CHAPTER -1

AN
OVERVIEW
OF
INSURANCE INDUSTRY

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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 development in the Indian Insurance sector reveals the 360-degree turn
witnessed over a period of almost two centuries. The insurance industry of India
consists of 57 insurance companies of which 24 are in life insurance business and
33 are non-life insurers. Among the life insurers, Life Insurance Corporation (LIC)
is the sole public sector company.

Apart from that, among the non-life insurers there are six public sector insurers. In
addition to these, there is sole national re-insurer, namely, General Insurance
Corporation of India. Other stakeholders in Indian Insurance market include
agents, brokers, surveyors and third party administrators servicing health insurance
claims.

Out of 33 non-life insurance companies, five private sector insurers are registered
to underwrite policies exclusively in health, personal accident and travel insurance
segments. They are Star Health and Allied Insurance Company Ltd, Apollo
Munich Health Insurance Company Ltd, Max Bupa Health Insurance Company
Ltd, Religare Health Insurance Company Ltd and Cigna TTK Health Insurance
Company Ltd. There are two more specialized insurers belonging to public sector,
namely, Export Credit Guarantee Corporation of India for Credit Insurance and
Agriculture Insurance Company Ltd for crop insurance.

BRIEF HISTORY OF INSURANCE

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The beginning of Insurance business is traced to the city of London. It started with
the marine business. The first policy was issued in England in 1583. The history of
insurance consisted of the development of the modern business
of insurance against risks, especially regarding cargo, property, death, automobile
accidents, and medical treatment. The industry helps to eliminate risks and spreads
risks from the individual to the larger community, and provides an important
source of long-term finance for both the public and private sectors. The insurance
industry is generally profitable and provides attractive employment opportunities
for white collar workers.

Some of the important milestones in the Life Insurance business in India are:

1818:- The British introduce to India, with the establishment of the Oriental Life
Insurance company in Calcutta.
1850:- Non Life Insurance debuts, with triton Insurance Company.
1870:- Bombay mutual Life Assurance Society is the first India- owned life insurer
1907:- Indian mercantile insurance, is the first Indian non life insurer.
1912:- the Indian Life Insurance Companies Act enacted to regulate the life
insurance business.
1938:- The insurance Act, which forms the basis for most current insurance laws,
replaces act.
1956:- Life Insurance nationalized, government takes over 245 Indian and foreign
Insurer and provident society.
1972:- Non Life insurance nationalized, the general insurance business in India
with effect from 1st January 1973.
1993:- Malhotra Committee, headed by former Finance Secretary and RBI
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 Governor R.N Malhotra was formed to evaluate the Indian insurance
Industry and recommended its future directions.
1997:- Insurance Regulatory and Development Authority (IRDA) set up.
2000:- IRDA starts giving license to private insurers, HDFC standards Life,
and ICICI prudential first private insurer to sell a policy.
2002:- Banks were allowed to sell insurance policy.

ADVANTAGES OF LIFE INSURANCE

1. The value of human life is far greater than the value of property. Only insurance
can preserve it.
2. Facility of nomination and assignment makes the claim settlement easy on death.
3. Life insurance involves compulsory savings.
4. Tax benefits on premium paid as well as the amount received by way of claim.
5. Loan can raised against a life insurance policy.
6. Insurance is the only way to safeguards against the unpredictable risks of the
future. It is unavoidable.

PRINCIPLES OF LIFE INSURANCE

1. Life insurance contacts:- In the terms of Indian contacts act, contact is defined as
an agreement made with an intention to create a legally binding relationship
between two or more parties.

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2. Utmost good faith:- A positive duty to disclose, accurately and fully, all the facts
material to the risk being exposed, whether asked for or not.
3. Insurable interest:- insurable interest is a legal pre- requisite for insurance. The
primary interest of a person in the object of insurance (such as house, car,
machinery or life) which gives him the right to take insurance and so to say, this is
insurable interest.
4. Principle of indemnity:- Insurance cannot be used as a means to make profit out
of it. The mechanism of insurance is meant to compensate losses. Simply put,
insurance should not placed the insured in a better financial position after loss as
he enjoyed before the loss. This is the principle of indemnity.
5. Principal of subrogation: The principle of subrogation enables the insured to
claim the amount from the third party responsible for the loss. It allows the insurer
to pursue legal methods to recover the amount of loss.
6. Double insurance: Double insurance denotes insurance of same subject matter
with two different companies or with the same company under two different
policies. Insurance is possible in case of indemnity contract like fire, marine and
property insurance. Double insurance policy is adopted where the financial
position of the insurer is doubtful. The insured cannot recover more than the actual
loss and cannot claim the whole amount from both the insurers.
7. Principle of proximate cause: Proximate cause literally means the ‘nearest cause’
or ‘direct cause’. This principle is applicable when the loss is the result of two or
more causes. The proximate cause means; the most dominant and most effective
cause of loss is considered. This principle is applicable when there are series of
causes of damage or loss.

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 INSURANCE SECTOR REFORMS
In 1993, Malhotra Committee headed by former Finance Secretary and RBI
Governor R.N. Malhotra was formed to evaluate the Indian insurance industry and
recommend its future direction. The Malhotra committee was set up with the
objective of complementing the reforms initiated in the financial sector. The
reforms were aimed at "creating a more efficient and competitive financial system
suitable for the requirements of the economy keeping in mind the structural
changes currently underway and recognizing that insurance is an important part of
the overall financial system where it was necessary to address the need for similar
reforms…"

In 1994, the committee submitted the report and some of the key recommendations
included:

1) Structure
 Government stake in the insurance Companies to be brought down to 50%.
 Government should take over the holdings of GIC and its subsidiaries so that these
subsidiaries can act as independent corporations.
 All the insurance companies should be given greater freedom to operate.

2) Competition
 Private Companies with a minimum paid up capital of Rs.1bn should be allowed to
enter the industry.
 No Company should deal in both Life and General Insurance through a single
entity.

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 Foreign companies may be allowed to enter the industry in collaboration with the
domestic companies.
 Postal Life Insurance should be allowed to operate in the rural market.
 Only One State Level Life Insurance Company should be allowed to operate in
each state.

3) Regulatory Body
 The Insurance Act should be changed.
 An Insurance Regulatory body should be set up.
 Controller of Insurance (Currently a part from the Finance Ministry) should be
made independent.

4) Investments
 Mandatory Investments of LIC Life Fund in government securities to be reduced
from 75% to 50%.
 GIC and its subsidiaries are not to hold more than 5% in any company (There
current holdings to be brought down to this level over a period of time).

5) Customer Service
 LIC should pay interest on delays in payments beyond 30 days.
 Insurance companies must be encouraged to set up unit linked pension plans.
 Computerization of operations and updating of technology to be carried out in the
insurance industry The committee emphasized that in order to improve the
customer services and increase the coverage of the insurance industry should be
opened up to competition.

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Insurance Regulatory & Development Authority (IRDA)

The Insurance Regulatory and Development Authority of India (IRDAI) is an

autonomous, statutory agency tasked with regulating and promoting the insurance
and re-insurance industries in India. It was constituted by the Insurance Regulatory
and Development Authority Act,1999, an Act of Parliament passed by the
Government of INDIA. The agency's headquarters are in Hyderabad, Telangana,
where it moved from Delhi in 2001. The Insurance Amendment Act of 1950
abolished principal agencies, but the level of competition was high and there were
allegations of unfair trade practices. The Government of India decided to
nationalize the insurance industry. An ordinance was issued on 19 January 1956,
nationalizing the life-insurance sector, and the Life Insurance Corporation was
established that year. The LIC absorbed 154 Indian and 16 non-Indian insurers and
75 provident societies. The LIC had a monopoly until the late 1990s, when the
insurance industry was reopened to the private sector.
General insurance in India began during the Industrial Revolution in the West and
the growth of sea-faring commerce during the 17th century. It arrived as a legacy
of British occupation, with its roots in the 1850 establishment of the Triton
Insurance Company in Calcutta. In 1907 the Indian Mercantile Insurance was
established, the first company to underwrite all classes of general insurance. In
1957 the General Insurance Council (a wing of the Insurance Association of India)
was formed, framing a code of conduct for fairness and sound business practice.

The IRDA opened up the market in August 2000 with an invitation for registration
applications; foreign companies were allowed ownership up to 26 percent. The
authority, with the power to frame regulations under Section 114A of the Insurance

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 Act, 1938, has framed regulations ranging from company registrations to the
protection of policyholder interests since 2000.

In December 2000, the subsidiaries of the General Insurance Corporation of India

were restructured as independent companies and the GIC was converted into a
national re-insurer. Parliament passed a bill de-linking the four subsidiaries from
the GIC in July 2002. There are 28 general insurance companies, including
the Export Credit Guarantee Corporation of India and the Agriculture Insurance
Corporation of India, and 24 life-insurance companies operating in the country.
With banking services, insurance services add about seven percent to India’s GDP.
In 2013 the IRDAI attempted to raise the foreign direct investment (FDI) limit in
the insurance sector to 49 percent from its current 26 percent. The FDI limit in the
sector was raised to 49 percent in June 2016.

FUNCTIONS
The functions of the IRDAI are defined in Section 14 of the IRDAI Act, 1999 and
include:
 Issuing, renewing, modifying, withdrawing, suspending or cancelling registrations
 Protecting policyholder interests
 Specifying qualifications, the code of conduct and training for intermediaries and
agents
 Specifying the code of conduct for surveyors and loss assessors
 Promoting efficiency
 Promoting and regulating professional organizations connected with the insurance
and re-insurance industry
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 Levying fees and other charges
 Inspecting and investigating insurers, intermediaries and other relevant
organizations
 Regulating rates, advantages, terms and conditions which may be offered by
insurers not covered by the Tariff Advisory Committee under section 64U of the
Insurance Act, 1938.
 Specifying how books should be kept.
 Regulating company investment of funds.
 Regulating a margin of solvency.
 Supervising the Tariff Advisory Committee.
 Specifying the percentage of premium income to finance schemes for promoting
and regulating professional organizations.
 Specifying the percentage of life- and general-insurance business undertaken in the
rural or social sector.
 Specifying the form and the manner in which books of accounts shall be
maintained, and statement of accounts shall be rendered by insurers and other
insurer intermediaries.

MAJOR POLICY CHANGES

Insurance sector has been opened up for competition from Indian private insurance
companies with the enactment of Insurance Regulatory and Development
Authority Act, 1999 (IRDA Act). As per the provisions of IRDA Act, 1999,
Insurance Regulatory and Development Authority (IRDA) was established on 19th
April 2000 to protect the interests of holder of insurance policy and to regulate,
promote and ensure orderly growth of the insurance industry. IRDA Act 1999
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 paved the way for the entry of private players into the insurance market which was
hitherto the exclusive privilege of public sector insurance companies/ corporations.

Under the new dispensation Indian insurance companies in private sector were
permitted to operate in India with the following conditions:
 Company is formed and registered under the Companies Act, 1956.
 The aggregate holdings of equity shares by a foreign company, either by itself or
through its subsidiary companies or its nominees, do not exceed 26%, paid up
equity capital of such Indian insurance company.
 The company's sole purpose is to carry on life insurance business or general
insurance business or reinsurance business.
 The minimum paid up equity capital for life or general insurance business is
Rs.100 crores.
 The minimum paid up equity capital for carrying on reinsurance business has been
prescribed as Rs.200 crores.

The Authority has notified 27 Regulations on various issues which include

Registration of Insurers, Regulation on insurance agents, Solvency Margin, Re-
insurance, Obligation of Insurers to Rural and Social sector, Investment and
Accounting Procedure, Protection of policy holders' interest etc.

INSURANCE COMPANIES
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

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 companies operating in general insurance business. General Insurance Corporation
has been approved as the "Indian reinsurer" for underwriting only reinsurance
business.

Protection of the interest of policy holders

IRDA has the responsibility of protecting the interest of insurance policyholders.
Towards achieving this objective, the Authority has taken the following steps:
 IRDA has notified Protection of Policyholders Interest Regulations 2001 to
provide for: policy proposal documents in easily understandable language; claims
procedure in both life and non-life; setting up of grievance redressal machinery;
speedy settlement of claims; and policyholders' servicing. The Regulation also
provides for payment of interest by insurers for the delay in settlement of claim.
 The insurers are required to maintain solvency margins so that they are in a
position to meet their obligations towards policyholders with regard to payment of
claims.
 It is obligatory on the part of the insurance companies to disclose clearly the
benefits, terms and conditions under the policy. The advertisements issued by the
insurers should not mislead the insuring public.
 All insurers are required to set up proper grievance redress machinery in their head
office and at their other offices.
 The Authority takes up with the insurers any complaint received from the
policyholders in connection with services provided by them under the insurance
contract.

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 OBJECTIVE OF THE STUDY
 To study the customer satisfaction towards HDFC SLIC products.
 To identify the product preference of the customer.
 To identify the information sources influencing the customers.
 To find out the complaints or grievances against the product of HDFC SLIC.
 To find out reach ability of the products in and around peoples of life insurance
policies.
 To determine satisfactory level towards the features and characteristics of the
product offered.
 To find out whether they are satisfied with various types of premiums and method
of premium payments.

LIMITATION OF THE STUDY

 The study was done for a short period of time, which might not hold true in the
long run.
 The study is limited.

 List of Life Insurance Companies in India (List obtained from

IRDA website on Jan-2018)
1. Bajaj Allianz Life Insurance Company Limited.
2. Birla Sun Life Insurance Co. Ltd.
3. HDFC Standard Life Insurance Co. Ltd.
4. ICICI Prudential Life Insurance Co. Ltd.

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5. Exide Life Insurance Company Limited
6. Life Insurance Corporation of India
7. Max Life Insurance Co. Ltd.
8. PNB Metlife India Insurance Co. Ltd.
9. Kotak Mahindra Old Mutual Life Insurance Company Limited.
10.SBI Life Insurance Co. Ltd.
11.Tata AIA Life Insurance Company Limited.
12.Reliance Life Insurance Company Limited.
13.AVIVA Life Insurance Company India Limited.
14.Sahara India Life Insurance Co. Ltd.
15.Shariram Life Insurance Co. Ltd.
16.Bharti AXA Life Insurance Company India Ltd.
17.Future Generali India Life Insurance Company India Limited.
18.IDBI Federal Life Insurance Company Ltd.
19.Canara HSBC Oriental Bank of Commerce Life Insurance Company Ltd.
20.AEGON Life Insurance Company Limited.
21.DHFL Pramerica Life Insurance Co. Ltd.
22.Star Union Dai-ichi Life Insurance Co. Ltd.
23.Indiafirst Life Insurance Company Limited.
24.Edelweiss Tokio Life Insurance Co. Ltd.

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 CHAPTER – 2

REVIEW OF LITERATURE
ON
LIFE INSURANCE

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This chapter presents the review of literature to identify and understand the
implications of different issues related to consumer behavior and life insurances in
India. A comprehensive review of related past studies helps the researcher to
adopt, modify and improve the conceptualization of framework and provide a link
with past approaches. The findings and recommendation of the past literature
relating to consumer behaviour towards life insurance services are not many. Only
few comprehensive studies exclusively towards consumer behavior on endowment
policy are carried out in India. Based on the review of literature the researcher has
enable to identify her source for the present study. The available studies are
collected from research articles, committee reports, projects and surveys
conducted.

Khan, M.K. (1978) attempts to know the opportunities and prospects in the career
of a life insurance sector. He explains about what a good career is and how a good
career should be for selling of life insurance products. There is no age barrier and it
requires no previous occupational experience but one must be a professional and
capable of creating opportunities in building personality. The relationship of life
Insurance agent with clients is not temporary and the service rendered has no
substitutes. He also observes that life insurance agent remains, in a sense,
permanent server to the clients.

Rajkumar (1985) views that advertising is to influence a customer, who has a

limited spending power and it seems to operate through familiarizing spreading
news over cog inertia and image building improving market share, educating,
informative and to have staff support. As far as insurance industry is concerned,
misconception is a common problem and the pre-testing revealed that most of the

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rich people are associated with insurance and he viewed that the treatment of Life
Insurance Company to the public is always unfair.

Mishra, M.N. (1987) made a study to appraise the strategies of Life Insurance
Company. While reviewing the strategies, the author felt that before 1960 Life
Insurance Company did not give much attention to the objective of customer
satisfaction, but from 1980 onwards the corporation has taken several remedial
measures to provide better customer service and improve the customer satisfaction.

Ashis Deb Roy (1987) in his article entitled “We Care for our Customers” has
examined the nature and importance of better customer services to policyholders
and has emphasized the need for quality in service. He has given a detailed note on
the various steps to be taken by Life Insurance Company to improve the customer
service such as training programmes conducted by Company to its agents and
employees, opening new branches and introduction of computers in insurance
branch offices.

Venkatesh, N.C. (1987) in his article entitled “On the Trail of Better Service” has
discussed the importance of better and personal servicing to the customers and has
emphasized the importance of satisfying the policyholders. The Planning Wing of
the LIC Divisional Office, Thanjavur (1987)9 has conducted a sample survey on
“Customer Satisfaction”. The objectives of the study found the level of consumer
satisfaction regarding the services, particularly on the aspects such as timely
dispatch of discharge forms, reminders, the cooperation given by agents or
development officers, courtesy and sympathy of Company officials, receipt of the
policy amount within the due date etc. The results of the study revealed the
following points. They are:
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• Discharge forms are received before the due date by seventy nine per cent of the
policyholders.
• Eleven per cent of the policyholders approached the agent or development officer
for help in the submission of the requirement and they are happy with the services
rendered by them.
• Twenty one per cent of the policyholders submitted the requirements after
receiving a reminder from the branch office.
• Six per cent of the policyholders approached the branch office for discharge
forms.
• 90% of the policyholders were satisfied with the prompt service rendered by the
branch office.
• Some policyholders stated that the corporation should insist the agents and
development officers render all possible help to their clients at the time of claim
and survival benefits settlement.

Rao, B.S.R. and Appa Rao Machiraju (1988) in their article entitled “Life
Insurance and Emerging Trends in Financial Services Market”, contends that the
agents of life insurance should improve their services to the level of financial
experts. The authors felt that the change in the economic scenario would help the
corporation in better services field.

Raghunadhan, R. (1988) in his article “Population - Insurable and Insured” made

an attempt to analyze the insurance coverage of the insurable population and
concluded that more self employed and agricultural labourers are to be tapped. The
author gave a suggestion to improve and introduce new schemes to satisfy the
groups. The National Council of Applied Economic Research, New Delhi
conducted two surveys in 1988 and 198913 on “Appraisal of Quality Service in
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Service Organizations” and “Quality Services in Life Insurance Company”
respectively. These two studies were sponsored by the Life Insurance Company.
The policyholders’ general feeling is that the demand notice must be sent in time.
Some policyholders rated the quality of services was excellent. Hence, by
providing prompt services, the customer relationship is maintained for a long
period of time.

Krirubashni, B. (1991) in her study attempts to know the level of awareness,

preference and influencing factor pertaining to policy holdings and to test the
relationship between the influencing factors and policy holdings. The study reveals
that the majority of the respondents aware of the endowment assurance policy and
considered to rank it as number one. The study also revealed that there was a
significant relationship between personal factors and policy holdings.

Narasima Murthy, G. (1996) in his paper attempts to examine and evaluate the
customer service provided by company at Hanamkonda branch in Andhra Pradesh.
For this purpose, opinion of the policyholders were grouped as professional and
managerial group, regular income group, self employed group and agricultural
group. A sample of 100 customers on random basis were selected and the data
were collected, using structured questionnaire. The findings of the study was that
majority of the policyholders are satisfied with premium rates fixed by Life
Insurance Company and remaining felt that rates should be reviewed in view of
declining mortality rate. Majority of the respondents expressed satisfaction with
service of agents at the time of maturity.

Shekar Chandra (1998) in his article “Future strategies for Life insurance”
discussed various issues relating to life Insurance. He has given a detailed note
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about new kinds of products and intimacy with the constant technology adoption
for survival as well as for consistent growth.

Pamela L. Alreck and Robert B. Settle (1999) felt that the central objective of
the marketer’s is not simply to have a relationship with buyer but also to build the
relationship with buyer in the form of linking the brand to a particular need,
associating it with a pleasant mood, appealing to sub conscious motives:
conditioning buyers to prefer the brand through reward; penetrating perceptual and
cognitive barriers to create preferences and providing attractive models for buyers.

Raghu Gulati (1999) in his survey attempts to observe the Life insurance market
in relation to products and customers. A basic understanding of life insurance
business, product portfolio, strategy the company adopts, demographic analysis,
the customer strategy that the organization repeatedly follows when launching
insurance etc. is studied. The study also reveals that the company has deep
penetration in urban areas, but the people are under insured, yet there exist
potential to increase the coverage of insurance. 50% of Life Insurance Company
business comes from rural areas and agents seem to be the most effective channels
regarding sales. In product strategy, if the customer is in need of basis insurance
product, the company should come forward to launch term profit that is to be
matched with risk; a unit link product is to be launched etc.

Vijayavani, J. (1999) in her prize winning technical paper entitled “Cost Effective
Distribution Channels of Life Insurance Products” discussed the various methods
to improve the channels of distribution. The concept of floating rebate schemes to
the customer not only spreads insurance coverage but also attracts extra customer.
She suggested health insurance products for different segments. She further
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suggested that free offer schemes should be introduced to the customers to improve
business.

Jaya Basu and Chandra Sekhar (2000) discuss the problem faced by the
insurance players towards majority of population being ignorant of the policies.
Only 15 per cent of the total population is insured and the penetration level of
insurance policies in India is only 0.5% as against 2.86% in Israel and 2.43% in
Hong Kong. If this status is to be increase in India, there is a need to create
customer awareness in rural areas, innovate low-prices units with a low premium
and right distribution techniques with planning for rigorous training to agents,
direct marketing, bank assurance etc, which can definitely prove to be a boon to
new the companies entering this sector.

Ramakrishna Reddy and Raghunadha Reddy (2000) attempt to study the issues
and relate conclusion on certain matters like whether premium rates reflect the life
expectancy or the policy designed only for government employees or semi -
government employees or reputed commercial firms etc. The spirit of the
policyholders to know about the working, drawbacks and short comings of the Life
Insurance Company is discussed. The study reveals that the rates of premium
charged under postal life insurance are less and cheaper compared to the rates of
premium of Life Insurance Company. As it is covered for a confined class of
selective masses, it is felt necessary to concentrate on uncovered areas and non-
salaried class as potential Market segments.

Achamma Samuel (2000) has made an attempt to make an overview of the

insurance system in India. As the insurance sector facilitates for economic
development, the author tries to evaluate the insurance penetration and makes a
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comparison with the world standards. The study reveals that India’s insurance
penetration was only 2.3% as against the world’s average of 7.8% in the year 2000.
The low insurance penetration reflects on the vast potential for the development of
insurance markets in India. The share of insurance as a percentage of real Gross
Domestic Product during the period 1981-82 to 2000-01 was below 1%. The
insurance sector has been only a marginal contributor to the country’s Gross
Domestic Product. One of the reasons attributable to this could be the lack of
effective competition (due to the monopoly position enjoyed) by the public sector.
Opening up of the insurance sector may argue well for the growth in income from
this sector.

Kotler, P. (2000) in his book, mentioned that a company practicing market

segmentation realizes that buyers differ in their needs and wants, purchasing
behavior, demographic characteristics, product service usage patterns, geographic
locations, buying habits and other characteristics. India is poised to experience
major changes in its insurance markets as insurers operate in an increasingly
deregulated and liberalized environment. For consumers, opening up of the
insurance sector will mean new products, better packaging and improved customer
service product innovation and channel diversification would gain momentum, in
line with the global trend of financial services convergence, the non-life insurance
industry in India is thus set to see some major drama unfolding in the near future,
with the public sector companies tussling with the private companies for the
potentially lucrative Indian General Insurance Market.

Mishra and Simita Mishra (2000) brings the position of insurance compared with
European countries, where life insurance accounts for 58% of global direct
premium and non-life 42% during the year 1997. The study states that the need for
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insurance arises when economic activity increases, family becomes nuclear and
individual become more dependent on employment.

Mahesh Chandra Garg (2001) brings out the new paradigm in the insurance
industry by imposing the increase in life expectancy of individuals and
disintegration of joint family system. According to his view, the rate of insured
which was around 7 per cent of the population in 1999 has to grow very fast
because private sector operator in collaboration with their overseas partners are
likely to bring in more professional and focused approach. Once competition
grows, lower premium may also become a reality and the regulatory body has to
ensure a balance in the enactment of the regulation in the overall development and
maturity of the insurance industry.

Agarwal, R.F. (2001) has attempted to study the importance of information

technology in the insurance industry and brings out the efficient need of providing
improved services when there is competition due to private entry. In an insurance
company, the service of it may be utilized in many areas like customer service,
claim management, human resources etc. It is assumed that to have an overall
increase in the size of the insurance market, information technology must be used
on a much vigorous basis for more extensive penetration.

Paresh Parasnis (2001) in an article briefly discusses the various channels of

distribution in the life insurance industry in India and new avenue cues being
explored by the new player. The greater importance is given to the customer not
only for meeting his requirements but also the impact in times of fulfillment,
quality of service rendered, complexity of products etc is given priority. To
conclude, the life insurance industry in transition presents - opportunities, but is
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also fraught with challenges of an - unknown magnitude. Therefore, only the best
will survive in the long-term which enables to spot the emerging trends and helps
to capitalize the benefits of its customers.

Michael Theil (2001) analyses the demographic variables and the appraisal of
insurance with a case analysis, pertaining to assistance products. Additional
features to traditional products are referred to as assistance products. A consumer
survey was conducted to find the demographic characteristics and the related
assistance products. It also analyses the consumer’s judgment towards new class of
insurance products. The study reveals that variables used in the survey are different
and there is a weak relationship between consumer’s judgment and class of
products. As demographic Variables are not performing as expected it seems
advisable to focus on alternative factors.

Thiripurasundari, K. (2002) in her study attempts to know the attitude of

Policyholders towards the Services of Life Insurance Company branch office at
Mayiladuthurai Town in Tamil Nadu and the Level of Satisfaction of Policyholders
relating to the rate of bonus, rate of premium, and medical examination etc. The
study also reveals that the overall services of the branch office with regard to
various aspects are satisfactory and 80% of the respondents expressed their opinion
towards rate of premium as normal and bonus as moderate at the end of maturity
period. Majority of the policyholders felt that the medical examination insisted for
taking policy is necessary.

Rudra Saibaba (2002) has conducted an enquiry on “Perception and attitude of

Women towards Life Insurance Policies”. According to him, 75% of women
perceived that life insurance plans provided coverage against future risk, 58% of
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women felt that insurance provided accidental coverage, nearly 41% of women
considered insurance beneficial for availing housing loans, 70% of the respondents
are satisfied with the services offered by the corporation. 58.75% of the women
knew about the different types of polices available with the corporation. 41% of
the respondents have not taken any new polices.

Santosh Dhar and Upinder (2003) present the study for the purpose of assessing
the awareness and understanding of future managers about insurance. The study
has revealed that five dimensions (Protects current and future needs, encourages
savings, guarantees payment, ensures growth and security) are perceived as
important by these future insurance managers. As people’s expectations about
services tend to be strongly influenced by their prior experience of outcomes with a
particular service provider. The future managers must learn to know the customer’s
specific requirements to provide individual attention and to recognize him as a
regular customer.

Raman, N. and Gayathri, C. (2004) have observed the customers awareness

towards new insurance companies. They found that 53% of the respondents belong
to the age group below 30, 24% to the age group 31-40, 2% belong to the group of
41-50 and the rest of the respondents belong to the group of ‘above 50’. They also
observed that a large percentage of the insured respondents (32%) are professional,
and 56% of the respondents are married. It is also found that 52% of the
respondents have taken a policy to cover risk and 44% of them to avoid tax and the
remaining to invest their surplus amount.

Krishnamurthy, S. (2005) in his article entitled insurance sector challenges of

competition and future scenario concludes that the limited availability of data on
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policyholders, the low awareness among policyholders the inadequate
infrastructure and technology are the major problems of the insurance industry in
marketing its products.

Rajesham, Ch. and Rajender, K. (2006) “Changing Scenario of Insurance

Sector” Indian Journal of marketing revealed that insurance companies of India are
required to come up with multi-benefit policies including tax benefits with quality
based timely customer services and need to focus on health insurance which is one
of the untapped areas of insurance including services through innovative products,
smart marketing and aggressive distribution with internet facility with much
individual attention transparency and flexibility to increase the quality and volume
of insurance business.

Raman, N. and Gayathri, C. (2006) “A Study on Customer’s Awareness towards

New Insurance Companies”, Indian journal of Marketing revealed that customers
are now looking at insurance as complete financial solutions offering stable returns
coupled with total protection. Companies will need to constantly innovate in terms
of product development to meet over changing consumer needs. Understanding the
customer better will enable insurance companies to design appropriate products,
determine price correctly and increase profitability. In the present scenario a key
differentiated would be professional customer service in terms of quality of advice
on enhancing the customer convenience.

Tanmay Acharya, Harshita Mishra and Venkataseshaiah, S. (2007) “Customer

Preferences in Insurance Industry in India”. The ICFAI journal of marketing
services revealed that the purchasing decision of the consumer depends on quality,
accessibility, company type, recommendations and promptness of service. India is
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poised to experience major changes in its insurance markets as insurers operate in
an increasingly deregulated and liberalized environment. For consumers, opening
up of the insurance sector will mean new products, better packaging and improved
customer service.

Keerthi, P. and Vijayalakshmi, R. (2009) “A Study on the Expectations and

Perceptions of the Services in Private Life Insurance Companies” reveals that the
policyholders’ expectations are well met in the case of certain factors reacting to
service quality. But in the case of other variables, there exists a significant gap
which means that policyholders have experienced low levels of service as against
their expectations. If all the players in the Life insurance industry focus on the
effective delivery of services, they can win the hearts of customers and anticipate
their increased market share.

Raju, S. and Gurupandi, M. (2009) in their article “Analysis of the Socio

Economic Background and Attitude of the Policyholders towards Life Insurance
Corporation of India”, Smart Journal of Business Management Studies revealed
that the study was of great help to the policyholders, as it was aimed at finding the
attitude towards the services of Life Insurance Company. Hence the prospective
customers, who propose to buy the insurance products and avail of the services of
an insurance company for the first time, can get benefited by the best service
provider.

Praveen Sanu, Gaurav Jaiswal and Vijay Kumar Panday (2009) in their article,
“A Study of Buying Behaviour of Consumers towards Life Insurance Company”,
Prestige institute of Management and Research, Gwalior, revealed that in present
Indian market, the investment habits of Indian consumers are changing very
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frequently. The individuals have their own perception towards various types of
investment plans.

Ramanathan, K.V. (2011) research has resulted in the development of a reliable

and valid instrument for assessing customer perceived service quality, awareness
level, and satisfaction level of customers towards life insurance industry. Here,
service quality needs to be measured using a six dimensional hierarchal structure
consisting of assurance, competence, personalized financial planning, corporate
image, tangibles and technology dimensions. This would help the service managers
to efficiently allocate resources, by focusing on important dimensions first. There
is no right and wrong in this. The success of marketing insurance depends on
understanding the social and cultural needs of the target population, and matching
the market segment with the suitable intermediary segment. The past related
reviews are basically relating to marketing strategies, its current impacts,
customers awareness towards new polices, insurance penetration, insurance
perception, buying behaviour towards Life Insurance Company, opportunities and
challenges in Life Insurance Company, channels of distribution, potential growth
in insurance, reforms adopted by Life Insurance Company, consumer preference in
insurance industry, attitude of policyholders to its life insurance company services
and its contribution towards the development of an economy. There is no specific
and in depth study relating to the Endowment policy of Life Insurance Company.
This enabled the Researcher to carry out the intensive research in the field of
Consumer behavior towards Endowment policy in Perambalur district. This also
paves way for the researcher to carry out the research relating to the behavior of
the Consumers towards Endowment policy of Life Insurance Company.

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 CHAPTER – 3

ORGANISATIONAL
PROFILE

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Housing Development Finance Corporation ltd. Housing Development
Finance Corporation Limited or HDFC is an Indian financial conglomerate based
in Mumbai, India. It is a major provider of finance for housing in India. It also has
a presence in banking, life and general insurance, asset management, venture
capital and education loans.

HISTORY
It was founded in 1977 as the first specialized mortgage company in India. HDFC
was promoted by the Industrial Credit and Investment Corporation of
India. Hasmukhbhai Parekh played a key role in the foundation of this company.
In 2000, HDFC Asset Management company launched its mutual fund schemes. In
the same year, IRDA granted registration to HDFC Standard Life Insurance, as the
first private sector life insurance company in India.

HDFC Standard Life Insurance Company

HDFC Life (HDFC Standard Life Insurance Company) is a long-term life
insurance provider with its headquarters in Mumbai, offering individual and group
insurance. HDFC Life was established in 2000 becoming the first private sector
life insurance company in India. It is a joint venture between Housing
Development Finance Corporation Ltd (HDFC), one of India's leading housing
finance institution and Standard Life Aberdeen PLC, leading well known provider
of financial savings & investments services in the United Kingdom.

On August 14, 2015 HDFC Ltd. entered into a share sale agreement with Standard
Life to sell a 9.00% stake in HDFC Life to the latter. The transaction is subject to
receipt of regulatory approvals. Post the completion of the above transaction,

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HDFC will hold 61.65% stake in HDFC Life and Standard Life’s stake will
increase to 35.00%, with rest to be held by others.

Presence & Distribution

HDFC Life has about 398 branches and presence in 980+ cities and towns in India.
The company has also established a liaison office in Dubai. HDFC Life distributes
its products through a multi channel network consisting of Insurance
agents, Bancassurance partners (HDFC Bank, Saraswat Bank, RBL Bank), Direct
channel, Insurance Brokers & Online Insurance Platform.

Key People

NAME OF KEY
DESIGNATION
PERSONS

Mr. Amitabh Chaudhry Managing Director & CEO

Ms. Vibha Padalkar Executive Director & CFO

Mr. Suresh Badami Chief Distribution Officer

Mr. Srinivasan Senior Executive Vice President, Chief Actuary and Appointed
Parthasarathy Actuary

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NAME OF KEY
DESIGNATION
PERSONS

Mr. Prasun Gajri Chief Investment Officer

Mr. Subrat Mohanty Sr. EVP & Head-Strategy, Ops, BS&T & Health

Mr. Rajendra Ghag Sr. EVP & Chief Human Resource Officer

Mr. Sanjeev Kapur Senior Executive Vice President - Bancassurance and Group
Sales

Mr. Sanjay Vij Executive Vice President – Bancassurance

Mr. Khushru Sidhwa Executive Vice President - Audit & Risk Management

Life Insurance
The company has been providing life insurance since the year 2000, through its
subsidiary HDFC Standard Life Insurance company Limited. It offers 33
individual products and 8 group products. It uses the HDFC group network to cross
sell by offering customized products. It operates out of 451 offices across India
serving over 965 locations. It had a market share of 4.6% of life insurance business
in India as of 30 September 2013. HDFC Life has over 15,000 employees.

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 The company also offers general insurance products such as:
 Motor, health, travel, home and personal accident in the retail segment which
accounts for 47% of its total business and
 Property, marine, aviation and liability insurance in the corporate segment.

HDFC holds approx. 70.7% of shares in HDFC Life. Standard Life holds 26%
shares. In September 2013, it was ranked third in terms of market share of private
life insurance companies in India. On the same date, it had a network of approx.
72,000 financial consultants to sell its policies.

AIM / VISION / MISSION

Our Vision:- 'The most successful and admired life insurance company, which
means that we are the most trusted company, the easiest to deal with, offer the best
value for money, and set the standards in the industry'. 'The most obvious choice
for all'.

Our Values:- Values that we observe while we work:

 Integrity
 Innovation
 Customer centric
 People Care "One for all and all for one"
 Team work
 Joy and Simplicity

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KEY STRENGTH

Financial Expertise
As a joint venture of leading financial services groups. HDFC standard
Life has the financial expertise required to manage long-term investments safely
and efficiently.

Range of Solutions
HDFC SLIC has a range of individual and group solutions, which can be easily
customized to specific needs. These group solutions have been designed to offer
complete flexibility combined with a low charging structure.

Strong Ethical Values

HDFC SLIC is an ethical and Cultural Organization. False selling of
also commitment with the customers is not allowed.

Most Respected Private Insurance Company

HDFC SLIC was awarded No 1 private company in 2004 by the world class
Magazine Business World for Integrity, Innovation and customer care.

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CHAPTER – 4

FINDINDS
AND
SUGGETIONS

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SWOT ANALYSIS OF HDFC STANDARDS LIFE INSURANCE

STRENGTH
 Domestic images of HDFC supported by standard Life’s international
images are strength of the company.
 Strong and well spread network of qualified intermediaries and sales
person.
 Strong capital and reserve base.
 The company provides customer services of the highest order.
 Huge basket of product range which are suitable to all age and income
groups.
 Large pool of technically skilled manpower with in depth knowledge and
understanding of the market.
 The company also provides innovative products to cater to different
needs of different customers.

WEAKNESS
 Heavy management expenses and administration costs.
 Low customer confidence on the private players.
 Vertical hierarchical reporting structure with many designations and
cadres leading to power politics at all levels without any exception.
 Poor retention percentage of tied up agents.

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OPPORTUNITY
 INSURABLE POPULATION: According to IRDA only 10% of the
population is insured which represents around 30% of the insurable
population. This suggests more than 300 people, with the potential to
buy insurance remain uninsured.
 There will be inflow of managerial and financial expertise from the
world’s leading insurance market. Further the burden of educating
consumer will also be shared among many players.
 International company will help in building world class expertise in
local market by introducing the best global practices.

THREATS
 Other private insurance company also levying for the same uninsured
population.
 Big public sector insurance companies like Life Insurance Corporation’s
(LIC) of India , National insurance company limited, Oriental insurance
limited, New India assurance company limited and United India
insurance company limited. People trust and go to them more.
 Poaching of customer base by other companies.
 Most people don’t understand the need or are not willing to take
insurance policy in general.

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 CHAPTER - 5

CONCLUSION

Page 38 of 42
CONCLUSION
The study on customer satisfaction of HDFC SLIC is a great useful to the
company. They come to know the areas of improvement and areas where they are
really good. HDFC SLIC is having good brand image in midst of the Chennai
people. More over most of the HDFC SLIC are satisfied with the service rendered
to them. They understand the needs of the customer and they act according to that
so that each and every customer can be satisfied.

This study is a great helpful to company. This study gives me a good practical
knowledge and also helps to know the reaction. They are the back bone for every
business. So their requirements have to be fulfilled. HDFC SLIC too is trying to
satisfy most of the customer. If they follow the suggestions given in the study it
will be a great useful to build a good customer relationship and can be the no 1
insurance company in India.

Indian insurance companies offer a comprehensive range of insurance plans, a

range that is growing as the economy matures and the wealth of the middle classes
increases. The most common types include: term life policies, endowment policies,
joint life policies, whole life policies, loan cover term assurance policies, unit-
linked insurance plans, group insurance policies, pension plans, and annuities.
General insurance plans are also available to cover motor insurance, home
insurance, travel insurance and health insurance.

Due to the growing demand for insurance, more and more insurance companies are
now emerging in the Indian insurance sector. With the opening up of the economy,
several international leaders in the insurance sector are trying to venture into the

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India insurance industry. 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 tha t 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.

With a huge population base and large untapped market, insurance

industry is a big opportunity area in India for national as Well as
foreign investors. India is the fifth largest life insurance market in the
emerging insurance economies globally and is growing at32-34%
annually. This impressive growth in the market has been driven by
liberaliation, wit h new players significantly enhancing product
awareness and promoting consumer education and information. The
strong growth potential of the country has also made international player so
look at the Indian insurance market.

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BIBLOGRAPHY
The following books and websites have been consulted for the preparation of this
project.

REFERENCES
1. Ahluwalia, M. S. (2002). “Economic Reforms in India since 1991: Has
Gradualism Worked?” Journal of Economic Perspectives.
2. Bhat, Ramesh (1996).”Regulation of the private health sector in India.”
International Journal of Health Planning and Management.
3. Insurance in India”. “Service Marketing” Himalaya Publishing
HouseWadhawan, Sahdev. (1987). “Health insurance in India: The case for
reform.” International Labour Review.
4. Potential of Indian Insurance Industry: Reforms Insurance Regulatory and
Development Authority (IRDA) (2010). Annual Report, IRDA, Mumbai.
5. Sinha, P.K. and Sahoo, S.C. (1994) Marketing of Life.
6. Roy, Samit. “Insurance Sector: India.” Industry Sector Analysis, National
Trade and Development Board, US Department of State, Washington, DC,
December 1999. World Bank (1995), The World Development Report 1994.
7. Malcolm Smith, Chen Chang, 2010, "Improving customer outcomes through
the implementation of customer relationship management: Evidence from
Taiwan", Asian Review of Accounting.
8. Mohammad Al-Hawari, Tony Ward, Leonce Newby, 2009, "The relationship
between services quality and retention within the automated and traditional
contexts of retail banking", Journal of Service Management.
9. Patrick Vesel, Vesna Zabkar, 2010, "Relationship quality evaluation in
retailers' relationships with consumers", European Journal of Marketing.

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Useful Websites
 http://www.lic.wwindia.com
 www.irda.com
 www.hdfcinsurance.com
 www.google.com
 http://www.asiainsurancereview.com/edsynopsis.asp
 www.hc.wharton.upenn.edu/impactconference/presentations.html

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