclusions that could lead to denied claims.
What is Comparative Study?

Comparative Study analyzes and compares two or more objects or

ideas. Comparative studies are the studies to demonstrate ability to
examine, compare and contrast subjects or ideas.
Comparative study shows how two subjects are similar or shows how two subj
ects are different. When the practice of comparative study began is a
matter of debate.
Karl Deutsch has suggested we have been using this form of investigation for o
ver 2,000 years. Comparing things is essential to basic scientific and philosophi
c inquiry, which has been done for a long time.
There are numerous reasons that comparative study has come to take a
place of honor in the toolbox of the social scientist. Globalization has
been a major factor, increasing the desire and possibility for educational
exchanges andintellectual curiosity about other cultures. Information
technology has enabled greater production of quantitative data for
comparison, and international communications technology has facilitated
this information to be easily spread. In Comparative study we compare and co
ntrast two or more things. Comparative study is used to determine and
quantify relationships between two or more variables by observing
different groups that either by choice or circumstances is exposed to
different treatments.
Comparative study looks at two or more similar groups, individuals, or conditi
ons by comparing them. This comparison often focuses on a few specific chara
cteristics. Comparative study plays a central role in concept formation by bring
ing into focus suggestive similarities and contrasts among cases/subjects.
It sharpens our power of description. Comparative study is also used in
testing hypotheses, and it can contribute to the inductive discovery of
new hypotheses and to theory building.
Comparison is one of the most efficient methods for explicating or
utilizing tacit knowledge or tacit atitudes. This can be done, for example, by sh
owing in parallel two slides of two slightly different objects or situations
and by asking people to explain verbally their differences.
In comparative study, we examine two or more cases, specimens or events. B
ut two main styles are as under;
I. Descriptive Comparison:
Descriptivecomparison aims at describing and perhaps also explaining the inva
riance of the objects. It does not aim at generating changes in the objects; on t
he contrary, it usually tries to avoid them.
ii. Normative Comparison:
A special style of comparative study is needed when the aim is not just to dete
ct and explain but also to improve the present state of the object or to help im
proving or developing similar object in the future. This is the technique of nor
mative comparison.
CHAPTER 2
RESEARCH METHODLOGY
RESEARCH DESIGN

Research design is defined as a framework of methods and techniques chosen

by a researcher to combine various components of research in a reasonably
logical manner so that the research problem is efficiently handled. It provides
insights about how to conduct research using a particular methodology.

TITTLE OF THE PROJECT

A COMPARATIVE STUDY OF LIC & SELECT PRIVATE INSURANCE COMPANIES

STATEMENT OF PROBLEM

Insurance sector as a whole has contributed towards the development of

economy by channelizing the savings of earning class, providing protection to
public (insuring their lives), through generating employment opportunities,
accelerating industrial growth etc. Although LIC has its own significance and
place in the market, it is not free from competition. There are many private
players in the insurance market providing customers with a large variety of
plans to choose from. Studying the customer behavior and analyzing their
preference between LIC and private insurance companies with reference to
the different products offered by the companies along with the customer
satisfaction will be of social relevance in the present context.

OBJECTIVES

1. To compare the performance of LIC and private insurance companies in

India.

2. To ascertain the performances of LIC and private insurance companies in

each category (size, growth, productivity and efficiency).
3. To compare grievance management of LIC and private insurance
companies.

4. To know and compare the market position and financial position of LIC and
private insurance companies.

5. To know the customers’ preference for buying insurance policy.

SCOPE OF THE STUDY

The scope of the study covers and focuses on studying the customer
preference and on comparative analysis of LIC and private players in the
insurance market.

LIMITATIONS

The limitations of the study are as follow:

1. The perception and attitude of every customer differs from one another.

2. The information provided by the respondents could be prejudiced and

biased.

3. Many of the respondents may not take it seriously.

4. The sample size is 100 people only. The sample size may not adequately
represent the whole market.

RESEARCH METHODOLOGY

 Types of research:
Descriptive research and design will be used in our studies. Descriptive
research is also known as statistical research; the main goal of this type
of research is to describe the data and characteristics about what is
being studied and providing the data based on the questionnaire
prepared and personal interaction.
  Sources of data:
1. Primary data: Primary data is the information which will be collected by
direct efforts of researcher. In this, the information will be collected
through questionnaires and personal interactions.
2. Secondary data: Secondary data is the information which will be
collected by a third party. In this, secondary data will be using the
different companies’ websites to study the financial and market position
of the LIC.

SAMPLING DESIGNS

The sampling design of the study is:-

1. Sampling size: Sample size, is the number of respondents to be included

in the study. In this study, the sample size is 100 respondents.
2. Sample units: For the research study, the researcher has been given the
opportunity to interact with different respondents. Thus, sampling unit
for this study is the policyholders from different companies.
3. Sampling procedure: Convenience sampling is the method which is
adopted for the study. Questionnaires were circulated to the 50
respondent.
4. Sampling units: It is the statistical units which will be used for the
analysis and interpretation.
a. Graphs
b. Tables
c. Percentages
5. Sampling methods: Data has to be collected and calculated under
different headings and percentages are to be worked out by statistical
tool for each group of data.