252033000 Blackbook Project on Insurance

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CHAPTER 1

INTRODUCTOIN

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INTRODUCTION TO THE STUDY

Everyone is exposed to various risks. Future is very uncertain, but there is way to protect one’s family and make one’s children’s future safe. Life Insurance companies help us to ensure that our family’s future is not just secure but also prosperous. Life Insurance is particularly important if you are the sole breadwinn er for your family. The loss of you and your income could devastate your family. Life insurance will ensure that if anything happens to you, your loved ones will be able to manage financia lly. This study titled “Study of Consumers Perception about Life Insurance Policies” enab les the Life Insurance Companies to understand how consumer’s perception diff ers from person to person. How a consumer selects, organizes and interprets t he service quality and the product quality of different Life Insurance Policies, offered by various Life Insurance Companies. Insurance is a tool by which fatalities of a small number are compens ated out of funds (premium payment) collected from plenteous. Insurance companies pa y back for financial losses arising out of occurrence of insured events e.g. in personal accident policy death due to accident, in fire policy the insured events are fire and other allied perils like riot and strike, explosion etc. hence insurance safeguard against un certainties.

It provides financial recompense for losses suffered due to incident o f unanticipated events, insured with in policy of insurance. Moreover, through a numbe r of acts of parliament, specific types of insurance are legally enforced in our country e.g. third party insurance under motor vehicles Act, public liability insurance for hand lers of hazardous substances under environment protection Act. Etc. 3 WHAT IS INSURANCE It is a commonly acknowledged phenomenon that there are countless risk s in every sphere of life .for property, there are fire risk; for shipment of goods. There are perils of sea; for human life there are risk of death or disability; and so o n .the chances of occurrences of the events causing losses are quite uncertain because t hese may or may not take place. Therefore, with this view in mind, people facing comm on risks come together and make their small contribution to the common fund. While it may not be possible to tell in advance, which person will suffer the losses, it is possible to work out how many persons on an average out of the group, may suffer losses. When risk oc curs, the loss is made good out of the common fund .in this way each and every one sha res the risk .in fact they share the loss by payment of premium, which is c alculated on the likelihood of loss .in olden time, the contribution make the above-sta ted notion of insurance DEFINITION OF INSURANCE Insurance has been defined to be that in, which a sum of money as a premium is paid by the insured in consideration of the insurer’s bearings the risk of paying a large sum upon a given contingency. The insurance thus is a contract whereby: a. b. the c.

Certain sum, termed as premium, is charged in consideration, Against the said consideration, a large amount is guaranteed to be paid by insurer who received the premium, The compensation will be made in certain definite sum, i.e., the loss or the

policy amount which ever may be, and d. The payment is made only upon a contingency More specifically, insurance may be defined as a contact between two parties, wherein one party (the insurer) agrees to pay to the other party (the insured) or the be neficiary, a certain sum upon a given contingency (the risk) against which insurance is requi red. 4

TYPES OF INSURANCE Insurance occupies an important place in the modern world because of the risk, which can be insured, in number and extent owing to the growing complexity of present day economic system. The different type of insurance have come about by p ractice within insurance companies, and by the influence of legislation controlling th e transacting of insurance business, broadly, insurance may be classified into the following cate gories: 1. Classification from business point of view a) Life insurance, and b) General insurance 2. Classification on the basis of nature of insurance a) Life insurance b) Fire insurance c) Marine insurance d) Social insurance, and e) Miscellaneous insurance 3. Classification from risk point of view a) Personal insurance b) Property insurance c) Liability insurance d) Fidelity general insurance

5 THE IMPORTANCE OF INSURANCE Insurance benefits society by allowing individuals to share the risks fa ced by many people. But it also serves many other important economic and societal functions. Because insurance is available and affordable, banks can make loans with the assurance that the loan’s collateral (property that can be taken as payment if a loan goes unpaid) is covered against damage. This increased availability of credit helps people buy homes and cars. Insurance also provides the capital that communities need to quickly rebuild and recover economically from natural disasters, such as tornadoes or hurricanes. Insurance itself has become a significant economic force in m ost industrialized countries. Employers buy insurance to cover their employees against wor k-related injuries and health problems. Businesses also insure their property, including t echnology used in production, against damage and theft. Because it makes business operatio ns safer, insurance encourages businesses to make economic transactions, which ben efits the economies of countries. In addition, millions of people work for insurance compa nies and related businesses. In 1996 more than 2.4 million people worked in the insurance industry in the United States and Canada. Insurance as an investment that of

fers a lot more in terms of returns, risk cover & as also that tax concessions & added bonuses Not all effects of insurance are positive ones. The possibility of ea rning insurance payments motivates some people to attempt to cause damage or losses. Without the possibility of collecting insurance benefits, for instance, no one would think o f arson, the willful destruction of property by fire, as a potential source of money.

6 THE INSURANCE INDUSTRY TODAY Since the 1970s, the insurance business has grown dramatically and undergone tremendous changes. As a result of the deregulation of financial servi ces businesses— including insurance, banking, and securities trading—the roles, products, and serv ices of these formerly distinct businesses have become blurred. For instance, citizens i n the U.S. state of California voted in 1988 to allow banks to sell insurance in that state . In Canada, banks may also soon be allowed to sell insurance. Advances in communications technology have also allowed traditionally distinct financial businesses to keep instantaneous track of development s in other businesses and compete for some of the same customers. Some insurance companies now offer deposit accounts and mortgages. In the United States, life insurance compa nies now sell more pension plans and other asset management services than they do conventional life insurance. Developments in computer technology that have given insurance providers the ability to quickly access and process information have allowed them to custo m-design policies to fit the needs of individual customers. But the increasing complexity of policies has also made some aspects of buying and selling insurance more difficult. In addition, improvements in geological and meteorological technology have th e potential to change the way property insurers calculate risks of damage. For exa mple, as scientists improve their abilities to predict severe weather patterns, such as hurricanes, and geological disturbances, such as earthquakes, insurers may change how they p rovide protection against losses from such events

7 EVOLUTION OF INSURANCE IN INDIA The marine insurance is the oldest form of insurance. If we trace

Indian history there are evidence that marine insurance was practiced here about thre e thousand years ago. The code of Manu indicates that there was the practice of marine insurance carried out by the traders in India with those of Srilanka, Egypt and Greece .it is wond erful to see that Indians had even anticipated the doctrine of average and contribu tion. Fright was fixed according to season and was then very much at the mercy of th e wind and other elements. Travelers by sea and land were very much exposed to the ri sk of losing their vessels and merchandise because of piracy on open seas and highway ro bbery of caravans was very common. The practice of insurance was very common during the r ule of Akbar to Aurangzeb, but the nature and coverage of the insurance in this peri od is not well known. It was the British insurer who introduced general insuranc e in India in the modern form. The Britishers opened general insurance in India around the year 17 00 .the first company known as the sun insurance office was set up in Calcutta in the ye ar 1710. This was followed by several insurance companies like London assurance and royal exchange assurance (1720), Phoenix Assurance Company (1782). Etc. General insura nce business in the country was nationalized with effect from 1st January 1973 by the General Insurance Business (Nationalization) Act, 1972. More than 100 n on-life insurance companies including branches of foreign companies operating wi thin the country were amalgamated and grouped into four companies, viz., the National Ins urance Company Ltd., the New India Assurance Company Ltd., the Oriental Insurance Compa ny Ltd., and the United India Insurance Company Ltd. with head offices a t Calcutta, Bombay, New Delhi and Madras, respectively.

8 Life insurance in the current form came in Indi a from united kingdom with the establishment of a British firm, oriental life assurance company in 181 8 followed by Bombay life assurance company in 1823, the madras equitable life insurance society in 1829 and oriental life assurance company in 1874.prior to 1871, In dian lives were treated as sub standard and charged an extra premium of 15% to 20%. Bombay mutual life assurance society, an Indian insurer that came in to existence in 1871, was the first to cover Indian lives at normal rates. The Indian insurance company Act 1923 was en

acted inter alia, to enable the government to collect statistical information about li fe and nonlife insurance business transacted in India by Indian and foreign insu rer, including the provident insurance societies. The first half of the 20 th century marked by two world war, the adverse affects of the World War I and World War II on the economy of India, and in between them the period of world wide economic crises triggered by the Great depression. The firs t half of the 20th century was also marked by struggles for India’s independence. The aggregate effect of these events led to a high rate of bankruptcies and liquidation of life insurance companies in India. This had adversely affected the faith of the gene ral public in the utility of obtaining life cover In this background, the Parliament of India passed the Life Insurance of India Act on 19th June 1956, and the Life Insurance Corporation of India was creat ed on 1st September, 1956, by consolidating the life insurance business of 245 private lif e insurers and other entities offering life insurance services.

9 Since 1972, the insurance sector has been to tally under the control of government of India through LIC and GIC and its subsidiaries. As a r esult, revenue of both of them increased in the last years .the amount of savings pooled by LIC in creased from Rs.2704 crores in 1974 to Rs .57670 in 1994 with an annual growth rate of 1 6.53% .similarly premium underwritten by GIC rose from 280 crores in 193 to 7647 crores in 1998 showing an annual growth rate of 25.18%. Despite increase in premium collected by both LIC and GIC their were i nefficiency and red tapeisum creeped in to the insurance sector. Apart from that a major pol icy shift by the Narasimha Rau government during 1990’s.the Indian economy opened for forei gn competition .In this background The government of India in 1993 had set-up a high powered committee by R.N Malhothra ,former governor reserve bank of In dia, to examine the structure of Indian insurance sector and recommended change s to make it more efficient and competitive keeping in view structural changes in o ther part of the financial system of the country. Insurance sector has been opened up for competition from Indian privat

e insurance companies with the enactment of Insurance Regulatory and Development Authority A ct, 1999 (IRDA Act). As per the provisions of IRDA Act, 1999, Insurance Regulatory and Development Authority (IRDA) was established on 19th April 2000 to pro tect the interests of holder of insurance policy and to regulate, promote and ensure orde rly growth of the insurance industry. IRDA Act 1999 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.

10 EVOLUTION OF INSURANCE ORGANIZATION With a view to serve the society, the insurance organizations have b een developed in different forms with innovation of insurance practice for social we lfare and development; some of these forms are outlined here. a) Self-insurance The arrangement in which an individual or concern sets up a private fund to meet the future risk. If some losses happened in the future the firm meet s the loss out of the fund. While it may be called ‘self insurance’ it is not a single matter of fact, ins urance at all because there is no hedge, no shifting, or distributing the burden of risk a mong larger Persons. It is merely a provision to meeting the unforeseen event. He re the insured become the insurer for the particular risk. But it can be effectively worked only when there is wide distribution of risks subjected the same hazard. b) Partnership A partnership firm may also carry on the insurance business for the sake of prof it. Since it is not an entity distinct from the persons comprising it, the personal liability of partners in respect to the partnership debts is unlimited. In case of huge loss the partners may have to pay from their own personal funds and it will not be profitable to them to start s insurance business .in the early period before the advent of joint stock companie s many insurance undertakings were partnership firms or unincorporated companies c) Joint stock companies The joint stock companies are those, which are organized by the share holders who

subscribe the necessary capital to start the business. These are formed for earn ing profits for the stockholders who are the real owners of the companies. The m anagement of a company is entrusted to a board of directors who is elected by the shareholders from amongst themselves. The company can operate insurance business and poli cyholders have nothing to do with the management of the concern. But in life insurance it is the practice to share certain portion of profit among the certain policyholders. 11 d) Mutual fund companies The mutual fund companies are co- operative association formed for the purpose of effecting insurance on the property of its members. The po licyholders are themselves the shareholders of the companies each member is insured as well as i nsured. They have power to participate in management and in the profit sharing to the fu ll extent. Whenever the income is more than the expenses and claims, it is accumulated I th e form of saving and is entitled in reducing the rate of premium. Since the insured are insurers also, they always try to reduce the management expenses and to keep the business at sound level. e) Co-operative insurance organizations Cooperative insurance organizations are those conce rns, which are incorporated and registered under Indian cooperative societies Act. The concerns are also called ‘co operative insurance societies’ these societies like mutual fund companies are non profit organization .the aim is to provide insurance protection to i ts members at the lowest reasonable net cost .the Indian insurance Act. 1938, has pr ovided special provisions for the co-operative insurance societies, but after nationalization t he societies have ceased to exist. f) Lloyd’s Association Lloyd’s association is one of the greatest insurance institutio ns in the world. Taking its name from the coffee house Lloyd where underwriters assembl ed to transact business and pick-up news. The organization traces its origins to the latter part of the seventeenth century .so it is the oldest insurance organization in exi sting form in the world. In 1871,Lloyds Act was passed incorporating the members of the associatio n into a single corporate body with perpetual succession and a corporate seal .the powers of Lloyds corporation were extended from the business of marine insurance to the other

insurance and guarantee business. The Lloyds Association also publishes, Lloyds list and register of shipping for the information of insuring public and the insurers 12 g) State Insurance The government of a nation, some times, owns the and runs the business for the benefit of the public. The sate insurance as that insurance which is under public sector. In Brazil, Japan and Mexico, nce are largely nationalized. Previously, the state undertook only those insurances, regarded as vital for the national interest.

insurance is defined the insura which were

I IN NS SU UR RA AN NC CE E S SE EC CT TO OR R R RE EF FO OR RM MS S Having looked at the insurance sector, the efforts made by the govern ment to make the industry more dynamic and customer friendly. To begin with, the Malhotra committee was set up with the objective of suggesting changes that wo uld achieve the much required dynamism. T Th he e M Ma al lh ho ot tr ra a C Co om mm mi it tt te ee e R Re ep po or rt t In 1993, Malhotra Committee, headed by former Finance Secretary and RBI Governor R. N. Malhotra, was formed to evaluate the Indian insurance industry an d recommend its future direction. In 1994, the committee submitted the report and gave the following recommendations: S St tr ru uc ct tu ur re e 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 the se subsidiaries can act as independent corporations All the insurance companies should be given greater freedom to operate

13 C Co om mp pe et ti it ti io on n 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 entit y Foreign companies may be allowed to enter the industry in collaboratio n 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 stat R Re eg gu ul la at to or ry y B Bo od dy y The Insurance Act should be changed.

An Insurance Regulatory body should be set up. Controller of Insurance (Currently a part from the Finance Ministry) I In nv ve es st tm me en nt ts s 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 compan y (There current holdings to be brought down to this level over a period of time). C Cu us st to om me er r S Se er rv vi ic ce e 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. Overall, the committee strongly felt that in order to improve the cus tomer services and increase the coverage of the insurance industry should be opened up to competiti on. But at the same time, the committee felt the need to exercise caution as any fai lure on the part of new players could ruin the public confidence in the industry

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Few Life Insurance policies are: Whole life policies - Cover the insured for life. The insured does no t receive money while he is alive; the nominee receives the sum assured plus bonus u pon death of the insured. Endowment policies - Cover the insured for a specific period. The insu red receives money on survival of the term and is not covered thereafter. Money back policies - The nominee receives money immediately on death of the insured. On survival the insured receives money at regular intervals d uring the term. These policies cost more than endowment with profit policies. Annuities / Children s policies - The nominee receives a guaranteed amo unt of money at a pre-determined time and not immediately on death of the insured. On survival the insured receives money at the same pre-determined time. These policies are best suited for planning children s future education and marriage costs. Pension schemes - are policies that provide benefits to the insured only upon re tirement. If the insured dies during the term of the policy, his nominee would receive the benefits either as a lump sum or as a pension every month. Since a single policy cannot m eet all the insurance objectives, one should have a portfolio of policies covering all t he needs

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1.2 BACKGROUND OF THE STUDY “Life Insurance is a contract for payment of a sum of money to the person assured on the happening of the event insured against”. Usually the insurance contract provi des for the payment of an amount on the date of maturity or at specified dates at periodic i ntervals or at unfortunate death if it occurs earlier. Obviously, there is a pric e to be paid for this benefit. Among other things the contracts also provides for the payment of premi ums, by the assured. Life Insurance is universally acknowledged as a tool to eliminate risk, substitu te certainty for uncertainty and ensure timely aid for the family in the unfortunate event of the death of the breadwinner. In other words, it is the civilized world’s partial solution to the problems caused by death. Life insurance helps in two ways dealing wi th premature death, which leaves dependent families to fend for themselves and old age withou t visible means of support. The most common types of life insurance are whole life insurance and term life insurance. Whole life insurance provides a lifetime of protection as long as you pay the premiums to keep the policy active. They also accrue a cash value an d thus offer a savings component. Term life insurance provides protection only during the term of the policy and the policies are usually renewable at the end of the term

16 There are many Life Insurance Companies like LIFE INSURANCE CORPORATION OF INDIA BAJAJ ALLIANZ LIFE INSURANCE COMPANY ICICI PRUDENTIAL LIFE INSURANCE COMPANY HDFC STANDARD LIFE INSURANCE COMPANY BIRLA SUN-LIFE INSURANCE COMPANY

ING VYSYA LIFE INSURANCE COMPANY METLIFE INSURANCE COMPANY TATA AIG LIFE INSURANCE COMPANY MAX NEW YORK LIFE INSURANCE COMPANY OM KOTAK MAHINDRA LIFE INSURANCE COMPANY

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CHAPTER 2 RESEARCH DESIGN 18 RESEARCH DESIGN 2.1 STATEMENT OF THE PROBLEM This Study will help us to understand the consumer’s perception about l ife insurance companies. This study will help the companies to understand, how a consumer selects, organizes and interprets the Quality of service and product offered by life insurance companies. 2.2 SCOPE OF THE STUDY This study is limited to the consumers within the limit of The study will be able to reveal the preferences, f the customers regarding the life insurance products, It rance companies to know whether the existing products are the customers needs .

Bangalore city. needs, perception o also help the insu really satisfying

2.3 NEED FOR THE STUDY 1) The deeper the understanding of consumer’s needs and perception, the earlier the product is introduced ahead of competitors, the expected contributi on margin will be greater .Hence the study is very important. 2) Consumer markets and consumer buying behavior can be understood bef ore sound product and marketing plans are developed 3) This study will help companies to customize the service and produc t, according to the consumer’s need. 4) This study will also help the companies to understand the experien ce and expectations of the existing customers. 5) Apart from creating, manufacturing and distribution capabilities for life

insurance products, an in depth study of the consumers, their preferences and demand for their product is very necessary for setting up an efficien t marketing network. 19 2.4 OBJECTIVE OF THE STUDY o Ascertain the profile and characteristics of

potential buyers.

o To have an insight into the attitudes and behaviors of customers. o To find out the differences among perceived service and expected service . o To produce an executive service report to upgrade service characteristics of life insurance companies. o To access the degree of satisfaction of the consumers with their current bran d of Insurance products. 2.5. REVIEW OF LITERATURE: The literature review section critically examine the recent or historic ally significant studies, company data or industry reports that acts as a basis for proposed stud ies to begin with the research discussion of the related literature and relevant se condary data from a comprehensive prospective, moving to more specific studies, that are as sociate with research problem. Basically the literature should be applied to the st udy, than the researcher proposes. The literature may also explain the needs for the proposed work to appraise the short comings and informational gaps in secondary data sources. To carry the research work the researcher has gone thro ugh a few reports, books, journals and websites. The details regarding Life Insurance Indu stry, history, origin and growth of the industry is also taken from some books, mag azines etc. The sources of this information are as follows: Catalogues and Broachers from various life insurance companies. Articles from magazines and news paper. Information from various websites.

20 2.6 RESEARCH DESIGN: A research design is a basic plan, which guides the researcher in the collectio n and analysis of data required for practicing the research. Infect the research desig n is the conceptual structure where the research is conducted. It constitutes the ‘Blue Pri nt’ for the collection, measurement and analysis of the data. The study is carried out t o understand the Consumer Perception about life insurance companies in Bangalore city .For this study the researcher used exploratory research design. This resea

rch covers 50 consumers in Bangalore city, belonging to various age groups. 2.7 SAMPLE DESIGN: The process of drawing a sample from a large population is called sampling. Popu lation refers to the total of items about which information is defined. Well -selected samples may reflect fairly and accurately the characteristics of the population. Sampling Unit: The sample unit of this survey was the customers having life insurance policies in Bangalore city. Sample Size: The sample size was 50 customers of different life insurance companies, from the various parts of the Bangalore city. Sampling Technique Adopted: Convenient sampling 2.8 SOURCES OF DATA: After identifying and defining the research problem and determining specific inf ormation required to solve the problem the researcher will look for the type and sources of data which may yield the desired results, while deciding about the method of data col lection to be used for the study, there are two types of data.

21 Secondary Data: Secondary data means data that are already available i.e. they refer to the data which have been collected and analyzed by someone and can save both money and t ime of the researcher. Secondary data may be available in the form of company re cords, trade publications, libraries etc. Secondary data sources are as follows: Company Reports Daily Newspaper Standard Textbook Various Websites Primary Data: Primary data are those, which are collected for the first time. Primary data is collected by framing questionnaires. The questionnaire contained questions, which are both openended and closed-ended. Open-ended questions are questions requiring answers in the responder’s own words. Closed-ended questions are those wherein the respondent has to merely check the appropriate answer from a list of options available. Any doubts raised by the respondents were clarified to get the perfect answers from the distributo rs. Openended questions yielded more insightful information, whereas closed-Ended questions

were relatively simple to tabulate and analyze. 2.9 FIELD WORK: An interview-schedule and well-structured questionnaire is administered t o the target respondents to collect primary data (Copy of questionnaire is attached in the ap pendix) Open and close-ended questions are used in the questionnaire. The orders of the questions are in such a manner that they begin with simple questions and lead on the quest ions that needed more involvement from respondents.The secondary data are collecte d from periodicals, magazines, journals and Internet.

22 OPERATIONAL DEFINITIONS OF THE STUDY Marketing: Marketing is a social and managerial process by which individuals and group obta in what they need and want through creating, offering and exchanging products of value with others . Marketing Management: Marketing Management is the process of planning and executing the conception, pr icing, promotion and distribution of individual and organizational goals. Marketing Research: Marketing research is the systematic and objective search for, and analysis of i nformation relevant to the identification and solution of any problems in the field of mark eting. Consumer Research: Consumer research is the methodology used to study consumer behaviour. Consumer Behaviour: Consumer behaviour is the study of how individuals make decisions to spend their available resources [time, money, efforts] on consumption related items . Market Segmentation: Market segmentation is the process of dividing a market in the distin ct subsets of consumer with common needs or characteristics and selecting one or mor e segments to target with distinct marketing mix. Positioning: Positioning is the act of designing the company’s offering and image so that they occupy a meaningful and distinct competitive position in the target consumer’s mind. 23 Perception:

Perception is the process by which an individual selects, organizes, a nd interprets information input to create a meaningful picture of the world. For a marketer t o influence a motivated buyer to buy their products rather than competitors they must be careful to take the perception process into account while designing their marketin g campaigns. Perception therefore influence what product consumer buys. Attitude: An attitude is a person enduring favorable or unfavorable evaluation, em otional feeling, and action tendencies towards some object or idea. Attributes: Attributes are the strengths and weaknesses of a brand that create attitudes an d are used by consumers to choose between brands that are relatively similar or functionally equivalent. Values: A value is a concept of the desirable. An internalized standard of evaluation a person possession. This standard determines or guide an individual evaluation of the ma ny objects encountered in everyday life. Brand: A brand is a name, term, sign, symbol, or design or a combination o f them, used to identify the goods or services of one seller or group of seller and the differentiate them from those of competitors.

24 2.10 LIMITATIONS OF THE STUDY Although the study was carried out with extreme enthusiasm and careful planning there are several limitations, which handicapped the research viz. Time Constraints: The time stipulated for the project to be completed is less and thus there are c hances that some information might have been left out, however due care is taken to include all the relevant information needed. Sample size: Due to time constraints the sample size was relatively small and would definitel y have been more representative if I had collected information from more respondents . Accuracy:

It is difficult to know if all the respondents gave accurate information; some r espondents tend to give misleading information.

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CHAPTER 3

PROFILE OF THE INDUSTRY 26 3.1 INDUSTRY PROFILE History and Development of Life Insurance Life Insurance, in its present form, came to India from the United K ingdom with establishment of a British firm, Oriental Life Insurance Company in Ca lcutta in 1818, followed by Bombay Life Assurance Company in 1823, the Madras Equitabl e Life Insurance society in 1829 and Oriental Government security Assurance Co mpany in 1874. Prior to 1871, Indian Lives were treated as sub-standard and ch arged an extra premium of 15% to 20%. Bombay Mutual Life Assurance Society, a Indian insurer wh ich came into existence in 1871 was the first to cover Indian lives at normal rates. The Indian life Assurance Companies Act, 1912 was the first statutory measure to regulate life insurance business. Later, in 1928, the Indian Insurance Companies Act was enacted, to enable the government to collect statistical information ab out both life and non-life insurance business transacted in India by Indian and foreign insurers, including the provident insurance societies. Comprehensive arrangements were, howev er, brought into effect with the enactment of the Insurance Act, 1938. By 1956, 154 Indian insurers, 16 non-Indian insurers and 15 provident societies were carrying online insurance business in India. On 19 th January 1956, the management of the entire life insurance business of 229 Indian insurers and provident insurance so cieties and the Indian life insurance business of 16 non-Indian Life insurance com panies then operating in India, was taken over by the central Government and then nationaliz

ed on 1 st September 1956 when the Life Insurance Corporation came into existence. With largest number of life insurance policies in force in the world, Insurance happens to be a mega opportunity in India. It’s a business growing at the rate o f 15-20 per cent annually and presently is of the order of Rs 450 billion. Together with banking services, it adds about 7 per cent to the country’s GDP. Gross premium collection is nearly 2 per cent of GDP and funds available with LIC for investments are 8 per cent of GDP. 27 Yet, nearly 80 per cent of Indian population is without life insuran ce cover while health insurance and non-life insurance continues to be below internati onal standards. And this part of the population is also subject to weak social secur ity and pension systems with hardly any old age income security. This itself is an i ndicator that growth potential for the insurance sector is immense. A well-developed and evolved insurance sector is needed for economic development as it provides long-term funds for infrastructure developmen t and at the same time strengthens the risk taking ability. It is estimated that ove r the next ten years India would require investments of the order of one trillion US dolla r. The Insurance sector, to some extent, can enable investments in infrastructure develo pment to sustain economic growth of the country. INSURANCE AND BUSINESS ENVIRONMENT Insurance is considered as one of the important segment of the econom y for its growth and development. This industry provides long term funds which are esse ntial for the growth and development of the nation .so the growth of insurance indu stry largely depends up on the environment in which they exists. Here I would like to mention about Indian business environment and their impact on insurance sector. There are two type of environment which affect the business one is environment which is inte rnal to the organization (internal environment) and the other one which is external to the organization (external environment). Internal environment includes managem ent, technology, competitors, employees, shareholders, policyholders, marketing inter mediary etc. The external environment of insurance business has been classified in four parts, namely legal, economic, financial, and commercial. let us discus them in detail by taking

one by one.

28 THE INSURANCE REGULATORY AND DEVELOPMENT AUTHORITY (IRDA) The Malhotra Committee felt the need to provide greater autonomy to insurance companies in order to improve their performance and enable them to act as indepe ndent companies with economic motives. For this purpose, it had proposed set ting up an independent regulatory body- The Insurance Regulatory and Development Au thority. Based on the Malhotra committee report in April 2000 IRDA was incorpo rated. Since being set up as an independent statutory body the IRDA has put in a framework of globally compatible regulations. Section 14 of the IRDA Act 1999, lays the dutie s, power and functions of the authority .the authority shall have the duty to regulate, p romote and ensure orderly growth of the insurance business and reinsurance business. Reforms and Implications The liberalizations of the Indian insurance sector has been the subjec t of much heated debate for some years. The sector is finally set to open up to priv ate competition. The Insurance Regulatory and Development Authority bill will clear the way for priva te entry into insurance, as the government is keen to invite private sector pa rticipation into insurance. To address those concerns, the bill requires direct insurers to have a minimum paid-up capital of Rest. 1 billion, to invest policyholder’s funds only in India; and to restrict international companies to a minority equity holding of 26 pe rcent in any new company. Indian Promoters will also have to dilute their equity holdin g to 26 percent over a 10-year period. Over the past three year, around 30 companies have expressed interest in entering the sector and many foreign and Indian companies have arranged alliances. Whether the insurer is old or new, private or public, expanding the market will present chal lenges. A number of foreign Insurance Companies have set up representative office s in India and have also tied up with various asset management companies. Some of th e Indian companies, which have tied up with International partners, are.

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Indian Partners International Partners Bombay Dyeing General Accident, UK Tata American Int. Group, US Dabur Group Liberty Mutual Fund, US ICICI Prudential, UK Sundaram Finance Winterthur Insurance, Switzerland Hindustan Times Commercial Union, UK Ranbaxy Cigna, US HDFC Standard Life, UK CK Birla Group Zurich Insurance, Switzerland DCM Shriram Royal Sun Alliance, UK Godrej J Rothschild , UK M A Chidambaram Met Life Cholamandalam Guardian Royal Exchange, UK SK Modi Group Legal and General, Australia 20th Century Finance Canada Life Alpic Finance Allianz Holding, Germany Vysya Bank ING Kotak Mahindra Chubb, US The likely impact of opening up of India’s insurance sector is that private players may swamp the market. International insurers often derive a significant part of their business from multinational operations. Multinational insurers are indeed keenly interested as; perhaps there home markets are saturated while e merging countries have low insurance penetration and high growth rates

30 Type of life insurance policies Whole life insurance Whole life is a form of permanent insurance, with guaranteed rates and guarantee d cash values. It is the least flexible form of permanent insurance. Universal life insurance Universal life is similar to whole life, except that you can change the death be nefit (the money paid to the beneficiary when the insured person dies), the amount of premi ums and how often you pay the premiums. Variable life insurance Variable life insurance is the riskiest form of permanent insurance, but it can also give you the best return for your money. Essentially, the life insurance company will invest your insurance premiums for you. If the investments do well, the death benefit a nd cash value of the policy go up. If they do poorly, they go down. It s a little like p utting your savings into the stock market.

Group life insurance Many companies allow their employees to buy group life insurance through the com pany. Usually, you can get very good rates for this insurance but you have to give the insurance up when you stop working there. For that reason, group insurance can be a good w ay to buy a little extra life insurance, but it does not make sense to make it your ma in policy.

31 There are a number of policies for specific insurance needs. Some of these inclu de: 1. Family income life insurance. This is a decreasing term policy that provides a stated income for a fixed perio d of time, if the insured person dies during the term of coverage. These payments continue until the end of a time period specified when the policy is purchased. 2. Family insurance. A whole life policy that insures all the members of an immediate family -husband, wife and children. Usually the coverage is sold in units per person, wi th the primary wage-earner insured for the greatest amount. 3. Senior life insurance. Also known as graded death benefit plans, they provide for a graded amount to be paid to the beneficiary. For example, in each of the first three to five years a fter the insured dies, the death benefit slowly increases. After that period, the ent ire death benefit is paid to the beneficiary. This might be appropriate if the beneficiary is not able to handle a large amount of money soon after the death, but would be in a better position to handle it a few years later. 4. Juvenile insurance. This is life insurance on a child. Coverage is paid for by an adult, usually the parents or guardians. Such policies are not considered traditional life insuranc e because the child is not producing an income that needs to be protected. However , by buying the policy when the child is young, the parents are able to lock in an extremely low premium rate and allow many more years of tax-deferred cash value buildup .

32

5. Credit life insurance. This insurance is designed to pay off the balance of a loan if you die before yo u have repaid it. Credit life insurance is available for many kinds of loans inclu ding student loans, auto loans, farm equipment loans, furniture and other personal loans including credit cards. Credit life insurance can be purchased by an individual. Usually it is sold by financial institutions making loans, like bank s, to borrowers at the time they take out the loan. If a borrower dies, the proceeds o f the policy repay the loan directly to the lender or creditor. 6. Mortgage insurance This decreasing term coverage is designed to pay off the unpaid balance of a mortgage if you die before the mortgage is paid off. Premiums are generally leve l throughout the term of the policy. The policy is usually independent of the mortgage, meaning that the financial institution granting the mortgage is separa te from the insurance company issuing the policy. The proceeds of the policy are paid to the beneficiaries of the policy, not the mortgage company. The beneficia ry is not required to use the proceeds to pay off the mortgage 7. Annuity An annuity is a form of insurance that enables you to save for your retirement. Basically, you give the insurance company money for a certain period of time, and then after you retire they will pay you a certain amount of money every year until you die. There are many different forms of annuities. . Most people who bu y annuities are 55 or older

33

3.2 PROFILE OF THE ORGANISATIONS: LIFE INSURANCE CORPORATION OF INDIA Life Insurance Corporation of India was formed in September 1956 by passing LIC Act, 1956 in Indian parliament. On the nationalization of the life insurance in 1956, the premium rating of Oriental Government security life Assurance company were adopted by LIC with a reduction of 5% of the tabular premium or Re. 1 per thousand sum assured, whichever was less. This reduction was made in anticipation of economies of scale that would emerge on the merger of

different insurers in a single entity. Life Insurance Corporation Of India - there are many things to consid er as Life Insurance Corporation of India offers various insurance products which are very complex, but underlying this complexity is a simple fact. The building blocks for all Life Insurance Corporation of India are (1) investment return; (2) mortality experience; and (3) expense management; for your Life Insurance Corporation Of India 34 Objectives of LIC • Spread Life Insurance much more widely and in particular to the rural areas and to the socially and economically backward classes with a view to reac hing all insurable persons in the country and providing them adequate financial cover against death at a reasonable cost. • Maximize mobilization of people s savings by making insurance-linked sa vings adequately attractive. • Bear in mind, in the investment of funds, the primary obligation to its policyholders, whose money it holds in trust, without losing sight of the interest of the community as a whole; the funds to be deployed to the best advantage of the investors as well as the community as a whole, keeping in view national priorities and obligations of attractive return. • Conduct business with utmost economy and with the full realization th at the moneys belong to the policyholders. • Act as trustees of the insured public in their individual and collective capaci ties. • Meet the various life insurance needs of the community that would ar ise in the changing social and economic environment. • Involve all people working in the Corporation to the best of their capability in furthering the interests of the insured public by providing efficient service with courtesy. Promote amongst all agents and employees of the Corporation a sense o f participation, pride and job satisfaction through discharge of their duties with dedi cation towards achievement of Corporate Objective

35 VISION "A trans-nationally competitive financial conglomerate of significance to societies and Pride of India “ MISSION "Explore and enhance the quality of life of people through financial security by providing products and services of aspired attributes with competitive returns, a nd by rendering resources for economic development” Various policies offered by life insurance corporation of India are 1) Whole Life Schemes • Whole life with profit • Limited payment whole life • Single Premium whole life • Convertible whole life plan 2) Endowment Schemes • Endowment plan with profit • Limited payment Endowment • Jeevan Mitra (Double Cover) • Jeevan Mitra (Triple cover) • Bhavishya Jeevan • Jeevan Anand • New Jana Raksha 3) • • • •

Term Assurance Plan Anmol Jeevan 2 Year Term Assurance Covertible Term New Bima Kiran 36

• • • • • • •

4) Plan for needs of Children Komal Jeevan Jeevan Sukanya Jeevan Kishore Jeevan Balya Jeevan Chaya Marriage/educational annuity Deffered Endowment

• • • • •

5) Periodic Money Back Plan Jeevan Samridhi Jeevan Rekha Plan Money Back Plan Jeevan Surabhi Jeevan bharathi

6) Medical benefits linked insurance • Asha Deep II • Jeevan Asha II 7) For benefits to Handicapped • Jeevan Aadhar

• Jeevan Vishwas 8) Plans to cover housing loans • Mortagage redemption 9) Joint life plan • Jeevan sathi 37 10) Investment plan • Bima Nivesh Triple cover 11) Capital market linked plan • Bima plus. Description of the LIC Policies Whole life plan: Whole life plan are those policies which life assured has to pay pre miums till his death the sum assured will be paid to his dependent generally 70 years is assume d as a maximum age for payment of premium. Under the whole life premium are payable throughout the life time of the life as sured and this is the cheapest form of policy. This plan is ideally suited to person who wants maximum provision for his family at minimum cost. It also meets the needs for funds required for funeral, religious rites and ceremonies to be performed, tax liabilities if any and expenses connected wi th the last sickness and hospital charges etc. Endowment Assured Plan: Endowment plans are not covering the risk for whole life of the life assured. Th e term of risk cover under this plan is as per the need of life assured. Endowment assurance plan are the most popular. They are eminently Suited to meet it one policy the twin demands of old age provision and risk cove r for family. The sum assured is payable on maturity or at death if earlie r. Thus an Endowment Assurance Policy provides for retirement and also serves as a means of family provisions. Term Assurance Under the term assurance the risk cover is generally for specific short term. Su ch term assurance is maximum for 2 years. Generally this type of assurance is useful for air traveling. 38 Money Back Plans Under this plan specific percentage of sum assured will be backed to the life as sured after specific period of time. This plan is of special interest to p erson who besides desiring to provide for their own old age and family feels the need for lump sum benefits at periodical intervals. Under these policies part of the sum assured i

s paid to the life assured in installments at selected intervals. Children Plan Under the children plans the risk on the life of the children where covered gene rally this type of plans are helpful in education and marriage of the children. Jeevan Balya: This plan is designed to enable a parent to provide for the child by payment of a very low premium an Endowment Assurance Policy, the risk under which will commence from the vesting date. In addition, Premium benefit and income benefit are in cluded as additional benefit by payment of appropriate additional premium duri ng the deferment period. This policy shall be cancelled in case the life assured shall die before the deferred dates and in such an event provided the policy is then in full forc e in for a reduced cash option. Marriage Endowment/ educational annual plan Every father desires to see that his children are well settled in li fe through sound education, leading to good jobs and happy marriage. These needs arise at ages wh ich can be approximately anticipated. Say when the children are between 18 to 25 yea r of age. This plan provides for a sum assured to keep aside to meet marriage educati onal expenses of children. Under this plan the S A along with the vested bonus shall be payable at the end of the selected term either is lump sum or in t en half yearly installment, at the option of the life assured nominee beneficiary. Jeevan Mitra This plan provides additional insurance cover equal to the sum assured in the ev en of death during the term of policy so that the total insurance cover in the event o f death is twice the basic sum assured. i.e. The basic sum assured is doubled and the a ccrued bonus is also paid. 39 ING VYSYA LIFE INSURANCE ING Vysya Life Insurance Company Private Limited entered the private life insura nce industry in India in September 2001, and in a short span of 18 months has establ ished itself as a distinctive life insurance brand with an innovative, attractive and customer friendly product portfolio and a professional advisor force. It also distributes products in close cooperation with its sister company ING Vysya Bank through Bank assurance. Currently, it has over 3000 advisors working from 22 locations across the countr y and over 300 employees. ING Vysya Life Insurance Company is headquartered at Bangalore and has establish

ed a strong presence in the cities of Delhi, Mumbai, Kolkata, Hyderabad and Chennai. In addition ING Vysya Life operates in Vizag, Vijaywada, Mangalore, Mysore, Pune, Nagpur, Chandigarh, Ludhiana and Jaipur. ING Vysya Life has pioneered product innovations in the Indian life insurance ma rket with customer-oriented cash bonus endowment and money back products. (Reassuring Life and Maximising Life), the first anticipated whole life product (Fulfilling Life) and the first Term/Critical Illness combination product (Conquering Life). Conquerin g Life is an innovative term and critical illness product that has been launched recently. Conquering Life provides affordable term cover and critical illness coverage for 10 critical illnesses of upto 50% of the Sum Assured. ING Vysya Life declared a bon us in September 2002 of 5% (cash bonus - payable immediately) and 4% (reversionary bon us payable at the end of the term).

40 The company has over 25,000 customers at the end of 2002 and has achieved a firs t premium income of Rs. 17 crores in 2002. ING Vysya Life Insurance is a joint venture between ING Insurance International BV a part of ING Group, the world s largest life insurance company (Fortune Global 50 0, 2002), ING Vysya Bank, with 1.5 million customers and over 400 outlets and GMR Technologies and Industries Limited, part of GMR Group also based in Bangalore a nd involved in the field of power generation, infrastructural development and sever al other businesses. ING Vysya Life has a paid up capital of Rs.140 crores and an authorised capital of Rs. 200 crores. Life insurance products offered by the company are: 1) Protection plan • Critical illness plan • Endowment plan 2) Savings plan • Endowment plan • Child protection plan • Money back plan 3) Investment Plan • Whole life plan • Limited payment endowment plan • Anticipated whole life plan

41 TATA-AIG Life Insurance Tata-AIG Life Insurance Company is a joint venture between the Tata Gr oup and American International Group Inc (AIG), the leading US-based international insurance and financial services organization and the largest underwriter of commercial and industrial insurance in America. Its member companies write a wid e range of commercial, personal and life insurance products through a variety of distribution channels in approximately 130 countries and jurisdictions throughou t the world. AIG’s global businesses also include financial services and asset managemen t, including aircraft leasing, financial products, trading and market making, consu mer finance, institutional, retail and direct investment fund asset management, real estate investment management, and retirement savings products. TATA holds 76% shares and AIG holds 24% shares in the total share capital of TATA AIG. Tata AIG Life Insurance Company Ltd. "Tata AIG Life" offers a broad array of life insurance products to individuals, associations and businesses of all sizes , with a wide variety of additional coverage to ensure our customers can find an insuranc e product to meet their needs. Tata-AIG Life Insurance and Tata-AIG General Insura nce, both joint ventures between the Tata Group and American International Group (AIG ), provide life and general insurance policies and solutions to companies, institut ions and organizations across India. It is licensed to operation on 12 th February 2001. TATA-AIG life is spread over28 branch offices and 39 training offices across the country. Tata-AIG Life offers a broad array of life insurance products and solutions to corporate and other organizations. These products and solutions have various val ueadded benefits and options that deliver flexibility and choice to the company s clients. Tata AIG Life has completed its 4th year of operations and registered a Total Pr emium of Rs. 497 Crores for the period April 2004 - March 2005. 42 The company has some 20 life insurance products with over 250 product combina tions, including endowment to term, pension to group life and credit life, money back t o whole life plans, etc. Tata-AIG Life uses different distribution channels, in cluding direct marketing, brokerage and banc assurance, to service client groups in 19 Indian c ities. Tata-AIG Life is the first private insurer in India to offer group

retirement schemes. Additionally, the company s group management division focuses on provid ing employee benefit solutions. PRODUCTS The product range of TATA-AIG Life is wide-spread across different seg ments. Some of the products are mentioned below. Maha life Invest Assure Health Protector Star Kid Shubh Life Nirvana Nirvana Plus Money Saver Plan Health First Assure Golden Life Assure 10, 20, 30 years – Security and Growth Assure Educate at 18, 21 Assure Career Builder Plan at 27 Assure Golden Years Plan Assure 21 Money Saver Plan Assure 1/5/10/15/20/25 years/ to age lifelines TROP 43 HDFC STANDARD LIFE INSURANCE The Partnership: HDFC and Standard Life first came together for a possible joint venture, to ent er the Life Insurance market, in January 1995. It was clear from the outset that both companies shared similar values and beliefs and a strong relationship quickly fo rmed. In October 1995 the companies signed a 3 year joint venture agreement. Around this time Standard Life purchased a 5% stake in HDFC, further strengtheni ng the relationship. The next three years were filled with uncertainty, due to changes in government and ongoing delays in getting the IRDA (Insurance Regulatory and Developmen t authority) Act passed in parliament. Despite this both companies remained firmly committed to the venture. In October 1998, the joint venture agreement was renewed and additional resource made available. Around this time Standard Life purchased 2% of Infrastructur e Development Finance Company Ltd. (IDFC). Standard Life also started to use the se rvices of the HDFC Treasury department to advise them upon their investments in India. Towards the end of 1999, the opening of the market looked very promi sing and both companies agreed the time was right to move the operation to the next level. The

refore, in January 2000 an expert team from the UK joined a hand picked team f rom HDFC to form the core project team, based in Mumbai. Around this time Standard Life purchased a further 5% stake in HDFC and a 5% sta ke in HDFC Bank. In a further development Standard Life agreed to participate in the Asset Manage ment Company promoted by HDFC to enter the mutual fund market. The Mutual Fund was launched on 20th July 2000

44 Incorporation of HDFC Standard Life Insurance Company Limited: The company was incorporated on 14th August 2000 under the name of HDFC Standard Life Insurance Company Limited. Companies ambition from as far back as October 1 995, was to be the first private company to re-enter the life insurance market in Ind ia. On the 23rd of October 2000, this ambition was realized when HDFC Standard Life was the only life company to be granted a certificate of registration. HDFC are the main shar eholders in HDFC Standard Life, with 81.4%, while Standard Life owns 18.6%. Given Standar d Life s existing investment in the HDFC Group, this is the maximum investment all owed under current regulations. HDFC and Standard Life have a long and close relation ship built upon shared values and trust. The ambition of HDFC Standard Life is to mir ror the success of the parent companies and be the yardstick by which all other insuranc e company s in India are measured. Products offered by the company are: INDIVIDUAL PLAN • With Profit Endowment Assurance • With Profits Money Back • Single Premium Whole of Life • Term assurance Plan • Loan Cover Term Assurance • Personal Pension Plan • Children’s Plan GROUP PLANS • Group Term Insurance • Development Insurance Plan 45 ICICI PRUDENTIAL LIFE INSURANCE COMPANY ICICI Prudential Life Insurance Company is a joint venture between ICICI Bank, a premier financial powerhouse, and prudential plc, a leading internati onal financial

services group headquartered in the United Kingdom. ICICI Prudential was amongst the first private sector insurance companies to begin operations in Decembe r 2000 after receiving approval from Insurance Regulatory Development Authority (IRDA). ICICI Prudential’s equity base stands at Rs. 925 crore with ICICI Bank and Prudential plc holding 74% and 26% stake respectively. In the quarter ended June 30, 2005 , the company garnered Rs 335 crore of new business premium for a total sum assured of Rs 2,619 crore and wrote 111,522 policies. For the past f our years, ICICI Prudential has retained its position as the No. 1 private life insurer in the co untry, with a wide range of flexible products that meet the needs of the Indian customer at ev ery step in life. Products offered by ICICI Prudential are 1. Savings Plan 1) Smart kid 2) Life Time 3) Save ‘n’ Protect 4) Cash Bak 2. Protection plan • Life Guard 46 • Extra Protection Through • Riders 3. Retirement Plans • Forever Life • Life link pension • Life time pension • Reassure 4. Investment Plans • Assure Invest • Life Link 5. Group plans • Group Superannuation • Group Gratuity • Group Term Assurance

47 OM KOTAK MAHINDRA LIFE INSURANCE COMPANY Established in 1985 as Kotak Capital Management Finance promote

d by Uday Kotak the company has come a long way since its entry into corporate finance. It has dabbled in leasing, auto finance, hire purchase, investment banking, co nsumer finance, broking etc. The company got its name Kotak Mahindra as industrialists Harish Ma hindra and Anand Mahindra picked a stake in the company. Kotak Mahindra is today one of India s leading Financial Institutions Old Mutual plc is an international financial services group bas ed in London with expanding operations in life assurance, asset management, banking and g eneral insurance. Old Mutual is listed on the London Stock Exchange (where i t is included on the FTSE 100 Index) and also on the South African, Namibian, Malawi and Zimbabwe stock exchanges. It has 156 years of experience in the life insurance business. The Products offered by the Company are Individual Plan • Kotak Endowment Plan • Kotak Term Plan • Kotak Retirement Income Plan • Kotak Child Advantage Plan • Kotak Preferred Term Plan • Kotak Capital Multiplier Plan • Kotak Safe Investment Plan • Riders • Exclusions Under Riders 48 Group Plan Kotak Term Group plan Kotak Gratuity Group plan Kotak Credit Term Group plan Riders Exclusions Under Riders Rural Kotak Gramina Bima Yojana

49 MET LIFE INSURANCE COMPANY MetLife For almost 137 years, Metropolitan Life Insurance Company has been insuring th e lives of the people who depend on them. Their success is based on their long history of social

responsibility, strong leadership, sound investments, and innovative prod ucts and services. MetLife Begins The origins of Metropolitan Life Insurance Company (MetLife) go back to 1863, w hen a group of New York City businessmen raised $100,000 to found the National Union L ife and Helping and Healing People In 1909, MetLife Vice President Haley Fiske announced that "insurance, not mere ly as a business proposition, but as a social program" would be the future policy of the company Supporting Country and Community Over the years, MetLife has made a difference by supporting urban renewal projec ts and community financing. The company s social commitment and its commitment to the security of its policyholders have proven to be good business. MetLife Today In 2001 MetLife was the first insurance company to establish a fi nancial holding company with a nationally chartered bank. Products Offered by the company are 1) Whole Life • Met 100 Non par • Met 100 Gold par • Met 100 Platinum par

50 2) • • • •

Endowment Met Gold par Met Platinum par Met Junior par Met junior Non par

3) Money Back • Met Sukh • Met Junior MB 4) Term • Met Mortagage Protector • Met Riders • Accidental death

51 BIRLA SUN LIFE INSURANCE COMANY LIMITED Birla Sun Life Financial Services offers a range of financial services for resid ent Indians and Non Resident Indians. Brought together by two large, powerful and reputed bu siness houses, the Aditya Birla Group and Sun Life Financial , it is our aim to offer d iverse and top quality financial services to customers. The Mutual Fund and Insur ance companies provide wealth management and protection products to customers while the Distrib ution and Securities companies provide brokerage and trading services for inv estment in equities, debt securities, fixed deposits, etc. Insurance is not about something going wrong. It s often about things going right. One of the wonders of human nature is that we never believe anything can actually go wrong. Surely, life has its share of ifs. At Birla Sun Life however, they believe it has its equally ple asant share of buts as well. Birla Sun Life stand committed to help you realize those happy moments wh ich make a life. Be it living the same lifestyle in your post retirement days or prov iding a secure future for your loved ones, in case something happens to you. The life insurance products offered by the company are Individual life • Premium Back Term Plan • Flexi Secure Life Retirement Plan • Single Premium Bond • Birla Sun Life Term Plan • Flexi Life Line Whole Life Plan • Flexi Cash Flow Money back Plan Group Life • Pro Group Term Insurance • Group Superannuation Plan • Group Gratuity Plan 52 MAX NEW YORK LIFE INSURANCE COMPANY LTD. Max New York Life today emerged as the country s leading private life insurance company having recorded a sum assured of over Rs 2100 crore for the year ending March 31, 2002. This was the first full year of operations for Max New York Life. The company has sold over 64,000 policies in the last financial year. The total annualized first year premium for the financial year was over Rs 43 crore with the First Ye ar Premium Income amounting to over Rs 38 crore. This has exceeded the expectations of the company and the projections as submitted to IRDA. Over 70 per cent of the pr emia

income was from protection-oriented Whole Life Policies, which reinforces the company s focus on providing the true value of life insurance to the customer Given the better-than-expected performance of the company, the shareholders have increased their investment in the company to Rs 250 crore with an authorized sha re capital to Rs 300 crore making Max New York Life Insurance Company among the highest capitalized life insurance companies in India Max New York Life also met its commitment for the rural and social sectors. The company has 11 offices, over 1900 Agent Advisors and over 490 employees. Max New York Life believes in delivering top value to all its stakeholders. As part of the best practices adopted, the Company instituted satisfaction survey s conducted by ind ependent agencies to measure the satisfaction levels of its customers, agents and employe es. Max New York Life has clearly emerged as delivering top value across all these stake holders Max New York Life offers a suite of flexible products. It has eight base product s and nine options & riders that can be customized to over 250 combinations enabling customers to choose the policy that best fits their need 53 The products are – Whole Life Participating d Convertible Whole Life-Non-Participating, Children Endowment at age 18, Children Endowment at age 24, 20-year Endowment Participating Policy, Endowment to age 60, Five-year Term Renewable an, Easy Term

54 BAJAJ ALLIANZ LIFE INSURANCE COMPANY LIMITED

Bajaj Allianz life Insurance Company Limited is a joint venture betwe en Bajaj Auto Limited and Allianz AG of Germany. Both enjoy a reputation of expertise, st ability and strength. Bajaj Allianz General Insurance received the Insurance Regulatory and Development Authority (IRDA) certificate of Registration (R3) on May 2nd, 2001 t o conduct General Insurance business (including Health Insurance business) in Indi a. The Company has an authorized and paid up capital of Rs 110 crores. Bajaj Auto holds 74% and Allianz, AG, holds the remaining 26% Germany. In its first year of operations, the company has acquired the No. 1 status among the private non-life insurers. As on 31st March 2003, Bajaj Allianz General Insu rance maintained its leadership position by garnering a premium income of Rs.300 Crore s. Bajaj Allianz also became one of the few companies to make a profit in its first full year of operations. Bajaj Allianz made a profit after tax of Rs.9.6 crores Bajaj Allianz today has a network of 42 offices spread across the l ength and breadth of the country. From Surat to Siliguri and Jammu to Thiruvananthapuram, all the offices are interconnected with the Head Office at Pune. In the first half of the current financial year, 2004-05, Bajaj Alli anz garnered a premium income of Rs. 405 crores, achieving a growth of 84% and registered a 52% growth in Net profits of Rs.20 Crores over the last year for the same period. In the financial year 2003-04, the premium earned was Rs.480 Crores, which is a jump of 60% and the profit zoomed by 125% to Rs. 21.6 Crores

55

CHAPTER 4

ANALYSIS AND INTERPRETATION 56 4.1 INTRODUCTION TO ANALYSIS: In order to extract meaningful information from the data them. The analysis can be conducted by using simple statistical tools like percentages, averages and measu

res of dispersion. Alternatively the collected data may be analyzed, the data analys is is carried out. The data are first edited, coded and tabulated for analyzing by usi ng diagrams, graphs, charts, pictures etc. Data analysis is the process of planning the data in an ordered form, combining them with the existing information and extracting from them. Interpretation is the process of drawing conclusions from the gathered data in t he study. In this research the researcher has analyzed the data using percentages a nd graphs. 4.2 DATA ANALYSIS TOOLS USED: In this research the data analysis tools used are percentages and gra phs. The various attributes were analyzed separately and the importance to each was calculated on the basis of the percentage. The rank having the maximu m percentage was taken to be preferred importance to the particular attribute. After looking at each attribute separately, all the attributes were co nsidered together to develop a map on the most preferred rank for all the attributes.

57 TABLE 1 AGE OF RESPONDENTS

SL.NO AGE IN YEARS NUMBER OF RESPONDENTS PERCENTAGE OF RESPONDENTS

1. 19 – 28 24 48 % 2. 29 – 38 13 26 % 3. 39 – 48 6 12 % 4. 49 – 58 6 12 % 5. 59 – 68 0 0 % 6. 69 – 78 1 2 %

TOTAL

50 100 % SOURCE :- SURVEY DATA

INFERENCE: The above table classified the respondents according to their age gro up. The majority of the respondents belong to the age group 19 to 28 years with 48% and the second age group is 29 to 38 years with 26%, followed by 39 to 48 years and 49 t o 58 years with 12% each. 58

GRAPH 1 AGE OF RESPONDENTS 48% 26% 12% 12% 0% 2% 0% 10% 20% 30% 40% 50% 60% 19 - 28 YRS 29 - 38 YRS 39 - 48 YRS 49 - 58 YRS 59 - 68 YRS 69 - 78 YRS

59 TABLE 2 DIFFERENCIATION OF THE RESPONDENTS INTO MALE AND FEMALE

TYPES OF RESPONDENTS NUMBER OF RESPONDENTS PERCENTAGE OF RESPONDENTS MALE RESPONDENTS 34 68% FEMALE RESPONDENTS 16 32% TOTAL 50 100 % SOURCE: - SURVEY DATA

INFERENCE: This table helps us to understand that there are more number of male consumers with 68% market share than the female consumers with 32% Market share.

60 GRAPH 2 DIFFERENCIATION OF THE RESPONDENTS INTO MALE AND FEMALE 68% 32% 0% 10% 20%

30% 40% 50% 60% 70% 80% M A L E R E S P O N D E N T S F E M A L E R E S P O N D E N T S 61 TABLE 3 DIFFERENCIATION OF RESPONDENTS BASED ON THEIR OCCUPATION SL.NO OCCUPATION NUMBER OF RESPONDENTS PERCENTAGE OF RESPONDENTS

1. STUDENTS 2 4 % 2. GOVERNMENT EMPLOYEES 20 40 % 3. PRIVATE EMPLOYEES 24 48 % 4. HOUSE WIVES 2 4 % 5. RETIRED PERSONS 2 4 %

TOTAL 50 100 % SOURCE :- SURVEY DATA

INFERENCE: It could be inferred that majority of consumers of life insurance pol icies are private employees with 48% and Government employees with 40%, followed by students, house wives and retired persons with 4 % each.

62

GRAPH 3 DIFFERENCIATION OF RESPONDENTS BASED ON THEIR OCCUPATION 4% 40% 48% 4% 4% 0% 10% 20% 30% 40% 50% 60% S T U D E N T S G O V E R N M E N T E M P L O Y E E S P

R I V A T E E M P L O Y E E S H O U S E W I V E S R E T I R E D P E R S O N S

63 TABLE 4 TABLE SHOWING INCOME GROUP OF RESPONDENTS SL.NO INCOME GROUP NUMBER OF RESPONDENTS

PERCENTAGE OF RESPONDENTS 1. LESS THAN 5000 5 10 % 2. 5001 – 10,000 16 32 % 3. 10001 – 15000 17 34 % 4. 15001 – 20000 8 16 % 5. 20001 – 25000 2 4 % 6. GREATER THAN 30000 1 2 %

7. NIL 1 2 %

TOTAL 50 100 % SOURCE: - SURVEY DATA

INFERENCE: The majority of dominant income group having life insurance policies belong to the income group of 10,001 to 15,000, which is middle class group. Fol lowed by the income group of 5,001 to 10,000. 64

GRAPH 4 GRAPH SHOWING INCOME GROUP OF RESPONDENTS 0% 5% 10% 15% 20% 25% 30% 35% 40% 25000 NIL

65 TABLE 5 DIFFERENCIATION OF RESPONDENTS ACCORDING TO THE ASSETS OWNED

SL.NO ASSETS NUMBER OF RESPONDENTS PERCENTAGE OF RESPONDENTS 1. HOUSE 19 38 % 2. TWO WHEELER 25 50 % 3. CAR 6 12 %

TOTAL 50 100 % SOURCE: - SURVEY DATA

INFERENCE: This table helps us to know that most of consumers with l ife insurance policies own two wheelers with 50%, 38% of consumers own house and12% of the consumers own car.

66

GRAPH 5 DIFFERENCIATION OF RESPONDENTS ACCORDING TO THE ASSETS OWNED 38% 50% 12% 0% 10% 20% 30% 40% 50% 60% HOUSE TWO WHEELER CAR

67 TABLE 6 MARKET SHARE OF DIFFERENT LIFE INSURANCE COMPANIES COMPANIES NUMBER OF RESPONDENTS PERCENTAGE OF RESPONDENTS

LIC 39 78 % TATA AIG 1 2 % HDFC 3 6 % ICICI 4 8 % MAX NEWYORK 1 2 % KOTAK MAHINDRA 1 2 % ALLIANCE BAJAJ 1 2 % SOURCE: - SURVEY DATA INFERENCE: This table helps us to understand the market share of diff erent life insurance companies. LIC has a major share of 78 %, followed by ICICI Prudential with 8% market share, followed by HDFC Standard Life with 6% market share.

68 GRAPH 6 MARKET SHARE OF DIFFERENT LIFE INSURANCE COMPANIES 78% 2% 6% 8% 2% 2% 2% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% L I C T A T A A I G H D F C I C I C I M A X N E W Y O R K K O T A

K M A H I N D R A A L L I A N C E B A J A J

69 TABLE 7 TABLE SHOWING ATTRIBUTES FROM RESPONDENTS SL.NO ATTRIBUTE RESPONDENTS RANK 1. RETURN ON INVESTMENT 17 1 2. COMPANY REPUTATION

13 2 3. PREMIUM OUTFLOW 10 3 4. SERVICE QUALITY 7 4 5. PRODUCT QUALITY 3 5

SOURCE :- SURVEY DATA INFERENCE: This table shows the strengths and weaknesses of the company, and wha t are the important criteria or attributes on which decision making is done. From this table we can infer that consumers give more importance for Return on invest ment, secondly they prefer company reputation, and then premium outflow followed by s ervice quality and product quality.

70 GRAPH 7

GRAPH SHOWING ATTRIBUTES FROM RESPONDENTS 17 13 10 7 3 0 2 4 6 8 10 12 14 16 18 R E T U R N O N I N V E S T M E N T C O M P A N Y R E P U T A T I O N P R E M

I U M O U T F L O W S E R V I C E Q U A L I T Y P R O D U C T Q U A L I T Y

71 TABLE 8 FACTORS WHICH INFLUENCED TO SELECT LIFE INSURANCE COMPANY SL.NO FACTORS RESPONDENTS RANK

1. PERSONAL INTEREST 25 1 2. FAMILY 11 2 3. FRIENDS 6 3 4. AGENTS 5 4 5. ADVERTISEMENT 2 5 6. OTHERS 1 6 SOURCE :- SURVEY DATA

INFERENCE: This table is helpful in knowing which media is best suita ble for promoting a life insurance company. It can be seen that personal fa ctor influences a consumers to select a life insurance company, followed by family, frie nds , agents and advertisements.

72

GRAPH 8 FACTORS WHICH INFLUENCED TO SELECT A LIFE INSURANCE COMPANY 25 11 6 5 2 1 0 5 10 15 20 25 30 P E R S O N A L I N T E R E S T F A M I L Y

F R I E N D S A G E N T S A D V E R T I S E M E N T O T H E R S 73 TABLE 9 VALUE OF RESPONDENTS LIFE INSURANCE POLICY SL.NO AMOUNT NUMBER OF RESPONDENTS PERCENTAGE OF RESPONDENTS 1. < 10000 0 0 %

2. 10000 – 25000 5 10 % 3. 25000 – 50000 8 16 % 4. 50000-100000 15 30 % 5. > 100000 22 44 % SOURCE :- SURVEY DATA

INFERENCE: It can be inferred that majority of consumers buy the life insurance policy which costs more than Rs. 1,00,000 followed by Rs. 50,000 to Rs.1,00,000, follow ed by Rs. 25,000 to Rs. 50,000.

74

GRAPH 9 VALUE OF RESPONDENTS LIFE INSURANCE POLICY

0% 10% 16% 30% 44% 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50% > 10000 10000 25000 25000 50000 50000 100000 > 100000

75 TABLE 10 RESPONDENTS PREFERENCE TO INVEST THEIR MONEY

NUMBER OF RESPONDENTS PERCENTAGE OF RESPONDENTS INSURANCE COMPANY 24 48 % BANK

26 52 % TOTAL 50 100 % SOURCE :- SURVEY DATA INFERENCE: From the table it is clear that majority of people (52%) prefer to in vest in Bank and others (48%) prefer to invest in Insurance companies.

76

GRAPH 10 RESPONDENTS PREFERENCE TO INVEST THEIR MONEY 48% 52% 46% 47% 48% 49% 50% 51% 52% 53% INSURACE COMPANY BANK

77 TABLE 11 SATISFACTION OF RESPONDENTS WITH CURRENT LIFE INSURANCE COMPANY RESPONSE NUMBER OF RESPONDENTS PERCENTAGE OF RESPONDENTS YES 47 94 % NO 3 6 % TOTAL 50 100 % SOURCE :- SURVEY DATA INFERENCE: From this table it could be inferred that 94% of the cons umers are satisfied with the service and quality of products of their life insurance compa nies. Only 6% of consumers are not satisfied.

78

GRAPH 11

SATISFACTION OF RESPONDENTS WITH CURRENT LIFE INSURANCE COMPANY 94% 6% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% YES NO

79 TABLE 12 RATINGS OF THE SERVICES OFFERED BY THE RESPONDENT’S LIFE INSURANCE COMPANY RATINGS NUMBER OF RESPONDENTS PERCENTAGE OF RESPONDENTS EXCELLENT 7 14 % VERY GOOD 12

24 % GOOD 20 40 % AVERAGE 11 22 % POOR 0 0 % TOTAL 50 100 % SOURCE: - SURVEY DATA INFERENCE: From this table it could be inferred that 40% of the consumers have r ated service offered as good, 24% of them have rated them as very good, 22% of th em have rated as average and 14% of them have rated as excellent.

80

GRAPH 12

RATINGS OF THE SERVICES OFFERED BY THE RESPONDENT’S LIFE INSURANCE COMPANY 14% 24% 40%

22% 0% 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% E X C E L L E N T V E R Y G O O D G O O D A V E R A G E P O O R

81

TABLE 13 CONSUMERS WILLINGNESS TO COMMUNICATE THE SERVICE OFFERED BY THEIR LIFE INSURANCE COMPANY

RESPONSES NUMBER OF RESPONDENTS PERCENTAGE OF RESPONDENTS YES 39 78 % NO 11 22 % TOTAL 50 100 % SOURCE :- SURVEY DATA INFERENCE: From this table it can be noted that the majority of cons umers (78%) would like to communicate to others about the service offered by life insurance companies and 22% of consumers would not like to communicate the service offered . 82

GRAPH 13 CONSUMERS WILLINGNESS TO COMMUNICATE THE SERVICE OFFERED BY THEIR LIFE INSURANCE COMPANY

78% 22% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% YES NO

83 TABLE 14 NUMBER OF LIFE INSURANCE COMPANY KNOWN BY RESPONDENTS

NUMBER OF LIFE INSURANCE COMPANY KNOWN NUMBER OF RESPONDENTS PERCENTAGE OF RESPONDENTS < 5 18 36 % 5 – 7 29 58 % 8 – 10 2 4 % >10

1 2 % TOTAL 50 100 % SOURCE :- SURVEY DATA INFERENCE: This table helps us to know the consumer awareness about t he life insurance companies. 58% of the consumers are aware about 5 to 7 lif e insurance companies, followed by 36% consumers who know less than 5 life insurance compani es.

84

GRAPH 14

NUMBER OF LIFE INSURANCE COMPANY KNOWN BY RESPONDENTS

36% 58% 4% 2% 0% 10% 20% 30% 40% 50% 60% 70% < 5 5 TO 7 8 to 10 > 10

85 TABLE 15

SCORES OF DIFFERENT LIFE INSURANCE COMPANIES COMPANIES SCORES RANK LIC 345 1 ICICI PRUDENTIAL 211 2 HDFC 194 3 TATA AIG 123 4 ING VYSYA 121 5 BIRLA SUNLIFE 118 6 MET LIFE 90 7

OTHERS 41 8 SOURCE:- SURVEY DATA INFERENCE: From the table we can rank the life insurance companies, LIC stands f irst, followed by ICICI Prudential followed by HDFC Standard life, followed by TATA A IG. 86 GRAPH 15 SCORES OF DIFFERENT LIFE INSURANCE COMPANIES 1 2 3 4 5 6 7 8 0 1 2 3 4 5 6 7 8 9 L I C I C I C I P R U D E N T

I A L H D F C T A T A A I G I N G V Y S Y A B I R L A S U N L I F E M E T L I F E O T H E R S

87

CHAPTER 5 FINDINGS, CONCLUSION AND SUGGESTIONS 88 5.1

FINDINGS

The majority of respondents belonged to the age group of 19 to 28 years which formed 48% followed by age group of 29 to 38 years which formed 26%. The male consumers capture the Market share with 68%, followed by the female consumers with 32%. The majority of the consumers of life insurance companies are private employees with 48% and Government employees with 40% The dominant income group having life insurance group belong to the group of 10001 to 15,000 followed by 5,001 to 10,000. LIC has a major market share of 78%. The factors which influenced to select a life insurance company is the personal factor, followed by family, friends, agents and advertisements. 89 The value of respondents life insurance policy costs more than 1, 00,000 followed by 50,000 to 1,00,000. Majority of the people (52%) prefer to invest in bank others (48%) prefer to invest in insurance company. Majority of consumers are satisfied with the service and quality of products of their life insurance companies. Majority of consumers (78%) would like to communicate the service offered by life insurance companies. Majority of consumers (58%) are aware about 5 to 7 life insurance companies. LIC stands first followed by ICICI prudential, followed by HDFC Standard Life.

90 5.2 CONCLUSION An Insurance policy is an investment oriented plan. As compared to ot

her investment plans, the investment portfolio of the Insurance Policy functions like a mutual fund and other investment. It is invested in a portfolio of debt and equity i nstruments, in conformity with the announced investment policy. Hence it grows or erodes in lin e with the performance of that portfolio. From this study it reveals that the consumer’s attitude towards Insuranc e Policy and Insurance Company changed a lot. A 5 years before the consumers and the general public were not interested to take an Insurance Policy but now days there are many opti ons and choices in front of the customers. They are interested to take high return polic ies in order to secure their lives. People are aware of all the benefits and returns of insur ance policies. As a result of this new international and domestic companies are comi ng to the Indian Market. Since there are many players in the Indian Insurance Market the competition leve l is very high. So the companies are introducing new schemes. From this it is found that T he LIC is the major market share holder in the insurance field. Even if there are many players in this field still it is an untapped market. Only a few portion of Indian populati on is insured.

91 5.3 RECOMMENDATIONS AND SUGGESTIONS With regard to insurance companies, consumers respond at different rates, depend ing on the consumers characteristics. Hence Insurance companies should try to bring th eir new product to the attention of potential early adopters. a) Due to the intense competition in the life insurance market, the life insura nce companies have to adopt better strategies to attract more customers. b) Keeping the cost, quality and return on investment in tact is necessary in o rder to tackle the competition. c) Life insurance products are taken mainly by middle and higher income group. Hence they should be regarded as maim targeted income groups. Life insurance products which are suitable for lower income group should also be released so that the market share increases. d) Return on investment, company reputation and premium outflow are most preferred attributes that are expected by the respondents. Hence greater focus

should be given to these attributes. 92 e) Private life insurance companies should adopt effective promotional strategi es to increase the awareness level among the consumers. f) Life insurance companies should ask for their consumer feedback to know whether the consumers are really satisfied or dissatisfied with the service and product of the companies. If they are dissatisfied , then the reasons for dissatisfaction should be found out and should be corrected in future. g) The LIC brand name has earned a lot of goodwill and enjoys a high brand equi ty. As there is intense competition in life insurance market, LIC should work hard t o maintain its top position and offer better service and product.

93

BIBLIOGRAPHY

94 BIBLIOGRAPHY 1) Dr. Singh, Avtar, Principles of Insurance Law, S Chand & Sons, Delhi,2003. 2) Leon G. Schiffman, Lestie Lazar Kanwk, Consumer Behaviour, Himalaya Publishers, Delhi,2004 3) Kotler Philip, Marketing Management, Pearson Education Inc. 11th Edition. 4) Stanton William J, Etzel Michael J, Walker Bruce J, Fundamentals of Marketing, McGraw-Hill international, Singapore, 2002 5) Ravi Shankar, Services Marketing, Prentice Hall, 2000. 6) Valarie Azithaml, Marry Jo Bittner, Services of Marketing, Prentice Hall, 20 01 7) Rutchnee .T & K.S.Arun Kumar,Consumer preference & buying perception of ready made silk garments,PGDSM,International center for training & research in

tropical sericulture, Newspapers: • Economic Times • Business Line

95 World Wide Web: • • •

www.lic.com www.irda.org www.wikipedia.com

96

ANNEXURE 97 QUESTIONNAIRE A STUDY CONDUCTED TO UNDERSTAND THE CONSUMER’S PERCEPTION ABOUT LIFE INSURANCE POLICIES 1. Name : 2. Age: 3. Address: 3 a. Phone number:

4. Occupation: 5. Monthly income: 25,000

Nil 6. Do You Own House

Two Wheeler

Car

7. Do you have a Life Insurance Policy with any Life InsuranceCampany? Yes

No

7.a) If yes, name the Company___________________________________ b) Name the policy which you own_____________________________ 98

8. What factors do you consider while selecting a life insurance company? Premium Outflow Service Quality Return on Investment

Company Reputation Product Quality

9. What factors influenced to select a Life Insurance company? Personal interest

Friends

Family Agents

Advertisements

others 10. What is the value of your life insurance? >10,000

10,000-25,000

25,000-50,000 50,000-1,00,000

>1,00,000

11. Do you prefer to invest your money in a Insurance company or in a Bank? Insurance Company 12. Are you satisfied with your current Life Insurance Company?

Bank

Yes

No

If Yes Why?___________________________________________ If No Why?___________________________________________ 13. How do you rate the service offered by your Life Insurance Company? Excellent Average

Very Good Poor

Good

99 14. Would you like to communicate the service offered by your Life Insurance Company to others? Yes

No

15.

How many Life insurance Compannies do you know?

10 16. How do you rate the following Life Insurance Companies? LIC HDFC ING VYSYA MET LIFE INDIA INSURANCE BIRLA SUNLIFE ICICI Prudential TATA AIG Others

17.

Would You like to continue with the same Life Insurance Company? Yes

18. ies

No

Any suggestions for improving the service offered by life insurance compan

Thank You.