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A Study on Consumer Awareness and Perception towards Insurance Industry

Opportunities with Special reference to Chennai, Tamil Nadu

Article · September 2023

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A Study on Consumer Awareness and Perception towards Insurance Industry Opportunities
with Special reference to Chennai, Tamil Nadu.
Dr S SUDHA, M.A., M.Phil., P.hD
PRERNA H, IIIRD Year, BA Business Economics, Ethiraj College for Women

ABSTRACT
This paper highlights consumer awareness and perception towards insurance industry
opportunities. Since, the world we live is in full of risks and uncertainties. Insurance is a tool by
which casualties of a small number are compensated out of the finances collected from
plenteous. The insurance companies provide various schemes to its policyholders to safeguard
against the uncertainties. This paper helps us to understand how the consumer’s perception
differs from person to person. How a consumer selects the various policies provided by the
insurance companies, different types of insurance policy covers provided by the insurance
companies and various insurance related Government Schemes. The primary objective is to find
the consumer’s awareness level towards insurance industry. It was analyzed that the majority of
respondents are aware about the insurance policies and had purchased life insurance the most.

Keywords
Insurance, Consumer awareness, Consumer perception, Insurance policy

INTRODUCTION
Insurance is considered as one of the major segment of the economy for its growth and
development. This industry provides long term funds which are necessary for the development of
the nation. Insurance in this current form has its history dating back to 1818 when Oriental Life
Insurance Company in Kolkata. In 1870, Bombay Mutual Life Assurance Society became the
first Indian insurer. The insurance sector is made up of companies that offer risk management in
the form of insurance contracts. The basic concept of insurance is that one party, the insurer, will
guarantee payment for an uncertain future event. Meanwhile, another party, the insured pays a
smaller premium to the insurer in exchange for that protection on that uncertain future
occurrence.

Functions of Insurance:
 They provide certainty to the insured.
 They ensure the protection of the family.
 They prevent the damages that can come from losses.
 It provides capital.
 It helps in boosting the economy.
Types of insurance
Insurance can be classified broadly as:

 Life insurance
 General insurance, which include:
 Motor insurance
 Health insurance
 Travel insurance
 Home insurance
 Fire insurance

Benefits of insurance
 It provides financial support
 Insurance reduces the risk
 It maintains the stability of living standard
 It motivates people for savings
 It provides job opportunities

Government Schemes
The following are the different types of Government insurance scheme provided to the
consumers for their welfare, they are
 Ayushman Bharat Yojana
 Pradhan Mantri Suraksha Bima Yojana
 Aam Aadmi Bima Yojana
 Employment State Insurance Scheme
 Janshree Bima Yojana
 Chief Minister’s Comprehensive Insurance scheme
 Universal Health Insurance Scheme

NEED OF THE STUDY

Individuals, families businesses, properties and assets are exposed to different types and levels of
risks. These include risk of losses of life, health, assets, property, etc. While it is not always
possible to prevent unwanted events from occurring, financial world has developed tools that
protect individuals and businesses from these losses. Insurance is a financial tool that reduces or
eliminates the cost of loss or effect of loss caused by different types of risks.

The main importance of the study is to see the behavior of people and their satisfaction level with
the insurance sectors. It’s helpful for the insurance sectors for making policies according to
customer demand and their needs.
REVIEW OF LITERATURE
Review of Literature is an overview of the previously published works on a topic. A literature
review is supposed to provide the researcher and the audience with a general image of the existing
knowledge on the topic under question.

Keerthi, R Vijayalakshmi (2009) in their article, “A STUDY ON THE EXPECTATIONS

AND PERCEPTION OF THE SERVICES IN PRIVATE LIFE INSURANCE
COMPANIES” the policyholders expectations are well met in case of certain factors like
quality. But in the case of other variables, there exists a significant gap that the policyholders
have experience of low levels of service as against their expectations.
Sridevi (2012) in her paper “ A STUDY OF BUYING BEHAVIOR OF CONSUMERS
TOWARDS LIFE INSURANCE POLICIES” reported that the consumer’s perception
towards life insurance policies were positive. It developed positive mind sets for their
investment pattern in insurance policies. The major factors which play an important role in
developing consumer’s perception towards life insurance policies are consumer loyalty,
service quality and company image.

OBJECTIVES OF THE STUDY

1. To analyze the customer’s perception about the insurance industry.

2. To find the awareness level of people regarding insurance in Chennai.
3. To examine the various government insurance schemes provided to the customers.

HYPOTHESIS OF THE STUDY

H0: There is no association between the age of the respondents and their expectations from
an insurance policy.
H1: There is association between the age of the respondents and their expectations from an
insurance policy.
H0: There is no significant relationship between Monthly income and the availability of
Insurance policy.
H1: There is a significant relationship between Monthly income and the availability of
Insurance policy.

RESEARCH METHODOLGY

The study is conducted between the age group of 18 to 60 years where the majority of
respondents were found to be employed and insured themselves. This paper includes both
primary data and secondary data respectively with the total responses of 50 people. The
responses were collected by a questionnaire circulated online through random sampling
method. This paper include tables, pie charts, Chi square test and correlation analysis
 DATA ANALYSIS AND INTERPRETATIONS

TABLE 1: AWARENESS OF INSURANCE POLICIES BY THE RESPONDENTS

TABLE NO 1
S.NO AWARENESS OF INSURANCE NO OF RESPONDENTS PERCENTAGE
1 YES 38 76
2 NO 12 24

TOTAL 50 100
Source: Primary Data

INTERPRETATION

The above table shows that majority of the respondents are aware and have purchased
different insurance policies who are of 76% of the total respondents.

TABLE 2: CHOICE OF PREFERRED POLICIES BY THE RESPONDENTS

TABLE NO 2
S.NO POLICIES MOSTLY SLIGHTLY SOMETIMES NEVER RARE
PREFERRED PREFERRED
1 Child plan 20 13 5 7 5
2 Pension plan 22 13 11 3 1
3 Protection plan 24 12 9 4 1
4 Savings plan 26 12 8 1 3
5 Life Insurance 36 9 3 NIL 2
6 Hospitalization/ 31 11 3 3 2
treatment of illness
7 Burglary and theft 15 20 7 5 3
insurance
8 Fire insurance 12 20 7 6 5
Source: Primary data

INTERPRETATION:

The above table shows that the majority of the respondents prefer life insurance as it
provides financial security to the family and Child plan is the least preferred due to the fear
of lack of financial discipline.
TABLE 3: EXPECTATIONS FROM A POLICY BY THE RESPONDENTS

TABLE NO 3
S.NO ASPECTS OF EXPECTATIONS NO OF RESPONDENTS PERCENTAGE
1 Investment 4 8
2 Protection 9 18

3 Savings 7 14

4 Tax Benefits 2 4
5 All of the above 28 56
TOTAL 50 100
Source: Primary data

INTERPRETATION:

The above table shows that the majority of the respondents expect investment, protection,
savings and tax benefits from an insurance policy who are of 56% of the total respondents.

TABLE 4: SELECTION CRITERIA OF INSURANCE COMPANY BY THE

RESPONDENTS

TABLE NO 4
S.NO SELECTION CRITERIA’S NO OF RESPONDENTS PERCENTAGE
1 Premium outflow 1 2
2 Company reputation 3 6

3 Service quality 8 16

4 Return on investment 10 20
5 All of the above 28 56

TOTAL 50 100
Source: Primary data

INTERPRETATION

The above table shows that the majority of the respondents expect premium outflow, good
service quality, company reputation and return on investment from an insurance company
who are of 56% of the total respondents.
 TABLE 5: AWARENESS ON DIFFERENT GOVERNMENT SCHEMES

TABLE NO 5
S.NO SCHEMES HIGHLY MODERATELY SLIGHTLY AWARE NOT AWARE
AWARE AWARE AWARE
1 Ayushman 16 17 5 0 12
Bharat Yojana
2 PradhanMantri 15 18 5 1 11
Suraksha Bima
Yojana
3 Universal Health 11 14 8 1 16
insurance
scheme(UHIS)
4 Aam Aadmi 7 13 8 3 19
Bima Yojana
6 Janshree Bima 7 11 8 2 22
Yojana
Source: Primary data

INTERPRETATION
The above table shows that the majority of the respondents are highly aware about the
Ayushman Bharat Yojana and are not aware about Janshree Bima Yojana Scheme.

TABLE 6: HINDRANCES PREVENTING THE PURCHASE OF POLICY BY THE

RESPONDENTS
TABLE NO 6

S.NO HINDRANCES NO OF RESPONDENTS PERCENTAGE

1 Lack of awareness 35 70
2 Lack of commitment 17 34

3 Fear of responsibility 16 32

4 Low income 20 40
5 Poor attitude of the insurance agents 8 16
6 Level of premium 5 10
7 Low interest rates 14 28
8 Poor Benefits 10 20
Source: Primary data
INTERPRETATION
The above table shows that the majority of the respondents are not aware about the insurance
policies which hinder them to buy a policy who are of 70% of the total respondents.

HYPOTHESIS
I. CHI SQUARE TEST

H0: There is no association between the age of the respondents and their expectations from
an insurance policy.
H1: There is association between the age of the respondents and their expectations from an
insurance policy.

TABLE 7: AGE OF THE RESPONDENTS AND THEIR EXPECTATIONS FROM AN

INSURANCE POLICY

TABLE NO 7
Descriptive Statistics

N Mean Std. Deviation Minimum Maximum

Age 50 2.78 1.093 1 5

Expectations 50 3.82 1.466 1 5

Test Statistics

Age Expectations

Chi-Square 45.400a 43.400a

df 4 4
Asymp. Sig. .000 .000

a. 0 cells (.0%) have expected frequencies less than 5. The minimum expected cell frequency is 10.0.
INTERPRETATION
The above table shows the association of age of the respondents and their expectations from an
insurance from an insurance policy. The chi square value is 45.400 and 43.300 respectively for 4
degrees of freedom and asymptotic significance is 0.00 which is lesser than 0.05. Therefore, Null
hypothesis is rejected and Alternative hypothesis is accepted as the age of the respondents
influence their expectations from an insurance policy.

II. CORRELATION ANALYSIS

H0: There is no significant relationship between Monthly income and the availability of
Insurance policy.
H1: There is a significant relationship between Monthly income and the availability of
Insurance policy.

TABLE 8: MONTHLY INCOME OF THE RESPONDENTS AND THE AVAILABILITY

OF INSURANCE POLICIES

TABLE NO 8

Descriptive Statistics

Mean Std. Deviation N

2.14 1.294 50
MonthlyIncome

1.24 .431 50
Availability of Insurance policies
 Correlations

MonthlyIncome Availability of
Insurance
policies

Pearson Correlation 1 -.317*

MonthlyIncome Sig. (2-tailed) .025

N 50 50
Pearson Correlation -.317* 1

Availability of Insurance policies Sig. (2-tailed) .025

N 50 50

*. Correlation is significant at the 0.05 level (2-tailed).

INTERPRETATION
The mean and standard deviation of variables is given under descriptive statistics. This is done
according to Karl Pearson’s correlation, where the significance value of monthly income is 0.025
which is lesser than 0.05. Therefore, we reject the null hypothesis. The availability of insurance
policy depends on the monthly income.

FINDINGS
 The majority of the respondents are aware and have purchased different insurance
policies among the total respondents.
 Life insurance is the most preferred policy as it provides financial security to the family
and Child plan is the least preferred due to the fear of lack of financial discipline.
 The majority of the respondents expect investment, protection, savings and tax benefits
from an insurance policy.
 The majority of the respondents expect premium outflow, good service quality, company
reputation and return on investment from an insurance company.
 Most of the respondents are highly aware about the Ayushman Bharat Yojana and are not
aware about Janshree Bima Yojana Scheme.
 Lack of awareness about the insurance policies hinder people to buy an insurance policy.
 As per Chi square test, there is an association between the age of the respondents and
their expectations from an insurance policy.
 As per Correlation analysis, there is significant relationship between the monthly income
and availability of insurance policies.
SUGGESTIONS
With respect to insurance policies, insurance companies should try to bring their new products to
the attention of potential early adopters and the existing customers. The cost, quality and return on
investment plays a major role in deciding the competitiveness among the companies. Return on
investment, company reputation and premium outflow are the most preferred attributes that are
expected by the respondents. Hence, the significant focus should be given to these attributes. The
government insurance schemes should be advertised more to the public as it strives to ensure
consumers have access to beneficial and compliant insurance products and are protected against
insurers that fail to operate in ways that are legal and fair to consumers.

CONCLUSION OF THE STUDY

This study titled “Study on Consumer Awareness and perception towards Insurance Industry
Opportunities with special reference to Chennai, Tamil Nadu” enables us to understand how far
the consumers are aware about the insurance policies and how consumer’s perception differs
from person to person. The consumer expects investment, protection, savings and tax benefit
from an insurance policy. The company’s reputation and return on investment being the
important criteria that the consumer considers before taking up an insurance as people expect
safety and security for their money which they invest. The government plays a major role in
educating the public with its insurance schemes. Thus, the mission of widening the spread of
insurance can be achieved through proper planning and commitment of the insurance companies
to improve service among the customers.

REFRENCES
 Rajni M Shah (2007), Paper presented at the CD Deshmukh’s Seminar on “CREATING
CONSUMER AWARENESS IN LIFE INSURANCE”
 Syed Ibrahim (2012) in his research, “CONSUMER’S GRIEVANCE REDRESSAL
SYSTEM IN THE INDIAN LIFE INSURANCE INDUSTRY – AN ABALYSIS”
 Keerthi, R Vijayalakshmi (2009) in their article, “A STUDY ON THE EXPECTATIONS
AND PERCEPTION OF THE SERVICES IN PRIVATE LIFE INSURANCE
COMPANIES”
 Arnika Srivastava (2012) reviewed the insurance industry in her paper “INDIAN LIFE
INSURANCE INDUSTRY – THE CHALLENGING TRENDS”
 IRDAI Reports
 BIBLIOGRAPHY
 Insurance Principles and Practice – S CHAND
 https://irdai.gov.in/
 https://www.slideshare.net/hemanthcrpatna/a-project-report-on-customer-perception-
towards-insurance
 https://www.academia.edu/7726181/A_Project_Report_On_Consumer_Perception_Tow
ards_Insurance_Sector_IN_PARTIAL_FULFILLMENT_OF_BACHELER_OF_BUSIN
ESS_ADMINISTRATION
 https://policyholder.gov.in/

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