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ON
A STUDY OF AWARENESS LEVEL OF THE
CLIENTS OF L.I.C.
INSURANCE SECTOR
A STUDY IN REFERENCE TO
SUBMITTED B Y
SHUBHENDRA DUBEY
REGISTRATION NO: 3511230064
MBA( 2012-2014)
In Partial Fulfillment of the Requirement of the Degree of Master Of
Business Administration
SUBMITTED TOACADEMIC GUIDE:
Dr.ANUBHA
SRM UNIVERSITY
NCR CAMPUS, MODINAGAR,GHAZIABAD.
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DECLARATION
I,SHUBHENDRA DUBEY, registration no. 3511230064, MBA Programme ( 2012-
2014) SRM University, do here by solemnly declare that this dissertation is an
original work of mine and this has not been submitted to any other institute/university
towards any other degree/diploma.
(Signature) SHUBHENDRA DUBEY Date:
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CERTIFICATE OF ORIGIN
To Whom It may Concern
This is to certify that this Research Report has been compiled and prepare by Mr.
SHUBHENDRA DUBEY , Reg.No.3511230064 of SRM UNIVERSITY, pursuing
his MBA, batch (2012-2014); under my supervision and guidance.
This Report is an outcome of extensive study of above mentioned subject and is the
outcome of his own effort. I recommend this to be accepted and evaluated.
Name
Designation
Date
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ACKNOWLEDGEMENT
Through this acknowledgement, I express my sincere gratitudeTowards all those
people who helped me in the preparation of this project, which has been learning
experience.
I will like to record my special thanks to the director of our college, Mr. Manoj
Pandey,The HOD Of management department Dr.SARAT SHARMA who allowed
to do the project and to our Faculty guide, Dr.ANUBHA, who extended all the
possible support and encouragement, which helped me to cross all the hurdles.
Last but not the least, I wish to express all my appreciation and thanks to all with
whom I had the opportunity to work and those thoughts and insights have helped me
in furthering my knowledge and understanding of the subject of project.
SHUBHENDRA DUBEY
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TABLE OF CONTENTS
CHAPTER PAGE NO.
1. Introduction 1
a) Overview of Insurance Industry 2
b) Company Profile 6
2. Review of Literature 19
3. Research Design & Methodology
a) Objective of Research
b) Research Design
c) Sampling Design
d) Data Collection Method
Bibliography 49
Annexure 50
a) Questionnaire 51
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INSURANCE INDUSTRYInsurance is of Rs. 400 billion business in India and yet its growth in the country is
relatively less. Insurance as a concept has not been able to make headway in India.
Till December, 1999 LIC enjoyed monopoly in life insurance business. There is little
option before the consumer to decide the insurer.
A successful passage of IRDA bill had cleared the way of private
sector operators in collaboration with their overseas partners. It is more professional
and focused approach. Moreover the foreign players would bring sophisticated
actuarial techniques with them, which would facilitate the insurer to effectively price
the product. In this new millennium all these activities would play a crucial role in
over all development and maturity of insurance industry.
Insurance business is growing in India. Even before the advent of
IRDA and privatization in the insurance sector, insurance was a lucrative business in
India as was elsewhere. Life was full of risk and here was someone who was
willing to cover some of it for nominal consideration. Business boomed,
specially after nationalization on the insurance sectors in India after
independence. But it is roses way for this vital sectors.
The sales executives of insurance cos. are really welcome visitor to
any house hold. In fact many people consider him as the hard bringer of
impending death, a gentle reminder to ultimate reality waiting for each. Life
insurance & ICICI has now reached a stage where people have started looking
down upon you if you are not adequately insured.
Today insurance is playing various roles as covering the risk of
life , the education of children and medical benefits to the insured. So the LICI
& other insurance companies are playing more a social role than only covering
risk.
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Insurance Sector Development before nationalization-Growth of
Business:The practice of insurance in the world is quite old infect. However, life
insurance business, as it is known today, is a much later development. It evolved from
the great transformation in life, which began with the decline of the agrarian society
in the western countries in the 19th century.
Industrialization with its cities, factories, cash economy and an urban
‘saving’ class set the stage for life insurance as a large – scale national institution. It
can truly be that life insurance, a product of modern industry. Growth of life insurance
Company in any country will illustrate introduced modern life. The business started
taking its deeper roots only in the late 19th century. Insurance companies appeared on
the scenes and started accepting Indian lives freely on the same terms as European
lives in India. The growth of Indian life insurance business continued to remain
restricted till the Swedish movement gathered momentum. The business passed
through the period of ups and downs with the political and economic situation in the
country.
Need for AssociationWith the rise in the number of Indian life insurance companies occasioned by
the growth in the national spirit as a result of the independent movement a need was
felt by the companies for an organization to assist them in solving the problems faced
by them. With a view to meeting this need and also to providing a representative body
for expression of a common viewpoint of Indian insurance before the government
regarding insurance legislation. Indian Life Assurance Offices Association was
established in 1928. The association played companies forum for expression of
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representatives views on insurance and taxation legislation and imparting insurance
education.
Brief History
Insurance is a federal subject in India and has a history dating back to 1818. Life and
general insurance in India is still a nascent sector with huge potential for various
global players with the life insurance premiums accounting to 2.5% of the country's
GDP while general insurance premiums to 0.65% of India's GDP. The Insurance
sector in India has gone through a number of phases and changes, particularly in the
recent years when the Govt. of India in 1999 opened up the insurance sector by
allowing private companies to solicit insurance and also allowing FDI up to 26%.
Ever since, the Indian insurance sector is considered as a booming market with every
other global insurance company wanting to have a lion's share. Currently, the largest
life insurance company in India is still owned by the government.Tritons Insurance
Company, for General Insurance, in 1850 was incorporated. Insurance ACT was
passed in 1928 but it was subsequently reviewed and comprehensive legislation was
enacted in 1938.
The nationalization of life insurance business took place in 1956 when
245 Indian and Foreign insurance societies were first merged and then nationalized. It
paved the way towards the establishment of Life Insurance Corporation (LIC) and
since then it has enjoyed a monopoly over the life insurance business in India.
Subsequently in 1973, non-life insurance business was nationalized
and the General Insurance Business (Nationalization) ACT, 1972 was promulgated.
The General Insurance Corporation (GIC) in its present form was incorporated in
1972 and maintains a very strong hold over the non-life insurance business in India.
Due to concerns of :-
a. Relatively low spread of insurance in the country.
b. The efficient and quality functioning of the Public Sector Insurance Companies.
c. The untapped potential for mobilizing long-term contractual savings funds for
infrastructure.
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The (Congress) government had set up Insurance Reforms committee
in April 1993. The committee submitted its report in January 1994, recommended a
phased program of liberalization, and called for private sector entry and restructuring
of the LIC and GIC.
ROLE OF INSURANCE REGULATORY AND DEVLOPMENT AUTHORITY
(IRDA) ACT, 1999:
An act to provide for the establishment of an authority to protect the interests of
policyholders, to regulate, to promote and ensure orderly growth of the insurance
industry and for matters connected therewith for incidental thereto and further to
amend, the Life Insurance Corporation Act, 1956 and the insurance Act, 1938 and
General Insurance Business Act 1972.
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 reaching
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
savings 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 that the
moneys belong to: the policyholders.
Meet the various life insurance needs of the community that would arise 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.
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Promote amongst all agents and employees of the Corporation a sense
of participation, pride and job satisfaction through discharge of their duties with
ded1cat1on towards achievement of Corporate Objective
The LIFE INSURANCE OF INDIA was established about 51 years ago on
September 1, 1956 with a view to provide an insurance cover against various risks in
life. A monolith then, the corporation, enjoyed a monopoly status and became
synonymous with life insurance.
Its main asset is its staff strength of 1.24 lakh employees and: 2,048 branches
and over 10, 00,000 agency force.
LIC has 100 divisionala offices and has established extensive training facilities
at all levels. At the apex, is the Management Development Institute, seven Zonal
Training Centers and 35 Sales Training Centres.
At the industry level, along with the Government and the GIC. It has helped
established the National Insurance Academy. It presently transacts individual life
Insurance businesses, group insurance businesses, social security scenario and
pensions grants housing through its subsidiary, and markets savings and investment
products through its mutual fund. It pays off about Rs.6, 000 crore annually to 5.6
million policy holders.
India has an amorphous middle-class of about 300 million people who can
afford to buy life, health and disability and pension plan products. Out of this only
20% have Insurance, and that too covers only 25% of their needs and financial
condition
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LIFE INSURANCE STATISTICS(As on latest updates)
Indian Population 1129.86 million
Urban Population 338.96 million
Rural Population 790.90 million
LIC Policy hold 77.7 million
LIC agents 5,58,000
No. of branches 2024
Premium Income 105875.76 Crore
Book value of Investments 487150.69 Crore
NCAER estimate of insurable
population
270 million
Marketing Strategy of LIC
Life Insurance Corporation enjoys a Goliath status in the current market, their
tasks in marketing are:
Educate the customer and specify the advantages of the product over its
counterpart in the market.
Making the customer aware over the Tax Benefits of the policy.
Emphasize on the rural population, considering their needs for Insurance.
Position itself as the mammoth player in the Insurance market because of its
Public status.
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LIC in an effort to retain its competitive edge has evamoped its service by
networking all the branches and improving information available to policy
holds through it website and tie-ups with internet companies.
Positioning its product in those markets, which are attacked of the counterpale,
is polarizing the benefits of the schemes, concentrating a fewer yet beneficial
schemes and educating their Tax benefits to the mass. Increasing the sales
force to a tremendous scale in order to make the availability of the agents on every
doorsteps LIC has improved its Product Management by withdrawing many high
guaranteed return products and launching them at lower guaranteed in view of the
falling rates of interest.
To single out the most important feature of any strategy for growth of
Insurance Industry in the new millennium, one would opt for
EMPOWERMENT! For rapid, healthy and wholesome growth of insurance on
India, more so in the emerging competitive environment, we need to bring
about qualitative improvement in the Insured-Insurer relationship. And the
most effective strategy to achieve this is EMPOWERMENT.
But what does this mean in operational terms. It means:
(A) Enriching the sales process through qualitative up gradation of Agents
and other intermediaries,
(B) Enriching the product development process through focused and
detailed customer needs analysis C Undertaking comprehensive
consumer education programmes in order to raising the programmes in
order to raising the consumer awareness level substantially.
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LIC building, at Connaught Place, New Delhi
LIC PRODUCTS ENDOWMENT SCHEMES :
Jeevan Anand:
The plan is a combination of the Whole Life Plan and the most popular Endowment
Assurance Plan. The plan provides the pre-decided Sum. Assured and Bonuses at the
end of the stipulated premium term, but the risk cover on the life continues till death.
Endowment Plan:
Under this plan Sum Assured is payable on the date of maturity or on death of the life
assure if earlier. Plans available with different variations like:
Maturity with profits
Limited premium payment term
Jeevan Mitra (Double Cover):
Basically an endowment assurance plan with payment of an additional sum assured
equal to the basic sum assured on death of the life assured during the term of be
policy.
A high risk low cost plan.
This is with profit plan.
Jeevan Mitra (Triple Cover) :
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For a small extra cost it provides a risk cover of 3 times the basic Sum Assured. In
case of accidents, the risk cover goes up to 4 times. Thus it is an attractive plan that
provides a high-risk cover for a comparatively lower cost.
A high –risk low cost plan.
This is also with profit plan.
New Jeevan Raksha:
An endowment plan for people with no regular income. It provides for death
cover for a period of 3 years from first unpaid premium, provided at least 2 full years
premiums have been paid.
Inbuilt accident benefit
A with profit plan.
Double Endowment:
Ideal for people with physical disability who are otherwise not acceptable for
other plans of assurance at normal rates. On maturity double the sum assured is paid.
WHOLE LIFE SCHEMES :
Jeevan Rekha Plan:
Jeevan Rekha, a with-profit plan, is a novel combination of Whole Life and
popular Money Back Plans. This is a unique plan catering to tile needs of insuring
public who cherish to have inflow of income at regular intervals and at the same time
provide their family a lump sum amount on.
Jeevan Anand:
The plan is a combination of the whole life plan and the most popular
endowment Assurance Plan. The plan provides the pre-decided Sum Assured and
Bonuses at the end of the stipulated premium term, but the risk cover on the life
continues till death.
Whole Life Plan:
A low cost insurance plan where Sum Assured is payable on e assured and
premiums are payable throughout life. Available in four variations with:
Option for maturity with or without profit
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Facility of paying the premium for a limited period.
premium payment also possible
Convertible Whole Life Plan:
The policy is issued as a whole life plan with option to convert it into an
Endowment Assurance at the end of 5 years.A plan suitable for those who cannot
afford high premium in the initial years but have prospects of increased income within
a few years.
Bank - one of India's foremost financial services companies-and Prudential plc - a
ICICI Prudential Life Insurance Company is a joint venture between ICICI leading
international financial services group headquartered in the United Kingdom. Total
capital infusion stands at Rs. 29.32 billion, with ICICI Bank holding a stake of 74%
and Prudential plcholding26%.We began our operations in December 2000 after
receiving approval from Insurance Regulatory Development Authority (IRDA).
Today, our nation-wide team comprises o
over 735 offices, over 243,000 advisors; and 22 bancassurance partners.
ICICI Prudential equity base stands at Rs. 3.75 billion with ICICI Bank and
Prudential Plc holding 74% and 26% stake respectively As of March 31, 2005 the
Company had issued nearly 350,000 policies with a sum assured in excess of Rs.
8,700 crore and total premium income of over Rs. 500 crore. Today the company is
the #1 private life insurers in the country.
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DISTRIBUTION
ICICI Prudential has one of the largest distribution networks amongst private
life insurers in India. It had commenced operations in 25 cities and towns in India.
These are: Ahmedabad. Banglore, Chandigarh, Chennai, Coimbatore, Gurgaon,
Hyderabad, Indore, Jaipur, Jalandhar, Kanpur, Kochi, Kolcata, Lucknow, Ludhiana,
Madurai, Managalore, Meerut, Mumbai, Nagpur, Nasik, Noida, New Delhi, Pune and
Vadodara.
The Company has the largest number of banc assurance tie-ups, having
agreements with ICICI Bank, Citibank, Allahabad Bank, Federal Bank, South Indian
Bank, Bank of India, Lord Krishna Bank, and Punjab & Maharashtra co-operative
Bank, as well as some corporate agents. It has also tied up with organizations like
Dhan for distribution of Salaam Zindagi, a policy for the socially and economically
underprivileged sections of society.
CHAPTER 2
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REVIEW OF LITERATURE
LIC, sales fall in Nov
BS Reporter / Mumbai January 04, 2013, 0:32 IST
Life Insurance Corporation of India (LIC), the country’s largest insurer, has managed
to mitigate some of the losses in new business premium to four per cent during
November as against a 16 per cent drop in October. As per the latest Irda report, while
ICICI Prudential Life Insurance continued to lose its share in new business premium,
SBI Life Insurance, the second largest private sector contender, with a collection of
Rs 560.84 crore, piped ICICI Prudential for the first time during November.
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LIC collected a new business premium of Rs 3,346.39 crore by selling 25.80 lakh
policies in November. The state-owned insurer has regained its market share in the
individual single premium segment, from 87 per cent in October to 89 per cent in
November.
LIC, which has been losing its market share over the past few months, had earlier said
that it would enhance its share through sale of traditional products, in contrast to unit-
linked policies that were hot favourites till March 2008. The company’s market share
stood at just over 50 per cent in August, which it plans to increase to over 65 per cent
by March this year.
In an attempt to enhance its market share, LIC has recently launched a capital
guaranteed product – Jeevan Aastha. The public sector insurer intends to garner
premiums of about Rs 25,000 crore by January 21. The insurance major covered 3.43
lakh lives under the individual single premium during November. In group single
premium, LIC dominated with 92.4 per cent share.
Meanwhile, private sector insurers such as ICICI Prudential and Bajaj Allianz have
been losing market share over the past few months, while the country’s second largest
private sector insurer SBI Life Insurance has moved to the top slot in new business
premium during November.
ICICI Prudential witnessed a drop of 45.96 per cent on a month on month basis in
new premium income in November.
“The downturn in the equity market has taken away the Ulip market. This has led to a
dip in the premium collection of the private insurance and, especially, ICICI
Prudential which is very aggressive in this segment,” said an insurance broker.
Ericson et. al. (2001) surveyed 397 consumers purchasing the insurance cover on
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one hand, factors affecting operators' choice on the other. The results indicated that
while accident cover and other facilities were the most influential factors affecting
the purchase of a insurance whereas regarded as the most important in choice of
insurance market.
According to, The Economic Times, Jan. 1,2013,
CURRENT BUSINESS ENVIRONMENT
The Indian insurance industry is currently valued at Rs. 180000 crores ($400
billion)and grosspremium collection contributes to roughly 2% of the GDP. The life
insurance sector premiumsgrew at a rate of 41% in the last fiscal (2005-06) to Rs.
35896 crores1.Within the sector, Life Insurance Corporation of India continues to be
the market leader with the highest premiums collected in FY 06 to the tune of
Rs.25645 crores. LIC is followed by Bajaj Allianz with an 8% market share, ICICI
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Prudential with a 7.4%, HDFC Standard with a 3% and SBI Life with a market share
of 2.5% as shown in Figure 1 below. The private players have a long way to go before
they can challenge the largest player in the industry with only single digit market
shares to boast of. However with almost 30% share of the industry taken away from
this eternal player in a small period of 6 years, LIC has strived towards strengthening
its foothold by bringing in innovative products and services upbeat with the new kids
on the block. LIC has thus managed to increase its premium income consistently over
the past years although its market share has continued to slide downwards.
Market share of life insurers in 2005-06, based on first year premiums
Why LIC is better than private companies?
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The following are the reasons giver by the hundred respondents to the questionnaires
for LIC being better than private companies.
1. Government hold
2. Financial soundness
3. Safety of investment
4. Very reliable
5. Good reputation
6. Huge organization
7. Impressive past record
8. Assured return
9. Extensive network
10. Good performance of agents
11. Vast choice in policies
Most of the people are of the view that investment in LIC is extremely safe due top
government hold and because of the past record. Most of them were satisfied by the
claim fulfillment and services of the agents provided by the LIC. People have high
level of confidence on LIC in wake of its past record.
Why private companies are better than LIC?
Following are the reasons given by the respondents for finding private companies
better than LIC.
1. Better customer care
2. Higher level of professionalism
3. Better service
4. Easily approachable
5. Better use of technology
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6. Less delays in claim settlement
Almost all the people haven't yet experience the services of private companies, so the
above analysis reflects the expectations of the customers from the private companies
vis-a-vis LIC. Most of them expect private companies to provide better service and
customer care than LIC. Also, absence of bureaucracy will make private companies
more efficient and effective.
Dissatisfactions with LIC:
The policyholders of LIC have expressed the following dissatisfactions
1. Bad customer care
2. Poor service at times
3. Bureaucratic hurdles
4. Delays in front-end operations
5. Works as a typical government organization
More or less the dissatisfactions of the customers are related to the customer care and
service standards of LIC.
Around 18% of the respondents were found disgusted and dissatisfied with LIC.
Future expectations from LIC
The respondents expressed the following expectations and the changes they wish
to see in LICI in the era of Privatization.
1. Higher levels of professionalism
2. Better use of technology
3. Less delays in claim settlement
4. Less bureaucracy
5. Privatization of LIC
6. Competitive returns to policy holders
7. Low premiums
8. Stay as it is
In spite of giving so many suggestions regarding expected changes in LIC, almost
30% of respondent wanted LIC to stay as it is at present. Around 30% of the
respondents are extremely satisfied with the LIC while 18% expressed high level of
dissatisfaction with LIC.
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THE JOURNAL
S. C. Sahoo
Manager (Sales),
LIC of India,
Divisional Office-I, Mumbai.
Buying insurance is not like buying a washing machine immediately after you have
seen the demonstration. Neither is it a one-time purchase. We have to keep evaluating
our risks constantly and enhance our cover. Most of us measure insurance in terms of
costs. May be so, but it’s a cost that covers our lives. “Retirement solutions” have
become popular as people become more aware of the needs to save for their golden
years. There are many investment options but ideally one would look for an
investment that provides regular periodic returns during retired life coupled with
security. LIC’s New Jeevan Suraksha I offers cool comfort to serve the young, the
middle aged and the old which has also the security and safety backing of
Government of India. It is an ideal solution for people as it not only offers retirement
benefits but also takes care of our protection needs (with term rider option). To
combat the increase in longevity, this plan provides regular guaranteed income at old
age and helps in planning to meet requirements for current and future needs. This plan
provides a lot of flexibility in terms of various pension options for you to choose
from. Additionally you can also opt for an insurance cover during the deferment
period by taking the Term Rider add on. At the end of the deferment period when the
premium ceases, this policy can, at your option, pay you a lumpsum amount and a
suitable pension for your lifetime. The similar product marketed by ICICI Prudential
Life Insurance Company is Forever Life, a comprehensive retirement solution that is
developed keeping in mind your capabilities and needs with respect to your retirement
planning. The salient features of this plan are as under:
A deferment pension plan to build up your retirement benefits.
It provides regular income for life, after a stipulated date.
The amount you receive depends on the premium you pay till the stipulated
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date and the option you choose.
It also offers life cover during the deferment period.
Postponement of retirement age.
Health cover till age 65 through add-on benefits, not only while paying
A COMPARATIVE ANALYSIS :
LIC’s NEW JEEVAN SURAKSHA-I
JANUARY – 2013..
The table below shows the summarised comparison of LIC’s New Jeevan Suraksha-I
vs. ICICI’s Forever Life.
Sr. No. Features Jeevan
Suraksha-I
Forever Life
1 Age at entry 18-70 years last
birthday
18 - 60 years
2 Vesting age 50-79 years last
birthday
50 - 70 years
3 Deferment period 2 - 35 years Min. term = 5
years
Max. term = 30
years
4 Mode of premium
payment
Single, yearly, half-
yearly,
quarterly, monthly,
SSS
_
5 Minimum single
premium
Rs. 10,000 Min. SA = Rs.
50,000/-
6 Minimum Notional
Cash Option
Rs. 50,000/- for
regular premium
policies
_
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7 Minimum amount of
annual premium
Rs 2500/- _
8 Modes of annuity
payment
Yearly, half-yearly,
quarterly & monthly
Yearly, half-
yearly, quarterly
& monthly
9 Term rider option Available on payment
of nominal additional
premium Min. Term
Assurance SA =Rs.1
lac Max. Term
Assurance SA=twice
NCO subject to a
max. of Rs. 25 lacs
for all plans put
together
You can opt for
one or
more of the
following
riders at a
marginallyincrea
sed cost
(a) Accident &
Disability
for all plans put
together benefit
(b) Major
surgical
assistance
(c) Level Term
Insurance
10 Annuity options a) Annuity for
life
b) Annuity for
life with
guaranteed
period of 5,
10, 15 & 20
years
c) Joint life last
survivor
annuity and
his/her spouse,
a) Same as
in case of
Jeevan
SurakshaI
b) Life time
annuity
certain for
period of
years 5,10
& 15
years
c) Life
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under which
annuity
payable to the
spouse on
death of the
purchaser will
be 50% of that
payable to the
annuitant.
d) Annuity for
life with return
of purchase
price on death
of the
annuitant.
e) Life annuity
increasing
yearly at a
simple rate of
3% p.a.The
option has to
be exercised at
least 6 months
before the date
of vesting.
annuity to
the
annuitant
and then
to the
beneficiar
y with
return of
purchase
price on
death of
last
survivor
d) Same as
in case of
Jeevan
Suraksha.
e) Not
available.
Same as
in case of
Jeevan
SurakshaI
.
11. Tax benefits Tax benefits u/s
80CCC(I) for
investment upto Rs.
10,000/- (deducted
from taxable income).
Same as in case
of Jeevan
Suraksha –I.
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BENEFIT ILLUSTRATION:
Age = 30 years Annuity start age = 60 years
Mode of annuity payment = yearly Annuity option = for life time
Premium payment mode = yearly Annual premium = Rs. 10000/-
Notional Cash Option (NCO)
Reversionary *
Bonus %0
Estimated Bonus (Rs.)
Final additional **
Estimated FAB The calculation
is based onNCO inclusive of
Bonus (Rs)
Annuity for lifetime***
* To be declared by LIC
depending on experience of
interest earning, Mortality and
expenses from time to time.
**Final additional bonus been
presumed at the current rate.
*** Calculated @ current TOI
MUM) reads as under: annuity
purchase priceprevalent under
New Jeevan Akshay-I plan of
LIC with a rebate of 3% on the
purchase price of New Jeevan
LIC’s New Jeevan
Suraksha – I ICICI’s Forever Life
Rs. 4,10,462
Rs. 40
850
Rs. 3,48,893
Rs. 12,51,909
Rs. 1,25,070
The yearly annuity
payable
for 30 - 60 age - vesting
age
combination with an
annual premium of Rs.
10,000/- is
Rs.1,22,583
* The calculation is
based on
the current annuity rate
and
Bonus (Rs.) the
assumptions taken in
thebenefit illustration.
The.annuities shown in
the table are indicative
and are not
guaranteed.
The fine-print
newspaper
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Akshay-I policy advertisement of The
Times of India(LOWE
ICICI PRU 22 205TOI
MUM) reads as under:
“Investments are
subject to
market risks. Refer
policy
document for risk
factor -
ICICI Prudential Life
Insurance Company
Ltd.”
As you have seen that the rate of bonus/Guaranteed addition to be paid by ICICI is
have parity with LIC of India. Could it become a reality for a company which could
take seven years to just break even (to pay a similar bonus as that of LIC). The life
time annuity in case of New Jeevan Suraksha-I is more by Rs. 2487 p.a. as against the
annuity of ICICI’s Forever Life (projected as
“conditions apply”). The investment in LIC is characterised by the following
features :
1. Highest safety (Sovereign Guarantee).
2. LIC is No. 1 amongst India’s top 500 companies on the basis of net worth in
2001 (INR 1547951 million).
3. LIC is No. 1 organisation generating highest amount of net profit (surplus) in
India.
LIC is the largest pension provider to the nation. When you buy New Jeevan
Suraksha - I policy from LIC, you buy peace of mind. With over 33.56 lakh
people already covered under pension plans,
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LIC is the single largest pension provider to the nation. So when you decide to plan
for your future, you can be sure with LIC’s New Jeevan Suraksha-I, the just right
plan for you. You will also benefit from a saving Rs. 10,000 per annum from the
tax burden during the premium paying period, under Sec. 80 CCC(I) of Income
Tax Act. Ideally, you should be between 30 - 35 years of age to take the maximum
benefit of this plan. This gives you a longer period for your retirement plan, thus
giving advantage of compounding over a long period of time to create a sizeable
retirement kitty.
DISCLAIMER: The views expressed above are based on the market information
available and all efforts have been made to represent the facts in the best possible
manner. The terms and conditions on which the policies are sold by insurance
companies are subject to changes from time to time depending on various factors. The
author does not guarantee that the information in the article reflects the
latestnamendments/information.
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CHAPTER 3
RESEARCH DESIGN AND METHODOLOGY
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OBJECTIVE OF THE STUDY
The decision of the government of India to nationalize by the insurance industry was
implemented by the passage of the insurance corporation act, 1956 by parliament. The
objective of insurance industry is safe human life by covered by the insurance in my
project work objective are mainly these are…
.To study the impact of private participation in Indian Life Insurance sector
To study the benefit for consumer due to private participation in Indian Life
Insurance sector
To find out the level of security cover provided by to the policy holder by
private participation in indian life insurance
To do swot analysis of LIC.
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Research Design:
A research design is purely and simply the framework or plan for study
that guides the collection and analysis of data. Application and specification are
the main characteristics in a research designs can be classified on the basis of the
fundamental objectives of the research. There are mainly three types of research
design.
Exploratory Research – Exploratory research is conducted to clarify
ambiguous problems. Usually, exploratory research is conducted with the
expectation that subsequent research will be required to provide conclusive
evidence.
Descriptive Research – Descriptive research seeks to determine the answers
to who, what, when, where and how questions. Descriptive research often
helps segment and target markets. Unlike exploratory research, descriptive
studies are based on some previous understanding of the nature of the research
problem.
Casual Research – The main goal of casual research is to identify cause and effect
relationships among variables. Casual research attempts to establish that when we do
one thing, another thing will follow.
Sampling Design :
Sampling is a process of obtaining information about an entire population by
examining only a part of it. Sampling is used for a variety of reasons such as:
i. Sampling can save time and money.
ii. Sampling may enable more accurate measurements.
iii. Sampling remains the only way when populations contain infinitely
many members.
iv. Sampling only remains the only choice when a test involves the
destruction of the item under study.
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Population: Consumers of DELHI, NCR.
Sampling method: Non-Probability Convenient sampling plan.
Sample Size: 100 Customers
Survey Area: DELHI,NCR.
Data Collection Method
Data collection methods are generally of two types:
a. Primary Data
b. Secondary Data
Primary data are those which are collected a fresh and for the first time and
thus happens to be original in character. The primary data is collected in the
process of questionnaire and interview of the outlets.
Secondary data are those which have already been collected by someone else
and which have been already been passed through the statistical process. In
my research the secondary data is collected from the company sales records
and from research reports.
Tools and Techniques:
Primary Data : Questionnaire and Personal Interview.
Secondary Data : Company sales record and other research report.
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The methodology followed for the purpose of this project was as follows:
Sample Size: The size of the sample was around 100 people considering the
time constraint.
Data Collection: Data has been collected through both primary and
secondary approach.
Primary Data: - It is the data, which is, collected form the survey with the
target (of the awareness of the insurance in people & also for whom many
people having the insurance) and which is raw in hand and is used for the first
time.
Secondary Data:-It is the data, which has been collected from different
sources earlier i.e. through:
Magazines
Journals
Internet
Company brochures
Pamphlets
Web Sites
Other sources
are used for the purpose of project.
Sampling Techniques:-For gathering the data The Quantitative Technique
{Questionnaire} is used with condition that person should be above 18 years.
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CHAPTER 4
DATA ANALYSIS AND INTERPTITATION
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DATA ANALYSIS
Table No. 1
No. of Respondents
Person
Percentage
People having insurance
policy
50 50%
People not having insurance
policy
50 50%
INTERPRITATION: Fifty percentage of people having insurance and fifty
percentage of people not having insurance policy.
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Table No. 2
Company No. of People Percentage
LIC 40 80%
ICICI 4 8%
HDFC 2 4%
Birla Sunlife 1 2%
Others 3 6%
INTERPRITATION: According to table no.2 it shows that LIC cover more then
80% of insurance market in the comparison of other insurance company.
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Sector which is better in insurance:
Table No. 3
Sector No. of Respondents Percentage
Public 45 90%
Private 5 10%
INTERPRITATION: In table. No. 3 figure shows that number of public sector is
larger then, private sector it means there is more competition for private sector.
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Table No. 4
Reasons for purchasing a policy
Reasons No. of Respondents Percentage
Retirement 8 16%
Life risk 23 46%
Tax Saving 6 12%
Saving 10 20%
Others 3 6%
INTERPRITATION: The above figure shows the reasons for purchasing life
insurance policy.
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Table No. 5
Person insured :- Income of person
Income group yearly No. of person % of person
>100000 4 20
100000-200000 27 54
200000-400000 10 20
<400000 9 18
INTERPRITATION: Respondents earning between 100000-200000 constituted
35% of the sample followed ; between 200000-400000 at 27.5% ; less than 100000
and more than 400000 at 22% resp.
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Table No. 6
Person insured :-Occupation
Occupation No. of person % of person
Govt.service 12 24
Private. service 17 34
Business 11 22
House wife 3 6
Other 7 14
INTERPRITATION: 25% of the respondent were engaged in Professional activity ;
Business activity engaged 22.5%;Other were 20% ; Student were 17.5% &House
Wife with 15%
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Table No. 7
MARKET SHARE CAPTURED BY PVT INSURANCE
INTERPRITATION: The above figure shows the market share of private companies
in the life insurance sector.
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7.8%
4.3%
Tata AIG7.1%SBI Life
3.4%
Others9.6%
ICICI Prud.11.9% HDFC
Standard9.6%
LIC39.3%
Max NYL6.9%
Nov – Dec.-013
Allianz Bajaj
Om Kotak
FINDINGS
The current scenario indicates a failure to create a market for insurance products
where 33% of LIC policies were sold for tax benefits under Section 88 of IT Act,
which is expected to reverse after the arrival of the private players. In the first year of
operation, in Life, ICICI Prudential has emerged as the front-runner with the sales of
1, 00,000 policies and premium collection of Rs. 112 crore from underwriting Rs.
2700 crore of business. Delhi’s Max New York life is in place with 43 crore premium
income from risk products received on 64000 whole life policies and HDFC Standard
Life at third place with having sold 32000 policies with premi7um income of Rs. 36
crore on a business portfolio of Rs. 1266 crore.
Though the performance of new players is impressive, Life Insurance
Corporation of India sold 72 lakh policies for a Sum assured of Rs. 62,499 crore with
the First Premium Income of Rs. 3021 crore in the month of March 2005-06,
recording a growth rate of 15.78% in number of Policies, 41.68% in Sum Assured and
51.51% in First Premium Income. This is a record business done by the Corporation
in the month of March-Ever Best Performance in March.
For the year 2005-2006, the Corporation has widened its reach by providing
insurance 2,45,29,946 policies with a sum Assured of Rs. 1,79,683 crore and
Premium Income of Rs. 9,688.87 crore, registering the annualized growth of 10.75%
on policies, 20.00% on sum Assured and 24.41% on Premium Income over the period
of last two years.
The Product strategy of the new players is to offer limited no. of products with
a large number of adds on which increases the Product customization and hence
customer value and risk of the players through diversified product portfolio.
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Recommendations As far the products of both public & private sectors are concerned, no one is
one the losing edge, yet they differ in their market share. The reason being the
consume perception about the public and private sectors and the marketing strategies
of the companies. Some suggestions and recommendations regarding the marketing
strategies are as follows:
Greater market Penetration: As far as the private companies are concerned
they should emphasize on the rural market as well, which bears more wealth
than urban sector. LIC has deep roots in the rural India and therefore it has a
large market share.
Greater mass Appeal: The companies should have greater mass appeal by
effective advertising as done by ICICI Prulife, which has a greater impact on
the mass.
Proper Market Segmentation: The opportunity to segment the market in terms
of Geography, demographics, Psychographics and needs is tremendous. The
very nature of an insurance product encourages mass marketing rather focus
which points to the need to define ones Long Term Product Market Focus and
positioning for sustainable competitive advantage.
Emphasizing on risk factors : The marketing strategies of the new players in
the Life sector is on offering products which have been properly marketed by
LIC i.e., Max New York Lifes focus on Risk products, ICICI Prulife focus on
pension and Term Insurance Products with 40% business from new products
such as Unit Linked.
Customer Orientation : After the advent of the private players in the Indian
market, LIC ahs improved a lot in terms of customer orientation several claims
where are pending from a longer period have been setteled so far As pending
records in the year 2004-2005 the no. of claims settles were 87,97 lakhs which
amounted the sum of 14519.25 crores. Giving the following slogan.
“LIC settles one Claim in less than one Second”
Marketing a limited no. of products The Product strategies of the new players
is to offer limited number of product customization value and reduces the
Marketing costs and Risk of the players through diversified product portfolio.
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CONCLUSIONOn the basis of the data collected it can be conclude that private companies
have posed a challenge of the public sector. It all has been possible because of the
effective marketing strategies and product innovation of the private players. though
LIC still enjoys a huge market share of about 90% , Still it has been estimated by
eminent economists that by the year 2008 it can loose a share less than 50%.
Since the private insurance companies have not penetrated the rural market
therefore they are not in a position to acquire the well-established market of LIC with
that much ease. So in order to take a ride over LIC, they should emphasize on the
Rural sector as well. Both HDFC Standard Life Insurance and ICICI Prudential
entered the market nearly in the same year yet, ICICI Prudential got the advantage of
its product innovational and apt marketing strategy which included the product
promotion on a mass scale through media advertising and well-trained sales force.
The need for Life Insurance is to cover 3 contingencies i.e., Contingency of
Death, Old Age And Critical illness & Disability However, Life Insurance in India
has traditionally been bought for tax benefits and as an investment product which
creates a greats opportunity to develop the market. India has a Life Insurance
penetration of less than 40% of the population and premium which is 2 % of GDP
averaging $5 per capital compared to above $3000 for Japan and USA. Thus the
opportunity to segment the market in terms of geography, Demographics,
Psychographics and needs in tremendous.
The private sector has emerged very fast on the success charts in respect to
pension policies in which ICICI Prudential alone claims a 73% of the local private
insurance market and nearly 24% of the total market. The next being insurance is Max
New York Life followed by HDFC Standard leaving the rest market remaining
companies.
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BIBLIOGRAPHY
Bibliography is not concerned with the literary contents of books ,but rather the
bookness of books “How they were designed,edited,printed, circulated, reprinted and
collected
Search Engine
www.iciciprulife.com
www.hdfcinsurance.com
www.licindia.com
Magazine
Business India
India Today
Economic Times
News Paper
The Times of India
Business Line
Hindustan Times
Books:
V S Ramaswamy & S Namakumari ,Marketing Management
(Published by Macmillan Publishers India PVT. LTD., New Delhi)
Fourth Edition.
Philip Kotler, Marketing Management
(Published by Dorling Kindersley(India) PVT. LTD, New Delhi)
Thirteenth Edition.
Donald R. Cooper, Business Research Methods
(Published by Tata McGraw- Hill Education PVT. LTD., New Delhi)
Print 2006, Ninth Edition.
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QuestionnaireDear Participants, I will be very thankful to you for this cooperation. The topic of this
questionnaire is” To study the impact of private participation in the insurance sector”.
This questionnaire is for the research purpose. Its results will be used for analysis in
Master Thesis. Please provide Information with confidence. Your information will not
be disclosed
Name : Age :
Occupation : Income :
Address :
Mobile No : e-mail ID :
1. Do you have any Insurance policy?
a) Yes [ ] b) No. [ ]
2. If yes, in which insurance company you have your policy?
a) LIC [ ] b) ICICI [ ]
c) HDFC [ ] d) Birla Sunlife [ ]
e) Bajaj Allianz [ ] f) Others……… .[ ]
If no,
Why...................................
3. Reasons for purchasing life Insurance Policy?
a) To cover life risk [ ]
b) To save tax [ ]
c) To invest saving [ ]
d) To meet income need after retirement [ ]
e) Any other ……………………………….. [ ]
4. Which type of insurance plans you like most?
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a) ULIP [ ]
b) Endowment [ ]
c) Money Back [ ]
d) Whole life [
]
5. Which according to you is better insurance company?
a) LIC [ ] b) ICICI [ ]
c) HDFC [ ] d) Birla Sunlife [ ]
e) Bajaj Allianz [ ] f) Others [ ]
6. What are the reasons behind your choice of insurance company?
a) Better Services [ ]
b) Better Plans [ ]
c) Better Returns [ ]
d) Better Pension plan and other schemes [ ]
e) Better goodwill [ ]
7. Which sector you feel better for insurance sector?
a) Public [ ] b) Private [ ]
8. Do you feel that government should take proper measures to increase the
promotion of life insurance?
a) Yes [ ] b) No [ ]
9. In which insurance Company you would like to invest in near future?
a) LIC [ ] b) ICICI [ ]
c) HDFC [ ] d) Birla Sunlife [ ]
e) Bajaj Allianz [ ] f) Others [ ]
10. Mention your view on making insurance more popular? (20 words)
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