Professional Documents
Culture Documents
ON
Products and Marketing Strategies of Kotak Life Insurance
I, Mr. sanjaya Maharana hereby declare that the Project Work titled
“products and marketing strategies of Kotak Mahindra life insurance” is
the original work done by me and submitted to the Biju Patnaik University of
Technology, Odisha, in partial fulfillment of requirements for the award of
Master of Business Administration is a record of original work done by me
under the supervision of Asst. Prof. SAYED IZHARUL HASNAIN.
Sanjay maharana
CERTIFICATE OF THE GUIDE
This is to certify that the Project Work titled: “products and marketing
strategies of Kotak Mahindra life insurance”. It is a confide work of Mr.
Sanjay Maharana Reg. No: 1806281089 carried out in partial fulfillment for
the award of degree of MBA of Biju Patnaik University of Technology,
Odisha under my guidance. This project work is original and not submitted
earlier for the award of any degree / diploma or associate ship of any other
University / Institution.
Firstly, I am graceful to Gold almighty, for the blessing showed upon me for
the successful completion of my project.
I would also like to thank my parents, staff members and my friends for their
support and motivation in successful completion of this project.
Place: CUTTACK SANJAY MOHARANA
Date: Reg No: 1806281089
CONTENTS
I. INTRODUCTION
VIII. CONCLUSION
IX. BIBLIOGRAPHY
X. QUESTIONAIRE
PRODUCT SERVICES ANDMARKETING STRATEGIES OF KOTAK
MAHINDRA LIFE INSURANCE
INTRODUCTION
Functions of insurance:
Risk free trade: Insurance promotes exports insurance, which makes the
foreign trade risk free with the help of different types of policies under
marine insurance cover.
General Insurance
Life insurance
GENERAL INSURANCE
Insurance of the non life assets are called general insurance, this includes loss of
asset against water, fire, earthquake etc. With the opening up of the Indian
Market in Insurance sector for private players, in General Insurance the monopoly
of the general Insurance public sector’s companies has been broken. With the
entrance of the new private player market innovative technique has been
introduced to capture the market. In general Insurance around 17% of the market
has been captured by the private players.
General Insurance is a sector which alone has many type of insurance coverage in
it like Fire Insurance, Marine Insurance, motor Insurance, Liability Insurance,
Engineering Insurance etc.
HDFC Chub
LIFE INSURANCE
Life insurance as risk cover: Insurance is all about risk cover and protection
of life. Insurance provides a unique sense of security that no other form of
invest can provide.
Saving for old age: After retirement the earning capacity of a person
reduces. Life insurance enables a person to enjoy peace of mind and a
sense of security in his/her old age.
Social Security: Life insurance is important for the society as a whole also.
Life insurance enables a person to provide for education and marriage of
children and for construction of house. It helps a person to make financial
base for future.
Tax Benefit: Under the Income Tax Act, premium paid is allowed as a
deduction from the total income under section 80C.
TITLE
RESEARCH METHODOLOGY
All the findings and conclusions are based on the survey done in the working area
within time limit. I tried to select a sample representative of the whole group
during my job training. I have collected data from 100 respondents for studying
Customer Buying Behaviour and Market Segmentation, selected randomly from
different areas in Cuttack such as:
House wife
Businessmen
Relatives
Petrol pump
Working Professionals
Retired Persons
RESEARCH DESIGN
Research was initiated by examining the secondary data to gain insight into the
problem. The primary data is evaluated on the basis of the analysis of the
secondary data.
DEVELOPING THE RESEARCH PLAN
The data for this research project has been collected through self administration.
Due to time limitation and other constraints direct personal interview method is
used. A structured questionnaire was framed as it is less time consuming, I have
worked as a team in the field of petrol pump survey and also different apartments
in Cuttack, IT was not very easy to convenes them to our branch office for further
process of recruitment. I also visited the LIC office personally to recruit some Do’s
that is (DEVELOPMENT OFFICER) it was not easier to tabulate and interpret. More
over respondents prefer to give direct answers. In questionnaires open ended and
closed ended, both the types of questions has been used.
COLLECTION OF DATA
Secondary Data: It was collected from internal sources. The secondary data was
collected on the basis of organizational file, official records, news papers,
magazines, preserved information in the company’s database and website of the
company.
The mode of collection of data is based on Survey Method and Field Activity.
Primary data collection is based on personal interview. I have prepared the
questionnaire according to the necessity of the data to be collected .
RESEARCH LIMITATIONS
The research is confined to certain parts of Cuttack and does not
necessarily show a pattern applicable to all of other cities in Odisha.
Some respondents straightly told that they are not agreed to be a part of
the insurance industry
Life insurance came to India from England in 1818 when oriental life insurance
company started in Kolkata by Europeans. After this many insurance companies
had been started in India. But these companies were looking after only the needs
of European community established in India. Indian people were not being
insured by these companies. First Indian life insurance company came as Bombay
mutual life insurance assurance. Second company was Bharat insurance company
came in 1896. After this the united India in Madras, national Indian and national
insurance in Kolkata and the co-operative assurance in Lahore were established in
1906.
Indian Insurance consumers are like Indian Voters, they are soft but when time is
right and ripe, they demand and seek necessary changes. De-tariff of many
Insurance Products are the reflection of changing aspirations and growing
demand of Indian consumers.
For historical years, Indian consumers were at receiving end. Insurance Product
was underwritten and was practically forced onto consumers on a “Take-it-As-it-
basis”. All that got changed with passage of IRDA act in 1999. New insurance
companies have come into existence leading to open competition and hence
better products for customers.
Customers are looking at Insurance for covering Pure Risk now which I have
covered in my next section. Another good reason why we are seeing quick
changes in the buying behavior of Insurance from mere Investment to risk
mitigation is the cost of Replacement of Goods (ROG) or Cost of Services (COS).
Now Indian customers are aware of insurance industry and insurance products
provided by companies. They have become more sensitive. They would not
accept any type of insurance product unless it fulfills their requirements and
needs. In historic day’s customers looking at insurance products as a life cover
which can provide security against any unacceptable events, but now customers
look at insurance products as an investment as well as life cover. So today’s
customers wants good return from the insurance companies. The Indian
customer’s forms the pivot of each company’s strategy.
Investment of Indian household savings (as a % in different sector)
BANK DEPOSITS 39
CORP. BANKS 2
MUTUAL FUNDS 2
NBFC’S 3
GOVT. BONDS 13
INSURANCE 13
CURRENCY 6
Source: www.avivaindia.com
After the Insurance Regulatory and Development Authority Act have been passed
there has been establishment of many private insurance companies in India.
Previously there was a monopoly business for Life Insurance Corporation of India
(L.I.C.) who was the only life-insurance company for the people till 2000. L.I.C. still
holds 71.4% of the market share in 2006. But after the introduction of private life
insurance companies there is a great competition in Indian market now. Everyone
is trying to capture the fresh market here and penetrate it with aggressive
marketing strategies. Today life-insurance is not only limited up to just life risk
cover and maturity period bonuses but changed to greater return from the
investments. With the introduction of the unit linked insurance policies these
companies are investing the money in different investment instruments like
shares, bonds, debentures, government and other securities. People are
demanding for higher returns with the life risk cover and private companies are
giving 30-40% average growth per annum. These life-insurance companies have
every kind of policies suiting every need right from financial needs of, marriage,
giving birth and rearing up a child, his education, meeting daily financial needs of
life, pension solutions after retirement. These companies have every aspects and
needs of our life covered along with the death-benefit.
In India only 25% of the population has life insurance. So Indian life-insurance
market is the target market of all the companies who either want to extend or
diversify their business. To tap the Indian market there has been tie-ups between
the major Indian companies with other International insurance companies to start
up their business. The government of India has set up rules that no foreign
insurance company can set up their business individually here and they have to
tie up with an Indian company and this foreign insurance company can have an
investment of only 24% of the total start-up investment.
Today, the Indian life insurance industry has more than a dozen private
players, each of which are making strides in raising awareness levels, introducing
innovative products and increasing the penetration of life insurance in the vastly
underinsured country. Several of private insurers have introduced attractive
products to meet the needs of their target customers and in line with their
business objectives. The success of their effort is that they have captured over
28% of premium income in five years.
The biggest beneficiary of the competition among life insurers has been the
customer. A wide range of products, customer focused service and professional
advice has become the mainstay of the industry, and the Indian customer’s forms
the pivot of each company’s strategy. Penetration of life insurance is beginning to
cut across socio-economic classes and attract people who have never purchased
insurance before.
Life insurance is also now being regarded as a versatile financial planning
tool. Apart from the traditional term and saving insurance policies, industry has
seen the entry and growth of unit linked products. This provides market linked
returns and is among the most flexible policies available today for investment.
Now products are priced, flexible, and realistic and sustain so people in better
position to understand the risk and benefits of the product and they are accepting
these innovative products.
So it is clear that the face of life insurance in India is changing, but with the
changes come a host of challenges and it is only the credible players with a long
term vision and a robust business strategy that will survive. Whatever the
developments, the future and the opportunities in this industry will surely be
exciting.
The number of companies in Insurance particularly in Life Insurance has changed
drastically now the number is in 24. List of them are mentioned as below :
1. ICICI Prudential Life Insurance
2. TATA AIG Life Insurance
3. Max New York Life Insurance
4. AVIVA Life Insurance
5. Bharti AXA Life Insurance
6. Kotak Mahindra Life Insurance
7. Reliance Life Insurance
8. SBI Life Insurance
9. HDFC Standard Life Insurance
10.Birla Sun Life Insurance
11.Sahara INDIA Life Insurance
And so on…
Globally, insurers increasingly are pressured by the demands of their clients. The
development of global insurance industry over the past few years was influenced
by booming stock markets which enabled considerable capital gains to be made in
Non life business. Increase in insurers equity capital increased underwriting
capacity, while demand did not develop at the same pace, resulting in decrease in
insurance policies prices. The stock market boom of the past few years led to
demand for unit linked insurance products.
The global insurance industry is growing at rapid pace. Most of the markets
are undergoing globalization. Lot of mergers and acquisition are taking place in
the insurance world. The rapidity in the industry, technological improvement has
resulted in pressures on a few economic parameters. The world insurance
industry is at peak of its globalization process.
India has a rapidly growing middle class and this section can afford to buy
insurance products. This shows the attraction that the Indian market holds for
foreign insurers who have been putting pressure on developing countries as well
as on India to open up its market.
Japan 9.3
Korea 8.6
Malaysia 6.6
India 5.2
China 3.8
Brazil 2.5
Source: www.indianinsuranceresearch.com
The high volumes in the insurance business help spread risk wider, allowing
a lowering of the rates of the premium to be charged and in turn, raising
profits. When there is a bigger base, the probabilities become more
predictable, and with system wide risks balanced out, profits improve. This
explains the current scenario of mergers, acquisitions, and globalization of
insurance.
Insurance play a crucial role in the commercial lives of nations and act as
the lubricants of economic activities. Insurance firms help to spread the
potentially financial consequences of risk among the large number of
entities, to mobilize and distribute savings for productive use, facilitate
investment, support and encourage external trade, and protect economic
entities against external risk.
Insurance and economic growth mutually influences each other. As the economy
grows, the living standards of people increase. As a consequence, the demand for
life insurance increases. As the assets of people and of business enterprises
increase in the growth process, the demand for general insurance also increases.
In fact, as the economy widens the demand for new types of insurance products
emerges. Insurance is no longer confined to product markets; they also cover
service industries. It is equally true that growth itself is facilitated by insurance. A
well-developed insurance sector promotes economic growth by encouraging risk-
taking. Risk is inherent in all economic activities. Without some kind of cover
against risk, some of these activities will not be carried out at all. Also insurance
and more particularly life insurance is a mobilizer of long term savings and life
insurance companies are thus able to support infrastructure projects which
require long term funds. There is thus a mutually beneficial interaction between
insurance and economic growth. The low income levels of the vast majority of
population have been one of the factors inhibiting a faster growth of insurance in
India. To some extent this is also compounded by certain attitudes to life. The
economy has moved on to a higher growth path. The average rate of growth of
the economy in the last three years was 8.1 per cent. This strong growth will bring
about significant changes in the insurance industry.
At this point, it is important to note that not all activities can be insured. If that
were possible, it would completely negate entrepreneurship. Professor Frank
Knight in his celebrated book “Risk Uncertainty and Profit” emphasized that profit
is a consequence of uncertainty. He made a distinction between quantifiable risk
and non-quantifiable risk. According to him, it is non-quantifiable risk that leads to
profit. He wrote “It is a world of change in which we live, and a world of
uncertainty. We live only by knowing something about the future; while the
problems of life or of conduct at least, arise from the fact that we know so little.
This is as true of business as of other spheres of activity”. The real management
challenges are uninsurable risks. In the case of insurable risks, risk is avoided at a
cost.
The most difficult aspect of the insurance business is the underwriting of policies.
Using a wide assortment of data, insurers predict the likelihood that a claim will
be made against their policies and price products accordingly. To this end,
insurers use actuarial science to quantify the risks they are willing to assume and
the premium they will charge to assume them. Data is analyzed to fairly
accurately project the rate of future claims based on a given risk. Actuarial science
uses statistics and probability to analyze the risks associated with the range of
perils covered, and these scientific principles are used to determine an insurer's
overall exposure. Upon termination of a given policy, the amount of premium
collected and the investment gains thereon minus the amount paid out in claims
is the insurer's underwriting profit on that policy.
Investment Management
Investment operations are often considered incidental to the business of
insurance, and have traditionally viewed as secondary to underwriting. In the past
risk management was the most important part of business, whereas today the
focus has shifted to fund management. Investment income is a large component
of insurance revenues, skilful and careful management of funds. Insurance is a
business of large numbers and generates huge amount of funds over time. These
funds arise out of policyholder funds in the case of life insurance, and technical
and free reserves in the non-life segments. Time lag between the procurement of
premium and the payment of claim provides an interval during which the funds
can be deployed to generate income. Insurance companies are among the largest
institutional investors in the world. Assets managed by insurance companies are
estimated to account for over 40% of the world’s top ten asset managers.
Returns on investments influence the premium rates and bonuses and
hence investment income will continue to be an important component of
insurance company profits. In life insurance, benefits from insurance profits
accrue directly to policy holders when it is passed on to him in the form of a
bonus. In non life insurance the benefits are indirect and mostly by the creation of
an investment portfolio. Investment income has to compensate for underwriting
results which are increasingly under pressure. In the case of insurance, the
difference between revenue and the expenses is known as operating surplus.
Revenue = Premium
Net investment income includes income from trading in and holding stock market
securities including government securities, special deposits with the central
government, loans to several public utilities and service providers in state
government.
Insurance normally insure only pure risks However, not all pure risk is insurable
certain requirements usually must be fulfilled before a pure risk can be privately
insured from the view point of the insurer, there are ideally six requirement of an
insurable risk:
Insurance is often erroneously confused with gambling There are two important
differences between them First gambling creates a new speculative risk while
insurance is a technique for handling an already existing pure risk thus if you bet
Rs 300 on a horse a new speculative
technique is created but if you pay Rs 300 to an insurer for fire insurance the risk
of fire is already present and is transferred to the insurer by a contract. No new
risk is created by the transaction.
The second difference between insurance and gambling is that gambling is
socially unproductive, because the winner’s gain comes at the expense of the
loser in contract; insurance is always socially productive, because neither the
insurer nor the insured is placed in a position where the gain of the winner comes
at the expense of the loser. The insurer and the insured have a common interest
in the prevention of a loss. Both parties win if the loss does occur Moreover,
consistent gambling transaction generally never restore the losers to their former
financial position in contract insurance contracts restore the insured’s financially
in whole or in part if a loss occurs.
2. Insurance and Hedging compared
The concept of hedging is to transferring the risk to the speculator through
purchase of future contracts an insurance contract, however, is not the same
thing as hedging Although both technique are similar in that risk is transferred by
a contract, and no new risk is created, there are some important difference
between them. First, an insurance transaction involves the transfer of insurable
risks, because the requirement of an insurable risk generally can be met However,
hedging is a technique for handling risks that are typically uninsurable ,such as
protection against a decline in the price agriculture products and raw materials.
A second difference between insurance and hedging is that insurance and
hedging is that insurance can reduce the objective risk of an insurer by application
of the law of large numbers. As the number of exposure units increases, the
insurer’s prediction of future losses improves, because the relative variation of
actual loss from expected loss will decline thus, many insurance transactions
reduce objective risk. In contract, hedging typically involves only risk transfer not
risk reduction .The risk of adverse price fluctuation is transferred because of
superior knowledge of market conditions .The risk is transferred, not reduced,
and prediction of loss generally is not based on the law of large numbers.
Endowment policies: This type of policy covers risk for a specified period, and at the
end of the maturity sum assured is paid back to policyholder with the bonuses during
the term of the policy.
Money back policies: This type of policy is for periodic payments of partial survival
benefits during the term of the policy as long as the policy holder is alive.
Group insurance: This type of insurance offers life insurance protection under group
policies to various groups such as employers employees, professionals, co-operatives etc
it also provides insurance coverage for people in certain approved occupations at the
lowest possible premium cost.
Term life insurance policies: This type of insurance covers risk only during the selected
term period. If the policy holder survives the term, risk cover comes to an end. These
types of policies are for those people who are unable to pay larger premium required
for endowment and whole life policies. No surrender, loan or paid up values are in such
policies.
Whole life insurance policies: This type of policy runs as long as the policyholder is alive
and is covered for the entire life of the policyholder. In this policy the insured amount
and the bonus is payable only to nominee on the death of policy holder.
Joint life insurance policies: These policies are similar to endowment policies in
maturity benefits and risk cover, but joint life policies cover two lives simultaneously
such as married couples. Sum assured is payable on the first death and again on the
death of survival during the term of the policy.
Pension plan: a pension plan or annuity is an investment over a certain number of years
but does not provide any life insurance cover. It offers a guaranteed income either for a
life or certain period.
Unit linked insurance plan : ULIP is a kind of insurance plan which provides life
cover as well as return on premium paid over a certain period of time. The
investment is denoted as units and represented by the value called as net
asset value (NAV).
Insurance has to be sold the world over. The Touch point with the ultimate
customer is the distributor or the producer and the role played by them in
insurance markets is critical. It is the distributor who makes the difference in
terms of the quality of advice for choice of product, servicing of policy post sale
and settlement of claims. In the Indian market, with their distinct cultural and
social ethics, these conditions will play a major role in shaping the distribution
channels and their effectiveness. In today's scenario, insurance companies must
move from selling insurance to marketing an essential financial product. The
distributors have to become trusted financial advisors for the clients and trusted
business associates for the insurance Companies.
A multi-channel strategy is better suited for the Indian market. Indian insurance
market is a combination of multiple markets. Each of the markets requires a
different approach. Apart from geographical spread the socio-cultural and
economic segmentation of the market is very wide, exhibiting different traits and
needs. Different multi-distribution channels in India are as follows:
Agents: Agents are the primary channel for distribution of insurance. The
public and private sector insurance companies have their branches in
almost all parts of the country and have attracted local people to become
their agents. Today's insurance agent has to know which product will
appeal to the customer, and also know his competitor's products to be an
effective salesman who can sell his company, the product, and himself to
the customer. To the average customer, every new company is the same.
Perceptions about the public sector companies are also cemented in his
mind. So an insurance agent can play an important role to create a good
image of company.
Banks: Banks in India are all pervasive, especially the public sector banks. Many insurance
companies are selling their products through banks. Companies which are bank owned, they are
selling their products through their parent bank. The public sector banks, with their vast branch
networks, are helpful to insurance companies. This channel of selling insurance is known as Bank
assurance.
Marketing mix.
Positioning.
Value addition.
Segmentation.
Branding.
Effective pricing.
Growth in population.
Core product: In insurance industry the core product is the policy that provides
protection to the customers.
Expected product: Because of competition customers start to expect more from
an insurance product. Then insurance companies provide some tangible attributes
in their product to differentiate from competitors, such as-
Brand
Some additional features in existing product
By providing instruction manual with the policy
The entry of private players and their foreign partners has given domestic players
a tough time, because the opening up of the sector has not brought in only
foreign players, but also professional techniques and technologies. The present
scene in India is such that everyone is trying to put in the best efforts. There are
marketing strategies more for survival than growth. But the most important gift of
privatization is the introduction of customer-oriented services. Utmost care is
being taken to maximize customer satisfaction.
Assessment of risks (of the insured and the insurance corporation) and
estimation of losses: Efficiency of actuaries and assessors of the insurance
policies in fixing premiums and settling claims is foremost an important
area for achieving overall efficiency in operations. The quality of assessing
the risk and estimation of losses has the largest claim on the performance
of an insurance company. Well trained, experienced and expert hands are
needed for the operations.
Control over investment and operating costs: Control over resources such
as men, machines, and materials at each level of the organization provides
measures of efficiency of a unit as well as the organization. Investment
control and expense control are dealt separately and the effectiveness of
management’s’ decisions at various levels is to be assessed separately.
Consumer attitudes.
Consumption data: - Useful to evaluate annual premiums, number of
annuities owned, value of annuities, and with which company the current
policy is held.
Learn how to find a proper perspective and how to turn off all the signals
that cause people not to buy from you.
Learn how to act when you meet a client for the first time.
Learn how the order in which you explain the types of policies can double
your income.
COMPANY PROFILE
(About Kotak Mahindra Old Mutual Life Insurance)
Kotak Mahindra is in business since 1985 as a partnership between Uday Kotak
and Mr. Mahindra, and insurance part of their business came into existence in the
year 2001.
Evolution of Insurance business in Kotak Mahindra business is like this:-
As stated above Kotak Mahindra Life Insurance has Joint venture with Old Mutual
plc.
Old Mutual Plc is the 12th largest Insurance Company in the world. It has its base
of over 4 million life assurance policyholders. It has one of the best “Payouts”
among insurers in the world. It has one of the best “Solvency Ratios” among
insurers in the world. A FTSE 100 financial services group and ranks as a Fortune
Global 500 company The Old Mutual group manages in excess of 239 billion
pounds in funds (Dec’06). The company is 160 years old and has prominent
presence in the United States and the United Kingdom.
Now the question arises that why for the business in India of life insurance Kotak
Mahindra chose Old Mutual plc and vice versa.
Term Plans
Kotak Term Assurance Plan
Endowment Plans
Group
Employee Benefits
Rural
MANAGING
DIRECTOR
CFO
(CUTTACK BRANCH)
REGIONAL MANAGER
BRANCH OPERATIONS
AREA MANAGER
INCHARGE
LIFE ADVISOR
DATA VALIDATION
FOR
1.
2
3
4.
5
6.
7.
8.
DATA VALIDATION
1.
2.
3.
4.
5.
6.
7.
8.
RECOMMENDATIONS
CONCLUSIONS
During the data collected, it has been found that people have great
awareness about various companies but a lot more has to be done,
especially by smaller companies like Kotak Life Insurance to establish
their market presence.
People are beginning to look beyond LIC for their insurance needs and
are willing to trust private players with their hard earning money.
BIBLIOGRAPHY
REFERENCES
BOOKS
INTERNET
WEBSITE:
www.IRDA.com
www.insurance.kotak.com
www.businessindiaonline.com
www.m.moneycontrol.com
www.licindia.com
www.indianexpress.com
THANK YOU
NAME:
AGE:
GENDER:
EDUCATIONAL QUALIFICATION:
Dear Sir/Madam,
______________________________________________________________
E mail: _________________________________________________________
QUESTIONNAIRE
Undergraduate
Graduate
Post Graduate
Q3) Occupation
Business
Profession
Service
Any Other _____________________________________________________
(Please mention below the type of business/ profession you are in, in case of
service please mention your organisation name and designation)
_________________________________________________________________
< 2 lakhs
2 – 5 lakhs
5 – 10 lakhs
> 10 lakhs
No Idea
Q6) Are you aware of KOTAK LIFE INSURANCE?
Yes
No
Q7) Are you associated with any insurance company as Life Insurance Advisor?
Yes
No
Are you satisfied with the company, if so, reasons thereof: __________________
_______________________________________________________________
Q8) Would you like to avail a business opportunity with KOTAK LIFE INSURANCE?
Yes
No
Q9) How much time can you spare for this business opportunity?
a) 4 b) 5
C) 6 d) 7
a) Yes b) NO
a) YES b) NO
Q14)
Do you want to earn some extra money by the help of kotak life insurance?
a) YES b) NO
a) YES b) NO
Q17) Have you received any incentive from insurance agent on insurance
premium?
a) YES b) NO
a) 10 b) 20-30
c)40-50 d) Above 50
Q19) Are you aware about the insurance bonus of the policy?
a) YES b) NO
Q20) What do you feel after investing in insurance plans of XYZ life insurance?
a) Good
c) Cheated