ON
CONSUMER BEHAVIOUR AND INVESTMENT PATTERN IN INSURANCE SECTOR WITH REFERENCE TO HDFC STANDARD LIFE IN PARTIAL FULFILLMENT FOR THE REQUIRMENT OF THE AWARD OF THE DEGREE OF MASTER OF BUSINESS ADMINISTRATION (2007-2009)
SUBMITTED TO THE DIRECTOR OF DISTANCE EDUCATION ANNAMALAI UNIVERSITY GUIDED BY:
SUBMITTED BY:
DEAN OF NIS ACADEMY
AMIT BHALLA
M.B.A. 2ND YEAR CHANDIGARH
ENROLL.NO. - 4740700529
2
STUDENT’S DECLARATION I hereby declare that the project report conducted on ‘CONSUMER PATTREN
BEHAVIOUR IN
AND
INSURANCE
INVESTMENT
SECTOR
WITH
REFERENCE TO HDFC STANDARD LIFE’ is submitted in the partial fulfillment of the requirements for the award
of
the
MASTER
OF
BUSINESS
ADMINISTRATION IN APPLIED MANAGEMENT.
The project was undertaken as a part of the course of M.B.A.
in
Applied
Management
Programme
in
NIS
ACADEMY under ANNAMALAI UNIVERSITY.
This is my original work and the same has not been submitted
for
the
award
of
any
other
Degree/Diploma/Fellowship or other similar titles or prizes.
Place: Chandigarh Date: 30-03-09 Signature: Amit Bhalla
3
4
ACKNOWLEDGEMENT I would like to avail this opportunity to express my deep sense of gratitude to all those who have helped and encouraged me towards the successful completion of this project.
I am very grateful to Mr.Harpreet Singh Bhatia for his valuable suggestions, guidance and solving the problems throughout the project. Also, without his help, I would not have got a chance to undertake this work of study.
I would also like to thanks the following people who shared their precious knowledge and experience with me
and
provided
me
necessary
guidance
and
help
whenever required:
DR. PRIYANKA ROY MR. RAJESH
AMIT BHALLA
5
6
CERTIFICATE
This is to certify that the project report is an original work Of Mr. Amit Bhalla and has not been submitted earlier to any other University or Institute.
Date: 15 March’2009
Signature & seal Mr.Harpreet Singh Bhatia
SYSTEMA-SHYAM TELESERVICES Ltd. New Delhi
7
8
9
SYNOPSIS CONSUMER BEHAVIOUR AND INVESTMENT PATTREN IN INSURANCE SECTOR WITH REFERENCE TO HDFC STANDARD LIFE INTRODUCTION: HDFC
Standard
insurance
Life
company
in
insurance the
is
world.
the It
is
oldest the
life
largest
insurer in the UK and is the 28 th largest company in the world. In India, the company is marketing life insurance products and unit linked investment plans. From my research at HDFC SLIC, I found that the company has a lot of competition from other private insurers like ICICI, Aviva, Birla Sun Life and Tata AIG. It also faces competition from LIC. To
compete
cheaper
and
effectively more
HDFC
reasonable
SLIC
could
products
with
launch small
premiums and short policy terms (the number of year’s premium is to be paid). The ideal premium would be between Rs. 5000 – Rs. 25000 and an ideal policy term
10
would be 10 – 20 years. Family responsibilities and high returns are the two main reasons people invest in insurance. Optimum returns of 16 – 20 % must be provided
to
consumers
to
keep
them
interested
in
between
the
purchasing insurance. WHAT IS LIFE INSURANCE? Life
insurance
is
a
form
of
contract
insurance company and a person who gets his life assured, for the payment of a sum of money on the unfortunate happening of an event. The payment is made to the insurer on the date of maturity or at a specific
date,
unfortunate
at
earlier
different death.
period Under
intervals
the
terms
or of
at the
contract a person who gets his life assured has to pay the
premium
insurance investment
is
periodically universally
which
to
the
insurance.
acknowledged
eliminates
risk
and
to
be
Life an
substituting
certainty for uncertainty and comes to the timely aid of the family in unfortunate event of death. PROJECT OBJECTIVE: The insurance industry has never been in such lime light as it is now. It is witnessing an unprecedented boom. The massive upheaval in insurance sector has 11
opened gates for private insurance as well. The Indian market
of
life
insurance
is
flooded
with
private
companies vying with each other to create a niche for themselves. Thus project undertaken is a market survey pertaining to mind set and inclination towards the life insurance. PROBLEMS: So
though
the
study
aims
to
achieve
the
above
mentioned Objective in full earnest and accuracy, it may be hampered due to certain problems. Some of the problems are as follows: • To cover the various section for the society. • Respondents may not be at home and may have to re-contacted or replaced by others. • Getting accurate response from the respondents due to their inherent problem is difficult. • Limited response from client. There is a time limitation it is not possible to study whole thing I covered some special aspect as well as some topics METHODOLOGY:
12
Marketing research is a systematic and objective study of problems pertaining to the marketing of goods and services.
Market
research
specifies
the
information
required to address these issues; designs the method of collecting information; manages and implements the data
collection
process;
analysis
the
results
and
communicates the findings and their implications. For the survey a sample size of 100 was taken. The questionnaire was designed in such manner that it is self explanatory, and the data thus collected has been
very
comprehensive
one.
Then
a
task
of
tabulating the whole data, editing the whole data and finally analyzing the data was done to come out with certain conclusion. The questionnaire consisted of 12 questions regarding the awareness of insurance and private insurance companies. The criteria for a sample were:
Age : 25-60 years
Sex
Source
: Male/ female of
income
:
Salaried
Businessmen , Self employed
Income Group
: Middle income group
CONCLUSION: 13
class,
Over the past four years, around 40 companies have expressed interest in entering the sector and many foreign
and
anticipatory
Indian
companies
alliances.
The
threat
have of
arranged
new
players
taking over the market has been overplayed. As is witnessed in other countries where liberalization took place
in
recent
nationalized
year
players
we
can
will
safely
continue
conclude to
hold
that
strong
market share positions, but there be enough business for new entrants to be profitable. Opening
up
products,
the
better
sector
will
packaging
and
certainly
mean
improved
new
customer
service. Both new and existing players will have to explore
new
distribution
and
marketing
channels.
Potential buyers for most of this insurance lie in the middle class. New insurers must segment the market carefully to arrive at appropriate products and pricing. Recognizing the potential, in the past three years, the nationalized
insurers
have
already
begun
to
target
niches like pensions, women or children. There should be efforts made by different Insurance Companies
to
increase
awareness
among
general
public. This can be done by doing advertising through various Medias.
14
INTRODUCTION OF HDFC STANDARD LIFE
15
INTRODUCTION There are only two broad classifications of insurance companies:
Life insurance
Non-life insurance
WHAT IS LIFE INSURANCE? Life insurance is a form of contract between the insurance company and a person who gets his life assured, for the payment of a sum of money on the unfortunate happening of an event. The payment is made to the insurer on the date of maturity or at a specific
date,
at
different
period
intervals
or
at
unfortunate earlier death. Under the terms of the contract a person who gets his life assured has to pay the premium periodically to the insurance. Life insurance is universally acknowledged to
be
an
investment
which
eliminates
risk
and
substituting certainty for uncertainty and comes to the timely aid of the family in unfortunate event of death.
16
WHY LIFE INSURANCE? Life insurance has come a long way from the earlier days
when
it
was
originally
conceived
as
a
risk
covering medium for short periods of time, covering temporary risk situations. As life insurance become more established it was realized what a useful tool it was for a number of situations. These are: 1.
Temporary needs
2.
Regular savings
3.
Investment
4.
Retirement
1. Temporary Needs: The
original
purpose
of
life
insurance
remains
an
important element, namely providing for replacement of income on death etc. 2.
Regular savings:
Providing for one’s family and oneself as a medium to long
term
exercise(through 17
a
series
of
a
regular
payment of a premium).This has become more relevant in recent times as people seek financial independence for their family. 3. Put
Investment: simply
safeguarding regular
the
building
from
the
saving
investments
ravages
products
where
the
up
are
of of
savings
while
inflation.
Unlike
traditionally
individual
makes
lump a
sum
one
off
payment. 4.
Retirement:
Provision
for
latter
years
becomes
increasingly
necessary, especially in a changing culture and social environment. One can buy a suitable insurance policy which will provide periodical payment in one’s old age. No one likes to think about dying especially when they
are
young
but
everyday
people
die
in
car
accidents, of illness like cancer, aids, fire or other accidents. If something like this happens to you what would happen to your family? Would they have enough money to pay for? :
Your funeral cost
Debts you owe like credit bills car payments mortgage on your home.
Child care 18
Your children’s education
The most important reason to buy life insurance policy is to protect your family by making sure that they have enough money if something happens to you. One type of insurance called “Permanent insurance” can also help you to save money for retirement or get collateral for a loan.
HDFC STANDARD LIFE THE PARTNERSHIP: HDFC and Standard Life first came together for a possible
joint
venture,
to
enter
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 formed. In October 1995 the companies signed a three year joint venture agreement. Around this time Standard Life purchased a 5% stake in HDFC, further strengthen the relationship. The next three year were filled with uncertainty, due to
changes
in
government
19
and
ongoing
delays
in
getting
the
IRDA
Development
(Insurance
authority)
Act
Regulatory
passed
in
and
parliament.
Despite this both remained firmly committed to the venture. In
October
renewed Around
1998,
and this
the
joint
additional time
Infrastructure
venture
resource
Standard
Development
Life
agreement made
available.
purchased
Finance
was
2%
Company
of Ltd.
(IDFC). Standard Life also started to use the services of HDFC Treasury
department
to
advise
them
upon
their
investments in India. Towards the end of 1999, the opening of the market looked very promising and both companies
agreed
the
time
was
right
to
move
the
operation to the next level. Therefore, in January 2000 an expert team from 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% stake in HDFC Bank. In
a
further
participate
development in
the
Asset
Standard
Life
Management
agreed
to
Company
promoted by HDFC to enter the Mutual Fund market. The Mutual Fund was launched on 20th July 2000.
20
INCORPORATION: 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 Ltd. Our ambition from as far as October 1995 was to be the first private company to re-enter the life insurance market in India. 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 shareholders in HDFC Standard Life, with 81.4%, while Standard Life owns 18.6%. Given Standard Life’s existing investment in the HDFC Group, this is the maximum investment allowed under current regulations.HDFC and Standard Life have a long and close relationship built upon shared values and trust. The ambition of HDFC Standard Life is to mirror the success of the parent companies and be the yardstick by which all other insurance company’s in India are measured.
21
MISSION: We aim to be top new life insurance company in the market. This does not just mean being the largest or the most productive
company
in
the
market,
rather
it
is
a
combination of several things like Customer service of the highest order Value of money for customer Professionalism in carrying out business Innovative products to cater to different needs of different customer Use of technology to improve service standards Increasing market share VALUES: Security: Providing long term financial security to our policy holders will be our constant endeavor. We will be
do
this
by
offering
life
insurance
and
pension
products. Trust:
We appreciate the trust placed by our policy
holders in us. Hence, we will aim to manage their investments very carefully and live up to this trust. 22
Innovation: Recognizing the different needs of our customers,
we
will
be
offering
a
range
innovative
product to meet these needs. Our mission is to the best new life insurance company in India and these are the values that will guide us in this.
BELOW ARE FEW OF THE PLANS THAT ARE OFFERED BY HDFC STANDARDS LIFE INSURANCE INSURANCE PLANS AVAILABLE
Individual Products: We at HDFC Standard Life realize that not everyone has the same kind of needs. Keeping this in mind, we have a varied range of Products that you can choose from to suit all your needs. These will help secure your future as well as the future of your family. Protection Plans You can protect your family against the loss of your income or the burden of a loan in the event of your unfortunate
demise,
disability
or
sickness.
These
plans offer valuable peace of mind at a small price. Our Protection range includes our Term Assurance
23
Plan & Loan Cover Term Assurance Plan.
Investment Plans Our Single Premium Whole Of Life plan
is well
suited to meet your long term investment needs. We provide you with attractive long term returns through regular bonuses. Pension Plans Our Pension Plans help you secure your financial independence even after retirement. Our
Pension
range
includes
our
Personal
Pension
Plan, Unit Linked Pension, Unit Linked Pension Plus Savings Plans Our Savings Plans offer you flexible options to build savings for your future needs such as buying a dream home
or
fulfilling
your
children
immediate
and
future needs. Our Savings range includes Endowment Assurance Plan,
Unit
Linked
Endowment,
Unit
Linked
Endowment Plus, Unit Linked Endowment Plus II , Back,
Children’s,
Unit
Linked
24
Young
Star,
Unit
Linked Young Star Plus, Unit Linked Young Star Plus II.
Group Products One-stop shop for employee-benefit solutions HDFC Standard Life has the most comprehensive list of products
for
progressive
employers
who
wish
to
provide the best and most innovative employee benefit solutions
to
their
employees.
We
offer
different
products for different needs of employers ranging from term insurance plans for pure protection to voluntary plans such as superannuation and leave encashment. We now offer the following group products to our esteemed corporate clients: Group Group Group An
Term Insurance Variable Term Insurance Unit-Linked Plan investment solution that
provides
funding
vehicle to manage corpuses with Gratuity, Defined Benefit or Defined Contribution Superannuation or Leave Encashment schemes of your company Also suitable for other employee benefit schemes such
as
salary
saving
management schemes 25
schemes
and
wealth
SOCIAL PRODUCT Development Insurance Plan Development Insurance plan is an insurance plan which provides life cover to members of a Development Agency for a term of one year. On the death of any member of the group insured during the year of cover, a lump sum is paid to those member beneficiaries to help meet some of the immediate financial needs following their loss. Eligibility Members of the development agency and their spouses with: - Minimum age at the start of the policy 18 years last birthday - Maximum age at the start of policy 50 years last birthday Employees of the Development Agency are not eligible to join the group. The group to be covered is only eligible if it contains more than 500 members.
26
Premium Payments The premium to be paid will be quoted per member in the group and will be the same for all members of the group. The
premium
can
only
be
paid
by
the
Development
Agency as a single lump sum that includes all premiums for the group to be covered. Cover will not start until the premium and all the member information in our specified format has been received. The premium rate is Rs. 25 per Rs. 10,000 of lump sum, per member. Benefits On the death of each member covered by the policy during the year of cover a lump sum equal to the sum assured will be paid to their beneficiaries or legal heirs. Where
the
death
is
as
a
result
of
an
accident,
an
additional lump sum will be paid equal to half the sum assured. There are no benefits paid at the end of the year of cover and there is no surrender value available at any time. The role of the Development Agency Due to the nature of the groups covered, HDFC Standard Life will be passing certain administrative tasks onto
27
the Development Agency. By passing on these tasks the premium
charged
can
be
lower.
These
tasks
would
include: Submission of member data in a specified computer format Collection of premiums from group members Recording changes in the details of group members Disbursement of claim payments and the mortality rebate (if any) to group members These tasks would be in addition to the usual duties of a policyholder such as: Payment of premiums Reporting of claims Keeping policy holder information up to date
Training and support will be available to give guidance on
how
to
complete
the
tasks
appropriately.
Since these additional tasks will impose a burden on the Development
Agency,
the
Development
Agency
charge a Rs. 10 administration fee to their members.
28
may
Prohibition of rebates Section 41 of the Insurance Act, 1938 states No person shall allow or offer to allow, either directly or indirectly, as an inducement to any person to take out or renew or continue an insurance in respect of any kind of risk relating to lives or property in India, any rebate of the whole or part of the commission payable or any rebate of the premium shown on the policy, nor shall any person taking out or renewing or continuing a policy accept any rebate, except such rebate as may be allowed in accordance with the published prospectus or tables of the insurer If any person fails
to
comply
with
sub
regulation
(previous point) above, he shall be liable to payment of a fine which may extend to rupees five hundred
Tax Benefits 29
INCOME
TAX GROSS ANNUAL HOW
SECTION
SALARY
MUCH HDFC
STANDARD
TAX CAN YOU LIFE PLANS SAVE?
Sec. 80C
Across All
Upto Rs. 33,990
All the life insurance
income Slabs
saved on
plans.
investment of Rs. 1,00,000. Sec. 80 CCC
Across all
Upto Rs. 33,990
All the pension
income slabs.
saved on
plans.
Investment of Rs.1,00,000. Sec. 80 D*
Across all
Upto Rs. 3,399
All the health
income slabs
saved on
insurance riders
Investment of
available with the
Rs. 10,000.
conventional plans.
TOTAL SAVINGS POSSIBLE **
Sec. 10 (10)D
Rs37,389 Rs. 33,990 under Sec. 80C and under Sec. 80 CCC , Rs.3,399 under Sec. 80 D, calculated for a male with gross annual income exceeding Rs. 10,00,000. Under Sec. 10(10D), the benefits you receive are completely tax-free, subject to the conditions laid down therein.
S.W.O.T ANALYSIS OF HDFC
30
STRENGTHS
WEAKNESSES
• Strong tie up
• Low Customer awareness
• Brand Equity
• Less promotion
• Strong Network • Huge Customer Database • Strong Financial Base
OPPORTUNITIES
THREATS
• Large uninsured
• Government policies • Cut throat competition
population • Network Building • Targeting
the
• Low customer awareness rural
segment
31
MARKETING MIX POLICIES Different companies can choose to position themselves differently and hence the Marketing Mix is different. However, there are certain common characteristics that one
can
cull
out
from
the
possible
strategies
that
companies adopt.
PRODUCT: The development of flexible products to suit individual requirements
is what will differentiate the winners
from the also-rans. The key to success is in providing insurance
solutions,
not
standardized
insurance
products. The concept of riders/optional benefits has already been a huge innovation brought about by the new
players,
products
for
which
has
individual
led
needs.
to
customization
However,
of
companies
may differentiate themselves on the basis of product segments that they choose to focus on and excel in.
PLACE: Different
companies
may
however
choose
different
channels and different geographies to focus on. The channel
options
are
-
tied
agency
force,
corporate
agents and brokers and this is an area where different 32
companies
will
make
different
choices.
Many
companies like HDFC Standard Life are focusing on all channels whereas companies like Max New York Life are focusing on the tied agency force only. Customer interface will be a key challenge for life insurance companies and includes every that interaction that the customer has with the company, such as sales, new business
underwriting,
policy
servicing,
premium
payments, claim processing and so on. Technology can play a crucial role in delivering the highest standards of service set by the company and it will be imperative for any serious player to excel in all of these.
PRICE: Price is a relevant differentiator only in two segments - pure term insurance and in pure annuities. Here too, service delivery and financial strength will need to be present at a minimum acceptable level for price to be a relevant products,
differentiator. long-term
In
case
returns
of
savings
generated
oriented
are
more
relevant than just the price of the product. A focus on generating good investment performance and keeping a tight control on costs help in generating good longterm maturity value for customers. Norms have been laid down on all of these by IRDA and adhering to
33
these
while
delivering
good
returns
will
be
a
challenge.
PROMOTION AND ADVERTISING: The level of demand is latent and will have to be activated
considerably.
developed.
Greater
The
awareness
market of
needs
insurance
to
be
and
the
need to have it as a protection tool rather than as a tax planning measure needs to be appreciated by the Indian people.
Various
advertising,
communication
direct
marketing
tools and
including
road
shows
contribute to all this and different companies take different approaches on these.
PROCESS: Cashless settlement: One of the most defining and customer-friendly changes that we’ve seen in recent years relates to the way claims settlements are made. The
advent
regime
has
of
the
third-party
facilitated
the
administrator
transition
to
the
(TPA) hugely
convenient era of cashless settlement of health and auto insurance claims. TPAs are entities who process claims on behalf of insurers: the IRDA licenses them after
it
is
satisfied
that
34
they
have
the
financial
strength, the trained manpower, the infrastructure and the skills to undertake this activity. Likewise, with auto insurance, the TPA ties up with garages and authorized service centers for cashless settlement of auto insurance claims.
Lower premiums: The spirit of competition and the broadening
of
the
risk
experience
of
insurance
companies have contributed to a fall in premiums over the years. That’s because, other things being equal, an insurer who covers the lives just of 10 people bears a higher risk than an insurer who covers the lives of, say, 100 people. Further, a broader base will provide greater
efficiencies
management mortality
and
on
costs
claims.
experience,
A
such broad
therefore,
as
distribution,
basing
gives
of
the
insurers
the
elbowroom to compete by lowering premiums, and that trend is expected to continue.
Premium payment flexibility: Insurers have imparted certain flexibility to premium payment options in order to address this concern. For instance, one now have the option to pay your premiums upfront, which is then carried forward for the tenure of the policy. The yearly premiums are drawn from the initial corpus. Insurers
35
have also introduced the concept of ‘automatic cover maintenance’
to
protect
your
policy
from
lapsing
owing to your omission to pay your premium on time. Under
this,
in
the
event
of
your
not
paying
the
premium, the insurer dips into your investment account to the extent of the premium. Of course, this comes with an in-built drawback: your investment portion diminishes year on year to the extent of the amount paid to cover your risk.
Physical Evidence: This can play a significant role for marketing in the Indian scenario. Since Internet users are comparatively lesser than countries such as US, the offline mode will be preferred in India. Although the distribution model is largely agent-based, wherever the customer is in contact
with
the
company,
this
factor
can
play
a
significant role in luring the customer.
People: The most important factor that materializes sales and maintains customer relationships on a long-term basis is this factor. No matter what distribution strategy a company adopts, customer relationship has to be taken
36
care of in order to maintain the customer base on a long-term basis.
GROUP COMPANIES HDFC LIMITED: HDFC
was
incorporated
in
1977
with
the
primary
objective of meeting a social need – that of promoting home
ownership
households
for
promoted
with
million.
HDFC
by
providing
their an
long-term
housing
initial is
a
share
needs. capital
finance HDFC of
professionally
to was
Rs.100 managed
organization with a board of directors consisting of eminent persons who represent various fields including finance, taxation, construction and urban policy and development. HDFC BANK LIMITED: The Housing Development Finance Corporation Limited (HDFC)
was
amongst
the
first
to
receive
an
‘in-
principle’ approval from the Reserve Bank of India (RBI) to set up a bank in the private sector, as part of the RBI’s liberalization of the Indian Banking Industry in 1994. The bank was incorporated in August 1994 in 37
the name of ‘HDFC Bank Limited’, with its registered office in Mumbai, India. Bank’s
aim
is
across
distinct
to
build
sound
businesses
so
customer as
to
franchises
build
sound
customer franchises across distinct businesses so as to be the preferred provider of banking services in the segments that the bank operates in and to achieve healthy growth in profitability, consistent with the bank’s risk appetite. HDFC ASSET MANAGEMENT COMPANY LIMITED: A mutual fund is a common pool of money in to which investors
with
common
investment
objective
place
their contributions that are to be in accordance with the stated investment objective of the scheme. The investment manager would invest the money collected from
the
investor
in
to
assets
that
are
defined
/
permitted by the stated objective of the scheme. For example, an equity fund would invest equity and equity
related
instruments
and
a
debt
fund
would
invest in bonds, debentures, gilts etc. The mission is to provide customers with the most useful investment guidance and investment-related services available in the country. It is a one-stop solution for all investment 38
needs, one that will help you get the most out of your money.
HDFC SECURITIES LIMITED: HDFC sec is a brand brought by HDFC Securities Ltd, which has been promoted by the HDFC Bank & HDFC with the objective of providing the diverse customer base
of
the
HDFC
Group
and
other
investors
a
capability to transact in the Stock Exchanges & other financial market transactions. HDFC sec, will equip with the necessary tools to allocate, select and manage investments
wisely,
and
also
support
it
with
the
highest standards of service, convenience and hasslefree trading tools. HDFC REALITY LIMITED: HDFC realty.com is a real estate site that aims to bring
credibility
and
trust
to
property
dealers.
At
HDFC realty.com one can meet Customer Relationship Manager for any assistance one may require at various stages of property dealing.
39
HDFC CHUBB GENERAL INSURANCE COMPANY LIMITED: It’s a partnership that leverages the strengths of two financial powerhouses-combining the trust and local experiences
of
HDFC,
with
the
one
years’
proven
expertise of Chubb. Individually, you can count on specialized products
that
cover
not
only
you
and
your
family
(Personal Accident, Travel and Health Insurance) but also your possessions (Motor and Home Insurance). For
businesses,
there’s
a
range
of
innovative
Commercial and Specialty Insurance offerings that can be
custom
designed
to
peace
of
mind
to
employees and superior value to your organization.
40
your
INSURANCE SECTOR IN INDIA
41
THE INSURANCE INDUSTRY IN INDIA AN OVERVIEW
With the 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 of 15-20 per cent annually and presently is of the order of Rs 1560.41 billion (for the financial year 2006 – 2007). Together with banking services, it adds about 7% to the country’s Gross Domestic Product (GDP). The gross premium collection is nearly 2% of GDP and funds available with LIC for investments are 8% of the GDP. Even so nearly 65% of the Indian population is without life insurance cover while health insurance and nonlife
insurance
standards.
A
continues large
part
to
be
of
our
below
international
population
is
also
subject to weak social security and pension systems with hardly any old age income security. This in itself is an indicator that growth potential for the insurance sector in India is immense. A
well-developed
and
evolved
insurance
sector
is
needed for economic development as it provides long term
funds
for
infrastructure
42
development
and
strengthens the risk taking ability of individuals. It is estimated that over the next ten years India would require investments of the order of one trillion US dollars.
The
Insurance
sector,
to
some
extent,
can
enable investments in infrastructure development to sustain the economic growth of the country. (Source: www.indiacore.com) HISTORICAL PERSPECTIVE The history of life insurance in India dates back to 1818 when it was conceived as a means to provide for English Widows. Interestingly in those days a higher premium was charged for Indian lives than the non Indian lives, as Indian lives were considered more risky to cover. The Bombay Mutual Life Insurance Society started its business in 1870. It was the first company to charge the same premium for both Indian and non-Indian lives. The Oriental Assurance Company was established in 1880. The General insurance business in India, on the other hand, can trace its roots to Triton Insurance Company Limited, the first general insurance company established in the year 1850 in Calcutta by the British. Till
the
end
of
the
nineteenth
century
insurance
business was almost entirely in the hands of overseas companies. 43
Insurance regulation formally began in India with the passing of the Life Insurance Companies Act of 1912 and the Provident Fund Act of 1912. Several frauds during the 1920's and 1930's sullied insurance business in India. By 1938 there were 176 insurance companies. The
first
comprehensive
legislation
was
introduced
with the Insurance Act of 1938 that provided strict State
Control
insurance
over
business
independence.
the
insurance
grew
Indian
at
a
business.
faster
companies
The
pace
after
strengthened
their
hold on this business but despite the growth that was witnessed, insurance remained an urban phenomenon. The Government of India in 1956, brought together over 240 private life insurers and provident societies under one nationalized monopoly corporation and Life Insurance Corporation (LIC) was born. Nationalization was justified on the grounds that it would create the much needed funds for rapid industrialization. This was in conformity with the Government's chosen path of State led planning and development. The non-life insurance business continued to thrive with the private sector till 1972. Their operations were restricted
to organized
trade and
industry
in large
cities. The general insurance industry was nationalized in
1972.
With
this,
nearly 44
107
insurers
were
amalgamated National
and
grouped
into
four
Insurance
Company,
New
Oriental
Insurance
Company
Company,
companies-
India
Assurance and
United
India Insurance Company. These were subsidiaries of the General Insurance Company (GIC).
KEY MILESTONES 1912: enacted
The as
Indian the
Life
first
Assurance
statute
to
Companies
regulate
the
Act life
insurance business. 1928: The Indian Insurance Companies Act enacted to enable
the
information
government about
both
to
life
collect
and
statistical
non-life
insurance
businesses. 1938: Earlier legislation consolidated and amended by the Insurance Act with the objective of protecting the interests of the insuring public. 1956:
245
Indian
provident societies
and
foreign
were
insurers
taken over
by
along
with
the central
government and nationalized. LIC was formed by an Act
of
Parliament-
LIC
Act
45
1956-
with
a
capital
contribution of Rs. 5 crore from the Government of India.
INDUSTRY REFORMS
Reforms in the Insurance sector were initiated with the passage of the IRDA Bill in Parliament in December 1999. The IRDA since its incorporation as a statutory body
in
April
2000
has
fastidiously
stuck
to
its
schedule of framing regulations and registering the private sector insurance companies. Since being set up as an independent statutory body the IRDA has put in a framework of globally compatible regulations. The other decision taken simultaneously to provide the supporting
systems
to
the
insurance
sector
and
in
particular the life insurance companies was the launch of the IRDA online service for issue and renewal of licenses to agents. The approval of institutions for imparting training to agents has also ensured that the insurance companies would have a trained workforce of insurance agents in place to sell their products.
46
PRESENT SCENARIO - LIFE INSURANCE INDUSTRY IN INDIA The
life
insurance
impressive 1560.41
47.38%,
billion
industry with
during
in
India
premium
the
fiscal
grew
income year
by at
an Rs.
2006-2007.
Though the total volume of LIC's business increased in the
last
fiscal
year
(2006-2007)
compared
to
the
previous one, its market share came down from 85.75% to 81.91%. The 17 private insurers increased their market share from about 15% to about 19% in a year's time. The figures for the first two months of the fiscal year 2007-08 also speak of the growing share of the private insurers. The share of LIC for this period has further come down to 75 percent, while the private players have grabbed over 24 percent. With the opening up of the insurance industry in India many foreign players have entered the market. The restriction on these companies is that they are not allowed to have more than a 26% stake in a company’s ownership.
47
Since the opening up of the insurance sector in 1999, foreign investments of Rs. 8.7 billion have poured into the
Indian
market
and
19
private
life
insurance
companies have been granted licenses. Innovative products, smart marketing, and aggressive distribution have enabled fledgling private insurance companies
to sign up Indian customers
faster
than
anyone expected. Indians, who had always seen life insurance as a tax saving device, are now suddenly turning to the private sector and snapping up the new innovative products on offer. Some of these products include
investment
plans
with
insurance
and
good
returns (unit linked plans), multi – purpose insurance plans,
pension
plans,
child
plans.
48
plans
and
money
back
49
COMPANIES
INDIAN PROMOTER
FOREIGN PROMOTER
ICICI
Prudential PLC, UK
HDFC
Standard Life, UK
Aditya Birla Group
Sunlife Financial, Canada
Kotak Mahindra Finance
Old Mutual Plc, South Africa
Max India
New York Life, USA
TATA Group
American International Group,USA
Vyasa Bank
ING Group, Nether Land
Bajaj Auto
Allianz AG
Reliance Group
None
Dabur India
AVIVA PLC
State Bank of India
Cardiff, France
J & K Bank, Pallonji & Co.
Metropolitan Life Insurance
Sahara
None
LIC
None
50
MAX NEW YORK LIFE INSURANCE Max New York Life Insurance Company Limited is a joint venture that brings together two large forces Max
India
Limited,
a
multi-business
corporate,
together with New York Life International, a global expert
in
life
insurance.
The
very
nature
of
our
business makes us highly customer-sensitized at Max New York Life. They believe in building relationships with the people we serve, so that our customers enjoy the highest quality of service in life insurance. This fact comes alive from our defining qualities, all of which are outlined below. They are experts in life insurance: New York Life has over 160 years of experience in the life insurance business. It is a Fortune 100 company that has been trusted by millions worldwide, across generations. Their
existence
financial
is
strength,
rooted integrity
in and
our
commitment
responsibility.
to We
have increased our capitalization requirement to Rs. 527 crore from the initial Rs.100 crore that has been
51
stipulated
by
the
Insurance
Regulatory
and
Development Authority (IRDA). Our investments are confined only to debt instruments and we meet both Indian and US reporting norms. Max New
York
Life
also
deposits
one
per
cent
of
the
premium income with the RBI, towards Contingency Funds. They have the best Agent Advisors in the business. Backed by the best training and infrastructure, our expert Agent Advisor will spend time evaluating your needs rather than just selling. They are professionals who
will
thoroughly
understand
your
needs
before
recommending the policy tailored to meet them. They offer the best products with Flexibility as our cornerstone, so you can buy just what you need. With our various Products and Riders, you have more than 400 product combinations to choose from. Transparency business.
This
is
the is
bedrock
why
they
of
the
customize
way a
we
do
Personal
Insurance Plan, which gives you a broad overview of the details of your policy along with a year-on-year summary, even before you buy. And with the policy review period option you even have the unconditional 52
right to return the policy, if you so wish, within 15 days of receiving it. They offer you multiple bonus options, which includes options such as annual bonus, bonus accumulated and paid
on
maturity,
bonus
used
to
offset
premiums,
bonus utilized to buy Paid up additions and bonus used to buy one-year term insurance. So, you can decide how you want to use your bonus payments.
They have a national presence with a network of 57 offices in 37 cities across India. They are always there when you need us. Their Customer Helpline and Their branch office network will ensure that you can get in touch with them whenever you want.
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 international financial services group headquartered in the United Kingdom.
ICICI
Prudential
was
amongst
the
first
private sector insurance companies to begin operations
53
in
December
2000
after
receiving
approval
from
Insurance Regulatory Development Authority (IRDA). ICICI
Prudential's
equity
base
stands
at
Rs.
11.85
billion with ICICI Bank and Prudential plc holding 74% and 26% stake respectively. In the financial year ended March 31, 2005, the company garnered Rs 1584 crore of new business premium for a total sum assured of Rs 13,780 crore and wrote nearly 615,000 policies. The company has a network of about 56,000 advisors; as well as 7 banc assurance and 150 corporate agent tie-ups. For the past four years, ICICI Prudential has retained its position as the No. 1 private life insurer in the country, with a wide range of flexible products that meet the needs of the Indian customer at every step in life.
Tata AIG Life Insurance Company 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 their customers can find an insurance product to meet their needs.
54
Tata AIG is a joint venture of the Tata Group and American International Group, Inc. (AIG).
THE TATA GROUP The Tata Group (www.tata.com) is one of India's bestknown industrial groups with an estimated turnover of around
US
$14.25
India's
GDP).
billion
With
(approximately
more
than
220,000
2.6%
of
employees
across 91 major companies, it is also India's largest employer
in
the
pioneered
several
private firsts
sector. in
The
Indian
Tata
Group
industry
firsts,
including: India's first private sector steel mill, first private sector power utility, first luxury hotel chain and
first
international
airline,
amongst
others.
Recently, the Tata Group's pioneering spirit has been showcased
by
companies
such
as
Tata
Consultancy
Services (TCS), Asia's largest software and Services Company, and Tata Motors, the first car maker in a developing country to design and produce a car from the ground up.
AIG American
International
Group,
Inc.
is
the
world's
leading international insurance and financial services organization,
with
operations
55
in
more
than
130
countries serve
and jurisdictions.
commercial,
customers
through
AIG member
institutional the
most
companies
and
individual
extensive
worldwide
property-casualty and life insurance networks of any insurer. In the United States, AIG companies are the largest
underwriters
of
commercial
and
industrial
insurance and AIG American General is a top-ranked insurer.
AIG's
retirement
services,
management. include
global
AIG's
aircraft
businesses
also
include
financial
services,
and
financial
services
businesses
leasing,
financial
products,
asset trading
and market making. American General Finance leads AIG s growing global consumer finance business in the United States. AIG also has one of the largest U.S. retirement savings businesses through AIG SunAmerica and AIG VALIC, and is a leader in asset management for
the
individual
specialized equities,
and
investment
fixed
income,
institutional management alternative
markets,
with
capabilities investments
in and
real estate. AIG's common stock is listed in the New York Stock Exchange and ArcaEx, as well as the stock exchanges in London, Paris, Switzerland and Tokyo.
Life Insurance of India Life Insurance in its modern form came to India from England in the year 1818. Oriental Life Insurance
56
Company started by Europeans in Calcutta was the first life insurance company on Indian Soil. Bombay Mutual Life Assurance Society heralded the birth of first Indian life insurance company in the year 1870, and covered Indian lives at normal rates. Starting as Indian enterprise with highly patriotic motives, insurance companies came into existence to carry the message of insurance and social security through insurance to various sectors of society. Bharat Insurance Company (1896) was also one of such companies inspired by nationalism. In the year 1912, the Life Insurance Companies Act, and the Provident Fund Act were passed. The Life Insurance Companies Act, 1912 made it necessary that the premium rate tables and periodical valuations of companies should be certified by an actuary. But the Act discriminated between foreign and Indian companies on many accounts, putting the Indian companies at a disadvantage.
The first two decades of the twentieth century saw lot of growth in insurance business. From 44 companies with total business-in-force as Rs.22.44 crore, it rose to
176
Rs.298
companies crore
insurance
in
with
1938.
companies
total
business-in-force
as
During
the
of
many
financially
mushrooming
unsound
concerns were also floated which failed miserably. The 57
Insurance Act 1938 was the first legislation governing not only life insurance but also non-life insurance to provide strict state control over insurance business. The
demand
industry
for
was
nationalization
made
repeatedly
of in
life
the
insurance
past
but
it
gathered momentum in 1944 when a bill to amend the Life
Insurance
Act
1938
was
introduced
in
the
Legislative Assembly. However, it was much later on the 19th of January, 1956, that life insurance in India was
nationalized.
About
154
Indian
insurance
companies, 16 non-Indian companies and 75 provident were operating in India at the time of nationalization. Nationalization
was
accomplished
in
two
stages;
initially the management of the companies was taken over
by
means
of
an
Ordinance,
and
later,
the
ownership too by means of a comprehensive bill. The Parliament
of
India
passed
the
Life
Insurance
Corporation Act on the 19th of June 1956, and the Life Insurance
Corporation
of
India
was
created
on
1st
September, 1956, with the objective of spreading life insurance much more widely and in particular to the rural areas with a view to reach all insurable persons in
the
country,
providing
them
adequate
financial
cover at a reasonable cost. LIC had 5 zonal offices, 33 divisional offices and 212 branch offices, apart from its corporate office in the 58
year 1956. Since life insurance contracts are long term contracts and during the currency of the policy it requires a variety of services need was felt in the later years to expand the operations and place a branch office at each district headquarter. Re-organization of LIC
took
place
and
large
numbers
of
new
branch
offices were opened. As a result of re-organization servicing functions were transferred to the branches, and branches were made accounting units. It worked wonders with the performance of the corporation. It may be seen that from about 200.00 crores of New Business
in
1957
the
corporation
crossed
1000.00
crores only in the year 1969-70, and it took another 10 years for LIC to cross 2000.00 crore mark of new business. But with re-organization happening in the early eighties, by 1985-86 LIC had already crossed 7000.00 crore Sum Assured on new policies. Today
LIC
functions
with
2048
fully
computerized
branch offices, 100 divisional offices, 7 zonal offices and the Corporate office. LIC’s Wide Area Network covers
100
divisional
offices
and
connects
all
the
branches through a Metro Area Network. LIC has tied up with some Banks and Service providers to offer online
premium
collection
facility
in
selected
cities.
LIC’s ECS and ATM premium payment facility is an addition to customer convenience. Apart from on-line 59
Kiosks
and
IVRS,
commissioned
at
Info
Mumbai,
Centers
have
Ahmedabad,
been
Bangalore,
Chennai, Hyderabad, Kolkata, New Delhi, Pune and many other cities. With a vision of providing easy access
to
its
policyholders,
LIC
has
launched
its
SATELLITE SAMPARK offices. The satellite offices are smaller, leaner and closer to the customer. The digitalized facilitate
records anywhere
of
the
satellite
servicing
and
offices many
will other
conveniences in the future. LIC continues to be the dominant life insurer even in the liberalized scenario of Indian insurance and is moving fast on a new growth trajectory surpassing its own
past
records.
LIC
has
issued
over
one
crore
policies during the current year. It has crossed the milestone of issuing 1,01,32,955 new policies by 15th Oct, 2005, posting a healthy growth rate of 16.67% over the corresponding period of the previous year. From then to now, LIC has crossed many milestones and
has
set
unprecedented
performance
records
in
various aspects of life insurance business. The same motives
which
inspired
our
forefathers
to
bring
insurance into existence in this country inspire us at LIC to take this message of protection to light the
60
lamps of security in as many homes as possible and to help the people in providing security to their families.
Birla Sun Life Insurance Birla Sun Life Insurance pioneered the unique Unit Linked Life Insurance Solutions in India. Within 4 years of its launch, BSLI has cemented its position as a
leading
player
in
the
Private
Life
Insurance
Industry .There has been focus on Investment Linked Insurance Products, supported with protection products to maintain leadership in product innovation. Multi Distribution Channels- Direct Sales Force, Alternate Channels and Group offering convenient channels of purchase
to
customers.Web-enabled
superior
customer
services.First
IT to
systems have
for
issued
policies over the Internet.Corporate governance and a high degree of transparency in all business practices and procedures.First to have an operational Business Continuity Plan.
ING Vysya Life Insurance ING Vysya Life Insurance Company Private Limited (the
Company)
entered
the
private
life
insurance
industry in India in September 2001, and in a short span of 4 years has established itself as a distinctive
61
life insurance brand with an innovative, attractive and customer friendly product portfolio and a professional advisor sales force. It has a dedicated and committed advisor sales force of over 11,000 people, working from 80 branches located in 70 major cities across the country and over 2,600 employees.
It
also
distributes
products
in
close
cooperation with the ING Vysya Bank network. The Company has a customer base of over 3,00,000 & is headquartered at Bangalore. In 2005, ING Vysya Life earned a total income in excess of Rs. 400 crore and also has a share capital of Rs. 440 crore. The Company aims to make customers look at life insurance afresh, not just as a tax saving device but as a means to add protection to life. The one thing we hold in highest esteem is 'life' itself. They believe in enhancing
the
very
quality
safeguarding
an
values
therefore
are
Entrepreneurial,
of
individual's
life,
security.
defined
Trustworthy,
in
as
addition Their
to
core
Professional,
Approachable
and
Caring. The Company’s portfolio offers products that cater to every financial requirement, at any life stage. They believe
in
continuously
developing
62
customer-driven
products and services and value being accessible and responsive to the needs of their customers. In fact, the company has developed the Life Maker TM . A simple method which can be used to choose a plan most
suitable
to
a
specific
customer
based
on
his
needs, requirements and current life stage. This tool helps you build a complete financial plan for life, whether
the
requirements
is
Protection, Savings
or
Investment, Retirement.
Om Kotak Mahindra Life Insurance
Kotak Mahindra Old Mutual Life Insurance Ltd. is a joint
venture
between
Kotak
Mahindra
Bank
Ltd.
(KMBL), and Old Mutual plc. At Kotak Life Insurance, They aim to help customers take important financial decisions at every stage in life by offering them a wide range of innovative life insurance products, to make them financially independent.
Bajaj Allianz Life Insurance Bajaj Allianz Life Insurance Co. Ltd. is a joint venture between two leading conglomerates- Allianz AG, one of the world's largest insurance companies, and Bajaj 63
Auto, one of the biggest 2 and 3 wheeler manufacturers in the world. Bajaj has a Guinness’s record of selling highest number of two wheelers in the world. One very interesting thing about this company is that it is very high
advertisement
spending
company
and
the
advertisements of Allianz can be seen on top of cars participating in formula I racing championship around the globe. This high advertising spending and a very aggressive
selling
and
marketing
is
bearing
good
results for the company.
Aviva Life Insurance Aviva is the world's 6th largest insurance group, the biggest in the UK, and a leading provider of life, health and pensions products to markets across Europe. Its
main
activities
are
long-term
savings,
fund
management and general insurance, with a premium income of USD60 billion and USD524 billion in assets under management. The group has 60,000 employees and 30 million customers worldwide. In
Hong
Kong,
They
provide
innovative
financial
solutions to meet the increasing needs for protection, savings,
investment
bancassurance
and
retirement
partnership,
through
Independent
our
Financial
Adviser (IFA) and International Financial Solutions
64
(IFS) channels. With Their expertise and track record, they aim to become a leading long-term savings and wealth management provider. They strive to bring their customers superior services that meet their financial needs and are backed by their four
corporate
values:
Integrity,
Progressiveness,
Performance and Team Power.
SBI Life Insurance
SBI Life Insurance is a joint venture between the State Bank of India and Cardiff SA of France. SBI Life Insurance is registered with an authorized capital of Rs 500 crore and a paid up capital of Rs 350 crores. SBI owns 74% of the total capital and Cardiff the remaining 26%. State
Bank
of
India
enjoys
the
largest
banking
franchise in India. Along with its 7 Associate Banks, SBI Group has the unrivalled strength of over 14,000 branches across the country, the largest in the world. Cardiff is a wholly owned subsidiary of BNP Paribas, which is The Euro Zone’s leading Bank. BNP is one of the
oldest
foreign
banks
with
a
presence
in
India
dating back to 1860. It has 9 branches in the metros and other major towns in the country. 65
Cardiff is a vibrant insurance company specializing in personal lines such as long-term savings, protection products and creditor insurance. Cardiff has also been a
pioneer
through
in
the
art
commercial
of
selling
banks
in
insurance
France
and
products 29
more
countries. SBI
Life
Insurance’s
mission
is
to
emerge
as
the
leading company offering a comprehensive range of Life Insurance and pension products at competitive prices, ensuring high standards of customer service and world class operating efficiency. The company plans to make the insurance buying process quick, simple and based on well-informed judgment. In 2004, SBI Life Insurance became the first company amongst private insurance players to cover 30 lakh lives. The company expects to carve a niche in the Indian insurance market through extensive product innovation and aims to provide the highest standards of customer service through a technological interface. To facilitate this, call centre’s have been already installed and help lines will be installed and customers will have access to their accounts through the Internet or through SBI branches. The
company
proposes
to
make
available
ready
liquidity to its Life Insurance policies by way of loans 66
at SBI counters. This will make Life Insurance a liquid asset in the financial portfolio of households. SBI Life Insurance is uniquely placed as a pioneer to usher banc assurance into India. The company hopes to extensively utilize the SBI Group as a platform for cross-selling
insurance
products
along
with
its
numerous banking product packages such as housing loans, personal loans and credit cards. SBI’s access to over 100 million accounts provides a vibrant base to build
insurance
selling
across
every
region
and
economic strata in the country.
Sahara Life Insurance Company
The Sahara Pariwar’s latest foray is in the field of Life Insurance. The Pariwar’s life insurance company – Sahara India Life Insurance Company Ltd. - has been granted license by the insurance regulator – the IRDA on 6th February 2004. With this approval Sahara India Life Insurance Company Ltd. becomes the first wholly and
purely
collaboration
Indian to
company,
enter
the
without Indian
any
Life
foreign
insurance
market. The launch is with an initial paid up capital of 157
crores.
The
Chairman
67
of
the
company
is
Shri
Subrata Roy Sahara who is also the Chairman of Sahara Pariwar.
68
RESEARCH METHODOLOGY
69
RESEARCH METHODOLOGY
TITLE: To determine customer behavior and investment pattern with
a
focus
on
market
segmentation
for
HDFC
Standard Life Insurance. • TITLE JUSTIFICATION: The above title is self explanatory. The study deals mainly with studying the buying
pattern in the
insurance industry with a special focus on Standard Life
HDFC
Insurance. The various segments of
the markets divided in terms of Insurance Needs, Age groups , Satisfaction levels etc will also studied. OBJECTIVE Objective One •
To
determine
reasons
behind
opting
for
an
information
of
insurance. •
To
provide
the
company
with
customer's Insurance policy if they have any and reasons for opting for that particular policies. 70
To know the most preferred policy. Objective Two •
To determine customers perception towards private insurance
companies
and
their
expectation
form
private insurance companies. •
To determine the feedback on services provided by
any other insurance agent. •
To study the types of benefits provided by insurance
services. •
To
determine
the
use
of
Internet
for
valuable
information and decision-making process.
SCOPE OF THE STUDY A big boom has been witnessed in Insurance Industry in recent times. A large number of new players have entered the market and are vying to gain market share in this rapidly improving market. The study deals with HDFC Standard Life in focus and the various segments that it caters to. The study then goes on to evaluate and
analyse
the
findings
so
as
to
present
picture of trends in the Insurance sector.
71
a
clear
SIGNIFICANCE OF THE STUDY
SIGNIFICANCE TO THE INDUSTRY : This is a limited study which takes into consideration the
responses
of
100
people.
This
data
can
be
explorated to take in the trends across the industry. The significance for the industry lies in studying these trends that emerge from the study. It is a rapidly changing
and
evolving
sector.
People
are
only
beginning to wake up to it’s vast possibilities. A study like this can attempt to guide the future of the industry based on current trends.
SIGNIFICANE FOR THE RESEARCHER: To facilitate and provide all the useful information of the study, the company, the insurance industry and also
provide
marketing
ways,methods
of
HDFC
Standard Life insurance. RESEARCH DESIGN •
NON-PROBABILITY
•
EXPLORATORY
&
EXPERIMENTAL RESEARCH
72
DISCRIPTIVE
The research is primarily both exploratory as well as descriptive in nature. The sources of information are both primary & secondary. A
well-structured
personal
interviews
questionnaire were
was
conducted
prepared to
collect
and the
customer’s perception and buying behavior, through this questionnaire.
SAMPLING METHODOLOGY Sampling
Technique:
Initially,
a
rough
draft
was
prepared keeping in mind the objective of the research. A pilot study was done in order to know the accuracy of
the
arrived
Questionnaire. only
after
The
certain
final
Questionnaire
important
changes
was were
done. Thus my sampling came out to be judgmental and convenient
Sampling Unit: The
respondents
who
were
asked
to
fill
out
questionnaires are the sampling units. These comprise of employees of MNCs, Govt. Employees, and Self Employed etc.
73
Sample size: The sample size was restricted to only 100, which comprised of mainly peoples from different sector of Chandigarh due to time constraints. Sampling Area: The area of the research was CHANDIGARH, INDIA.
LIMITATIONS OF THE RESEARCH
1. The research is confined to a certain parts of Chandigarh and does not necessarily shows a pattern applicable to all of Country.
2.
Some
respondents
were
reluctant
to
divulge
personal information which can affect the validity of all responses.
3. In a rapidly changing industry, analysis on one day or in one segment can change very quickly. The environmental changes are vital to be considered in order to assimilate the findings.
74
FACTS & FINDINGS
75
FACTS/FINDINGS
1.As
the
people
think
that
insurance
is
a
tool
to
protect their family & a tax saving device. They are aware of the fact & realizing its, importance. The company
should
try
to
expand
&
build
up
its
infrastructure because there is a large potential for insurance in India. 2.
Company
should
come
up
with
its
branch
in
Chennai. With the objective and goals to meet the demands & expectations of the public. Because the entrance
of
private
players
will
increase
the
competition and it would be a tough task to secure a good position in market. 3.Since HDFC STANDARD LIFE INSURANCE LTD is leading with several companies’ policies it should be easy for them to penetrate into the market and secure a good
position
if
they
pay
greater
attention
to
the
service part provided to their customer and thereby forming a long and trusted relationship. 4. As seen from the survey that at present 70% of the customer are having insurance policy out of which
76
87.5%
of
the
customer
are
planning
for
new
investments. So it can be a good potential for the company and they should make an attempt to trap these customers. 5.43%
of
the
customer
is
even
ready
to
go
for
insurance if a service provider away from their home is providing it. But intend they should provide good products
and
services.
The
company
should
try
convince these customers and get them in its favor.
77
to
DATA ANALYSIS & INTERPRETATION
78
DATA ANALYSIS & INTERPRETATION DATA GIVES PREFERENCE INSURANCE COMPANIES
COMPANY’S NAME
OF
NO.OF RESPONDENT
RESPONDENTS
SHARE (%)
L.I.C.
78
78
HDFC
2
2
ICICI PRUDENTIAL
10
10
SBI LIFE
7
7
RELIANCE LIFE INSURANCE
3
3
100
100
TOTAL
79
OF
INTERPRETATION 78% of the people contacted prefer LIC policy to any other and therefore it is ranked no.1 by that percent of respondents. DATA GIVES BENEFITS OF INSURANCE PERCEIVED BY RESPONDENTS BENEFITS
NO.OF RESPONDENTS
SHARE (%)
Cover Future Uncertainty
55
55
Tax Deductions
20
20
Future Investment
25
25
TOTAL
100
100
80
INTERPRETATION 55% future
of
the
respondents
uncertainty
is
the
insurance policy.
81
believe
that
covering
biggest
benefit
of
an
Whereas, 20% and 25% of them believe that the other
benefits
are
Tax
deduction
and
future
investments respectively
DATA PROVIDES FEATURES OF INSURANCE
POLICY
THAT ATTRACTED RESPONDENTS FEATURE
NO.OF RESPONDENTS
SHARE (%)
Money Back Guarantee
15
15
Larger Risk Coverance
37
37
Easy Access to Agents
7
7
Low Premium
30
30
Company’s Reputation
11
11
TOTAL
100
100
82
INTERPRETATION Majority of the respondent (37%) found larger risk coverance as the most attracted feature of t h e all.
DATA PROVIDES NUMBER OF INSURANCE POLICY TYPE RESPONDENTS POLICY TYPE
NO. OF RESPONDENTS
SHARE (%)
LIFE POLICY
75
75
NON LIFE POLICY
25
25
BOTH
45
45
83
INTERPRETATION 75% of the respondents have Life Insurance Policy while 45% have both. (The % is calculated out of 280 positive response) DATA GIVES PEOPLE PERCEPTION ABOUT INSURANCE RESPONSE
NO. OF RESPONDENTS
SHARE (%)
A saving tool
81
81%
A tax saving device
74
74%
A tool to protect your family
100
100%
INTERPRETATION
84
•
81%
of
the
respondents
have
perception
of
Insurance being a saving tool. •
And 74%
of
the respondents
have perception
of
Insurance being a tax saving device. •
But 100% of the respondents are with the view that Insurance is a tool to protect your family.
DATA SHOWS PEOPLES HAVING INSURANCE RESPONSE
NO. OF RESPONDENTS
SHARE (%)
Yes
70
70%
No
30
30%
INTERPRETATION
85
•
Of the sample size of 400 surveyed respondents 70% of the respondents are having Insurance policy.
•
30% of the respondents are either not having any Insurance
policy
at
present
or
their
policy
is
already matured. •
And at present 100% of the respondents are with the view that Insurance is a tool to protect your family.
DATA SHOWS BUYING PROCESS OF THE PEOPLE BUYING PROCESS
NO. OF RESPONDENTS
SHARE (%)
Customer approached Insurance company/Agent
45
45%
Company/agent approached customer
55
555
Total
100
100%
86
INTERPRETATION •
44.5% of the respondents approached the Insurance Company / Agent.
•
Whereas, 55.5% of the respondents were approached by the Company /Agent.
87
DATA SHOWS REASONS BEHIND FOR INSURANCE RESPONSE
NO. OF RESPONDENTS
SHARE (%)
Tax saving
80
80%
Saving / Investment
80
80.%
Family protection
100
100%
INTERPRETATION •
80.71% of the Respondents opted for Insurance for tax saving benefits.
•
80.71%
of
the
Respondents
opted
for
saving
/
Investments. •
But all of them, i.e. 100% of the respondents have opted for insurance for their family protection.
88
DATA SHOWS SATISFACTION OF RESPONDENTS WITH RESPECT TO POLICY RESPONSE
NO. OF RESPONDENTS
SHARE (%)
Satisfied
60
60%
Not satisfied
40
40%
Not Responded
0
0.0%
100
100%
Total
INTERPRETATION 60% of the respondents are more or less satisfied with their existing policy. 40% of the respondents are not satisfied with their existing policy. 89
In this case all of those who have taken a policy have responded.
DATA SHOWS SATISFACTION OF +RESPONDENTS WITH RESPECT TO SERVICE AGENT RESPONSE
NO. OF RESPONDENTS
SHARE (%)
Satisfied
45
45%
Not satisfied
55
55%
Not Responded
0
0.0%
100
100%
Total
90
INTERPRETATION 45%
of
the
respondents
are
satisfied
with
their
existing service agent. 55% of the respondents are not satisfied with their existing insurance agent. All
of
those
who
have
taken
a
policy
have
responded.
DATA SHOWS NUMBER OF RESPONDENTS PAYING TAX RESPONSE
NO. OF RESPONDENTS
SHARE (%)
100
100%
-
0%
100
100%
Paying tax Not paying tax Total
91
INTERPRETATION Of the sample size of 400 respondents, all the respondents are paying tax
DATA SHOWS RESPONDENT’S INVESTMENTS FOR TAX SAVING INVESTMENTS
NO. OF RESPONDENTS
SHARE (%)
LIC
51
51%
NSC
33
33%
Bonds
32
32%
PPF
25
25%
PF
21
21%
EPF
11
11%
92
INTERPRETATION •
51% of the respondents save their tax by investing in LIC, which is the highest among all Investment. This
shows
that
most
people
for
getting
taxes
benefits invest in LIC. •
33.25% of the respondents do their tax saving by investing in NSC.
•
32.25% of the respondents to their tax saving by investing in bonds.
DATA SHOWS RESPONDENTS PERCEPTION ABOUT BEST FORM OF INVESTMENT FOR SECURING THEIR FUTURE NO. OF RESPONDENTS
SHARE (%)
75
75%
Fixed Assets
93
Bank deposits
11
11%
Jewellery
25
25%
Securities i.e. bonds, MFs
40.
40%
Shares
10
10%
Insurance
70
70%
INTERPRETATION •
75.25% of the respondents as with the view that Fixed Assets is the best form of investment for securing their future.
•
70.5% perception
of that
the
respondents
Insurance
is
the
are best
with form
the of
investment for securing their future, which is one of the highest and this shows that insurance is an important key for securing your future.
94
DATA SHOWS WHAT PEOPLE INTENT TO GAIN FROM THEIR INVESTMENT RESPONSE
NO. OF RESPONDENTS
SHARE (%)
Saving & Returns
100
100%
Security
90
90%
Tax benefits
71.
71.%
INTERPRETATION •
100% of the respondents intent to gain saving and returns from their investment.
•
90% of the respondent’s intent to gain security from their investments. 95
•
Whereas, 71.75% of the respondent’s intent to gain tax benefits from their investments.
DATA GIVES PEOPLE’S PERCEPTION ON APPROPRIATE AGE FOR BUYING INSURANCE RESPONSE
NO. OF RESPONDENTS
SHARE (%)
After 25 years
29
29%
After 35 years
10
10%
After 45 years
0
0%
Anytime
60
60%
INTERPRETATION 29%
of
the
respondents
insurance should
are
be bought
years. 96
with after
the
view
the age
that
of 25
10.5% of the respondents are with the view that insurance should be buy after the age of 35 years. Whereas, 60.5% of the respondents are with the view that buying of insurance do not have any thing to do with age i.e. there is no age limitations. It can be purchased any time according to the need.
DATA
SHOWS
PEOPLE
OPINION
ABOUT
INDIAN
INSURANCE COMPANIES RESPONSE
NO. OF RESPONDENTS
SHARE (%)
Rigid plans
67
67%
Non user friendly
29
29%
Unsatisfactory services
26
26%
Non Aggressive
35
35%
Satisfactory
24
24%
Good
10
10%
Very good
0
0%
97
INTERPRETATION •
67% of the respondents have the opinion that Indian Insurance Companies have Rigid plans.
•
29.5%
feel
that
Indian
Insurance
companies
are
Non-user friendly. •
26.5%
feel
that
services
of
Indian
Insurance
companies are Unsatisfactory. •
35.75% of the respondents are with the view that Indian Insurance companies are Non-aggressive.
•
24%
of
the
services
of
respondents Indian
feel
that
Insurance
products
and
companies
is
Satisfactory. •
Whereas only 10.25% feel that it is Good enough.
•
And according to the data, no single person has felt that it is very good.
98
DATA SHOWS WHAT PEOPLE WOULD LOOK FOR IN AN INSURANCE COMPANY RESPONSE
NO. OF RESPONDENT S
SHARE (%)
82
82%
71
71%
Good plans
81
81%
Accessibility
49
49%
A trusted name Friendly service responsiveness
&
INTERPRETATION •
82% customers look for a Trusted name in a company for insurance.
99
•
81.5% customers look for a good plan in a company for insurance.
•
Friendly
service
&
responsiveness
and
Accessibility are also important factors looked by customers in a company.
DATA SHOWS PEOPLE PLANNING FOR NEW INVESTMENTS RESPONSE
NO. OF RESPONDENTS
SHARE (%)
Planning
87
87%
Not planning
13
13%
Total
100
100%
INTERPRETATION
100
•
Only 12.5% of the customers contacted are not planning for new investments presently.
Whereas, 87.5% of the customers are still planning for new
investments
this
can
be
a
great
potential
for
Reliance Life Insurance to take them on their favor
DATA SHOWS PEOPLE INTERESTED IN GOING FOR INSURANCE IF A SERVICE PROVIDER AWAY FROM THE CITY OFFERS BETTER SERVICE & PRODUCTS RESPONSE
NO. OF RESPONDENTS
SHARE (%)
Yes
43
43%
No
44
44%
Uncertain
13
13%
Total
100
100%
101
INTERPRETATION •
The interested customers i.e. 43% are ready to go for insurance even away from a city if services and products are worthwhile, which again is a good prospect (potential) for Reliance Life Insurance to take them on their favor.
RECOMMENDATIONS •
As the people think that insurance is a tool to protect their family & a tax saving device. They are aware of the fact & realizing its, importance. The company should try to expand & build up its infrastructure because there is a large potential for insurance in India.
•
Company should come up with its branch in Chennai. With the objective and goals to meet the demands & expectations of the public. Because the entrance of private players will increase the competition and it would be a tough task to secure a good position in market.
•
Since HDFC Standard Life Insurance Company Ltd is leading with several companies’ policies it should be easy for them to penetrate into the market and secure a good position if they pay greater attention to the service part provided to their customer and thereby forming a long and trusted relationship.
102
•
As seen from the survey that at present 70% of the customer are having insurance policy out of which 87.5% of the customer are planning for new investments. So it can be a good potential for the company and they should make an attempt to trap these customers. 43% of the customer is even ready to go for insurance if a service provider away from their home is providing it. But intend they should provide good products and services. The company should try to convince these customers and get them in its favor.
CONCLUSION
Our exhaustive research in the field of Life Insurance threw up some interesting trends which can be seen in the above analysis. A general impression that we gathered during Data collection was the immense awareness and knowledge among people about various companies and their insurance products. People are beginning to look beyond LIC for their insurance needs and are willing to trust private players with their hard earned money. People in general have been impression by the marketing and advertising
campaigns
of
insurance
103
companies.
A
high
penetration of print, radio and Television ad campaigns over the years is beginning to have its impact now. Another heartening trend was in terms of people viewing insurance as a tax saving and investment instrument as much as a protective one. A very high number of respondents have opted for insurance for such purposes and it shows how insurance companies have been successful to attract public money in recent times. The general satisfaction levels among public with regards to policy and agents still requires improvement. But therein lies the opportunity for a relative new comer like HDFC Standard Life Insurance Company Ltd . LIC has never been known for prompt service or customer oriented methods and HDFC Standard Life can build on these factors.
104
105
BIBLIOGRAPHY
1.
BOOKS/MAGAZINES REFFERED: STUDY
GUIDE-
PRINCILES
&
PRACTICES
OF
GENERALINSURANCE, by AIMA. Books published by INSURANCE INSTITUTE OF INDIA LIFE-INSURANCE, by Mc GILL INSURANCE WATCH. MONEY OUTLOOK. 2.
WEBSITES REFFERED:
WWW.CIFAINSURANCE.COM WWW.MONEYOUTLOOK.COM WWW.INSURANCE.IND.COM WWW.HDFCINURANCE.COM 3.
REPORTS/ARTICLES REFFERED: REPORT: ISSUES & CHALLENGES FACING THE INSURANCE INDUSTRY…. Dec2005. BRIEF PROFILE OF LIC, INDIA…Dec 2006. REPORT: COPING WITH COMPETITION…Jan2007
106
LIFE
/
ANNEXURES AND QUESTIONNAIRE
107
QUESTIONNAIRE 1.
ARE YOU EMPLOYED? YES
NO
If YES, only then proceed 2.
DO YOU HAVE ANY INSURANCE POLICY? YES
3.
NO
WHICH INSURANCE POLICY DO YOU HAVE? LIFE
4.
NON-LIFE
BOTH
WHICH CO’S INSURANCE POLICY YOU PREFER THE MOST? (RANK THEM) a) LIC
b) ICICIPRUDENTIAL c) SBI LIFE INSURANCE d) ING VYSYA LIFE e) RELIANCE LIFE INSURANCE f) TATA AIG LIFE g) ANY OTHER
________( Specify)
5. FOR HOW MANY YEARS DO YOU HAVE INSURANCE POLICY? (Please Tick) a) <5Yrs
b) 5-10 Yrs
c) 10-15 Yrs d) Any Other______ (Specify)
108
6. WHAT DO YOU THINK ARE THE BENEFITS OF INSURANCE COVER? (RANK THEM) a) COVER FUTURE UNCERTAINITY
b) TAX DEDUCTIONS c) FUTURE INVESTMENT d) ANY OTHER
7.
_________
(Specify)
WHICH FEATURE OF YOUR POLICY ATTRACTED YOU TO BUY IT? (RANK THEM) a) LOW PREMIUM b) LARGER RISK COVERANCE c) MONEY BACK GUARNTEE d) REPUTATION OF COMPANY e) EASY ACCESS TO AGENTS f) ANY OTHER
8.
_________ (Specify)
YOUR MONTHLY INCOME? a)<4k b)4k-8k c)8k-12k d)12k-16k e)Other_____(Specify)
9.
DO YOU REALLY THINK INSURANCE POLICY COVER IN TODAY’S SCENARIO IS NOT ESSENTIAL? _____________________________________________________
10.
WHAT’S YOUR PERCEPTION ABOUT INSURANCE? (RANK THEM) a) A SAVING TOOL b) A TAX SAVING DEVICE
109
c) A TOOL TO PROTECT FUTURE
11.
HOW HAS/WOULD YOU BOUGHT/BUY AN INSURANCE? a) CUSTOMER APPROCHED INSURANCE COs b) INSURANCE COs APPROCHED CUSTOMER
12.
ARE YOU SATISFIED WITH THE POLICY? a) SATISFIED SAVING TOOL b) NOT SATISFIED c) NOT RESPONDING
13.
ARE YOU SATISFIED WITH THE SERVICE AGENT? a) SATISFIED SAVING TOOL b) NOT SATISFIED c) NOT RESPONDING
14
DO YOU PAY TAXES? YES
15.
NO
WHERE HAVE YOU INVESTED FOR TAX SAVING? (RANK THEM) a) LIC b) NSC c) BONDS d) PPF
110
e) PF f) EPF 16.WHICH IS THE BEST FORM OF INVESTMENTS? (RANK THEM) a) FIXED ASSETS b) BANK DEPOSITS c) JEWELLERY d) SECURITIES, i.e. Bonds, MFs e) SHARES f) INSURANCE 17. WHAT DO YOU INTENT TO GAIN FROM INVESTMENTS? a) SAVING & RETURNS b) SECURITY c) TAX BENIFITS 18. WHAT’S THE RIGHT AGE TO BUY INSURANCE? a) AFTER 25 Yrs b) AFTER 35 Yrs c) AFTER 45 Yrs d) ANYTIME
111
19.HOW WOULD YOU RATE INDIAN INSURANCE COs? a) RIGID PLANS b) NON-USER FRIENDLY
DA
c) UNSATISFATORY SREVICES d) NON-AGGRESSIVE e) SATISFACTORY f) GOOD g) VERY GOOD 20. WHAT WOULD YOU LOOK FOR IN AN INSURANCE COs? (RANK THEM) a) A TRUSTED NAME b) FRIENDLY SERVICE & RESPONSIVENESS c) GOOD PLANS d) ACCESSIBILITY
112
21. ARE YOU PLANNING FOR NEW INVESTMENTS? PLANNING
NOT PLANING
22. WOULD YOU GO FOR INSURANCE IF A SERVICE PROVIDER AWAY FROM THE CITY OFFERS BETTER SERVICE & PRODUCTS? a) YES b) NO c) UNCERTAIN
THANK YOU NAME:_________________________ ADDRESS:______________________ ______________________________ OCCUPATION:___________________
113
114
115