project report of abinahs dash1
TRANSCRIPT
A Summer Internship REPORT
ON
Branding and positioning of Kotak in Indian InsuranceIndustry (including marketing strategies, sales process and
Consumer Behavior)
Submitted by:ABINASH DASH
PGPBIFSM/09-11/01
Under the Supervision of
Prof S.D Sharma Mr. Satyajit Rath
Faculty (A.S.B.M) Manager Sales (Kotak Life-Secunderabad)
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A REPORT
ON
Branding and positioning of Kotak in Indian InsuranceIndustry (including marketing strategies, sales process and
consumer behavior)
Submitted by:ABINASH DASH
PGPBIFSM/09-11/01
A report submitted in partial fulfillment ofthe requirements ofMBA Program of
ASIAN SCHOOL OF BUSINESS MANAGENTMENT
Distribution list:Prof. S. D SHARMA (Faculty guide)
Mr. SATYAJIT RATH (Company guide)
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CERTIFICATE FROM THE CORPORATE GUIDE
This is to certify that Abinash Dash (PGPBIFSM/0911/01), student of Asian School of Business Management, pursuing Post Graduation Program In Banking Insurance and Financial Services Management has worked under my guidance and supervision on his project entitled Branding and positioning of Kotak in Indian Insurance Industry. To the best of my knowledge this is an original piece of
work.
Mr. Satyajit Rath
Manager Sales
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Kotak Life, Secunderabad
CERTIFICATE FROM THE FACULTY GUIDE
This is to certify that the project entitled Branding and positioning of Kotak in Indian Insurance Industry is a piece of work done by Abinash Dash (PGPBIFSM/09-11/01), student of Asian School of Business Management, under my guidance and supervision for the partial fulfilment of the course Post Graduation Program In Banking Insurance and Financial Services Management, Asian School of Business Management, Bhubaneswar.
To the best of my knowledge and belief the thesis and embodies the work of the candidate himself and has been duly completed. Simultaneously, the thesis fulfils the requirements of the rules and regulation related to the summer internship of the institute and I am assured that the project is up to the standard both in respect to the contents and language for being referred to the examiner.
Prof. S.D.Sharma
Faculty of Asian School of Business Management
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Bhubaneswar
DECLARATION
I do hereby declare that the work embodied in this project entitled Branding and positioning of Kotak in Indian Insurance Industry Carried out by me under supervision of Mr. Satyajit Rath(Manager Sales - Kotak Life Secunderabad ) and Prof. S.D Sharma(Professor of A.S.B.M).This project has not been submitted earlier to any other institute.
Abinash Dash(PGPBIFSM/09-11/01)
Asian School of Business Management
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ACKNOWLEDGEMENTS
While completing the project at KOTAK LIFE INSURANCE, I feel a deep sense of gratitude
for all those who helped me during the tenure of my project and thus, consider it as one of my
duties to acknowledge their help and thank for the same. Firstly, I would like to thank Prof. S. D
SHARMA, my Faculty guide for facilitating me to undertake this project; he provided necessary
academic guidance, monitored work periodically, clarified all doubts throughout the project and
suggested ways for improvement.
I am also very thankful to my company guide Mr. Satyajit Rath (Manager Sales) for his
continuous encouragement, guidance and support. At the same time I am very thankful to Mr.
Amit Sharma (ABM) for taking time out of his busy schedule and assigning us our respective
task and for continuous guidance during the project.
Special thanks to Ms. Amrita Singh for her guidance during the training period and after. I am
thankful to all the employees of the company for their support and encouragement while
completing the project.
I would also like to thank all the members of my group without whom the project wouldn’t have
been so value additive.
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TABLE OF CONTENTS
Abstract…………………………………………………………………………………..8
1. Introduction.…………………………………………………………………………..9
2. Literature Review…………………………………………………………………….9
3. Basics of Insurance….……………………………………………………………… 16
4. Industry Analysis….…………………………………………………………………17
5. Impact of Liberalization on Indian Life Insurance Sector……………….…......... 21
6. Company Profile…. ………………………………………………………………….22
7. Why People buy Life Insurance...………………………………………….…….. ...24
8. Why Branding is Necessary...………………………………………………………..26
9. Comparetive Analysis…………….……………………………………………….. .. 27
10.Product Comparison ………………………………………………………………...32
11. Marketing Strategies...………………………………………………………………34
12. Sales Process………………………………………………………………………....45
13. Analysis of Consumer behavior……………………………………………………..47
14. Conclusion…………………………………………………………………………….61
Bibliography
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ABSTRACT
The project aims at providing the insight into the Indian Insurance Industry and Life Insurance in
particular. It studies the growth in the Life Insurance sector and shows how much it is expected
to grow in the coming years. The competition in the Insurance Industry is determined using
Porter’s Five Forces Model. The business and environmental factors which influence the
Insurance Industry is studied using PEST (Political, Economic, Social and Technological)
analysis.
The project will help us understand the basic functionalities and details involved in a sales
process starting from leads generation, opening a sales call till closing of a sales deal. Moreover
it will help us understand and study the consumer behavior towards life insurance. Also it will
enhance our knowledge on how various marketing concepts are implemented in a company
whose basic objective is sales and marketing
The project will also involve the trainees to fix up the appointments through calling the
prospective customers and accompany the Field Sales Officers (FSO) on their visits to the
clients, to observe how policies are pitched to the clients. In this process, the trainee will also get
to read and understand some aspects of personal selling and consumer behavior. Also it will
enhance our knowledge on how various marketing concepts are implemented in a company
whose basic objective is sales and marketing.
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1. INTRODUCTION
1With the largest number of Life Insurance policies in the world, insurance happens to be a mega
opportunity in India. Gross premium collection is nearly 2% of GDP (Gross Domestic Product)
and funds available with LIC for investment are 8% of GDP. Yet nearly 80% of Indian
population is without Life Insurance cover while health insurance and non-Life Insurance
continues to be below international standards. Considering the growth potential, foreign
insurance companies have been demanding an increase in the foreign direct investment (FDI)
limit to bring more capital to their Indian ventures to help expand business. Stiff competition
between private and state-run insurers has boosted growth in premium income and spread
insurance coverage faster in the country, which by itself should be enough incentive to further
open up this sector. Faster growth in the insurance sector is crucial to raise long term funds
needed to raise infrastructure like roads and ports which can help raise economic growth to
double digits from the estimated 9.2% for the current fiscal year. Thus growth in Insurance
sector is important for the growth of Indian economy.
2. LITERATURE REVIEW
2With the initiation of the deregulation in the Indian insurance market, the monopoly of big
public sector companies in life insurance as well as general (non-life insurance) market has been
broken. New private players have entered the market and with their innovative approaches and
better use of distribution channels and technology, they are eating in to the shares of established
public sector companies in Indian Insurance Market.
3McKinsey’s director in India and banking industry expert Leo Puri says the opening of
insurance has been a smooth deregulation process. “The state mammoth, the LIC has not been
destabilized and the objective of deregulation has been met. Employment has grown so as the
insurance business.”
1 Business World, 5th march 20082 www.marketreserch.com, Indian Insurance Industry Forecast 2009-2011, May 1 20083 Gasping for Capital, Yassir A. Pitalwalla, Business World Online, Cover Story
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4“Consumer attitudes and perception about insurance have changed; Insurance is now considered
a viable financial instrument to meet different needs.” Bajaj Allianz’s Ghosh.
5In 2009-10, the life insurance sector grew by 10%, . Life Insurance penetration (i.e. premium as
a percentage of GDP) in India was 2.26% as against the global penetration level of 5.23%.
The marketplace is getting competitive, but the market share of private insurance companies
remains very low -- in the 10-15 percent range. The heavy hand of government still dominates
the market, with price controls, limits on ownership, and other restraints.
6Indian insurance industry is anticipated to witness a 500% growth and reach to US$ 60 Billion
in the coming four years, thanks to swelling demand in semi-urban and rural areas, reported
industry chamber Assocham.
Assocham stated that semi-urban areas would have a share of US$ 35 Billion and urban areas
would account for US$ 25 Billion in the US$ 60 Billion industry.
Anil K Agarwal, President, Assocham (Associated Chambers of Commerce and Industry of
India), reported that a large segment of rural India is still untouched because of long
distances, poor distribution and high return costs.
A Research Analyst at RNCOS says that the progress in the semi-urban and rural areas would
largely fuel the growth in insurance sector. The other factors that would boost the growth in this
sector are improving economic scenario, increasing disposable incomes, and rising product
demands.
4 www.ikw.in, Insurance: Indian and Foreign Firms Test Positive for Growth Steroid5 www.indiaonestop.com, Significance of Life Insurance industry in India6 www.Indiaprwire.com/pressrelease/insurance
10
7Despite a large and growing economy, the insurance market in India is not yet of commensurate
size. Till date, only 20% of the total insurable population of India is covered under various life
insurance schemes, the penetration rates of health and other non-life insurances in India is also
well below the international level. With one of the lowest insurance penetration levels in the
world, there exists significant potential for further growth in both life and general insurance
business.
Confederation of Indian Industry (CII) strongly feels that this higher growth and increase in the
spread of insurance business cannot occur in isolation. The full potential of the Indian insurance
sector can be realized only if all the stakeholders - the public and private insurance players,
government bodies and the regulator - work in unison to achieve the common goal.
However, there is one big reason for alarm. Insurers do need access to substantial capital in order
to keep up this growth despite their initial losses. But many private sector insurers are struggling
to raise the required capital. That’s because the government has not yet raised the ceiling for
foreign direct investment (FDI) in insurance companies from 26 per cent of equity to 49 per cent,
as outlined by the previous government. And this is acting as an artificial constraint on the
sector’s ability to raise capital.
And because of the 26 per cent FDI cap, the burden of funding the growth falls on the Indian
promoter. Many of them have no expertise, usually no sense of a long-term commitment to the
business. They are essentially investors looking for returns, and now not only are they earning
nothing, they are actually losing money.
8“While strong Indian banks that are partners in a life insurance venture can infuse capital,
industrial houses for which this is a diversification do have a capital constraint,” says Vinod
Wadhwani, vice-president, Ambit Corporate Finance Pte.
7 Insurance Industry: Ensuring a secure future, Amity EduMedia, Issue 23, Jan 26th, 09
8 Gasping for Capital, Yassir A. Pitalwalla, Business World Online, Cover Story
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“Capital constraint is the reason why some of the players in the industry haven’t been able to
grow their business as compared to the top four or five players, who have been bringing in more
capital,” says Ashvin Parekh, national leader (global financial services), Ernst & Young.
As American International Group Inc. (AIG) country head Sunil Mehta says: companies can
require capital at any point of time and ‘sponsors go through cycles, so any artificial barrier to
equity infusion is not conducive to orderly growth and could, in fact, threaten policyholder
confidence’.
With growth on their mind, foreign investors want faster deregulation. With initial success has
come the desire for more, notably the opportunity for foreign players to go up to 49% of the joint
venture. McKinsey’s Puri says the key issue today is ownership. “Each time the global players
invest in information technology, management time and expertise, they get back only 26% in
economic benefits.”
While the market for Life Insurance in India is still small, its growth value has been strong
during the past five years and it is expected to persist throughout most of the next five years. The
expressive research carried out on Juvenile Insurance is mostly in the United States and it looks
into reasons behind buying the Juvenile Insurance and how it has proved beneficial for both the
parents and as well as the child.
O’Connell Vanessa (1996) has carried out a research which discusses whether it makes sense for
parents to own life insurance on a child. The huge business in so-called `juvenile policies';
Controversy surround the decision to insure a child's life; Reasons that insurance companies give
for buying such a policy; Critics' view that such coverage is excessive and expensive. The Child
life insurance policy provides for the child's life, as well as medical and other health related
expenses. It offers death-benefit protection to the insured child. In the event of child's death, the
insurance amount is available for burial and other related expenses.
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As part of the Federal Balanced Budget Act of 1997, Congress in United States created the
Children's Health Insurance Program (CHIP) as a way to encourage states to provide health
insurance to uninsured children.
Jacob Alex Klerman (1997) in his report Health Insurance among children of unemployed
parents addresses the problem of lack of health insurance for children in the United States. Using
the data from the 1990, 1991, and 1992 panels of the Survey of Income and Program
Participation, this report presents the interrelation between parental unemployment and
children’s health insurance coverage. As per the report nearly half of the children lose their
health insurance because their parents lose or change a job.
Rosemarie, Paul J Boben, Jennifer B. Bonney (2007) evaluates the State Children’s Health
Insurance Program (SCHIP) and how it has given state the freedom in providing more children
with coverage. They found out that because of providing Health Insurance to Children it
provides not only cover against medical bill but also participate in the customer health planning.
Senate Bill Report (United States) (2005) on Regulating Life Insurance by Labor, Commerce and
Financial Institutions evaluates 100 Life Insurance Companies to survey their practices with
regard to the marketing and underwriting of juvenile insurance policies. In many cases, the
average death benefit claimed, upon the death of an insured child, far exceeded the economic
losses, such as funeral expenses. Concern exists that, while many well-meaning adults may
innocently purchase inappropriate or unnecessary amounts of life insurance on children, some
may actually be purchasing the policies with criminal intent. Some news stories indicate that
some children are murdered in order to obtain insurance payments. The report suggest that Life
insurers must develop and implement underwriting standards and procedures designed to detect
and prevent the purchase of juvenile life insurance for speculative or fraudulent purposes, and
maintain records of rejected applications for 10 years.
Deborah Senn (2007) Insurance commissioner United States says that State needs stronger
guidelines for Children’s Life Insurance. The survey conducted indicates that many companies
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offering juvenile life insurance do not appear to have strong standards in place to help prevent
this kind of tragedy.
Shailesh Bhandari and Elizabeth Gifford (2005) in their paper on Children with Health Insurance
investigate patterns of children’s health insurance coverage and explore the characteristics of
uninsured children. Using the data from the Current Population Survey (CPS), it provides
national estimates of the number and percentage of uninsured children by age, race, family type
and family income.
According to Tom Menezes, in his work on “Life insurance for child”, June, 2007, Child
Insurance is one of the fastest selling insurance products of the new era. Every insurance
company should focus on innovative products and train the advisors to approach prospective
customers.
Smitha Tripathi (2008) looks into how Higher education which used to be remarkably cheap in
India is changing with remarkable swiftness. The paper discusses that parents should start saving
for the child education even before he or she starts going to nursery school. If you are the type
who likes starting early, it might be a good idea to start looking at insurance policies that matures
when your child comes of age. Now that education is getting costlier, insurance companies are
also realizing that it’s important to offer new schemes. So, there are much more policies than
ever before. These policies mature when your child comes of age and the money can be used for
higher education or marriage expenses. The paper provides the information about the different
type of child policies and which one suits you according to your need.
Mr. Ian J Watts, Managing Director, Tata AIG Life Insurance (2006) says that Children Life
insurance products not only meet the educational needs of children but also offer insurance
cover. Considering the costs involved for pursuing higher education and also the competitive
environment that a child is exposed to, the need for planning the education of a child is an
important aspect for any parent.
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Alison Cuellar, Kelly J Kelleher, Jennifer A Rolls and Kathleen Pajer (2008) discuss that without
the Health Insurance benefits many youths will not receive timely health care. The delinquent
youths who have violated the law have typical poor physical and mental stress which leads to
higher medical costs.
David Gambrill (2008) points out the importance of Child Insurance. It’s a changing world.
Almost nothing remains the same like that your child dreams keep on changing. It’s up to you to
make sure that when time comes, she has the means to make her dreams come true.
Sue Laing (2009) brings forward an often-overlooked issue, the financial impact that a child’s
illness or injury can have on family finances in her research paper Children’s trauma: an
undersold safety net. The author shares her personal experience that clients accept the
vulnerability of their children far more readily than their own…this is just a matter of informing
them of their options. Of those with whom children’s trauma is discussed and perhaps debated,
some will accept the advice to go for child insurance. The overall amount the parent’s will be
committing to their insurance package is relatively inexpensive as compared to the child’s
trauma.
Though the returns are not very high, most financial planners recommend that you buy a
children's policy. Sanjiv Bajaj, director, Bajaj Capital, Says that "Children insurance policies
ensure a disciplined saving mode for the child's future”. Moreover, since the returns are tax-free,
you need not worry about what the tax structure will be like 20 years down the line."
9 The US$ 41-billion Indian life insurance industry is considered the fifth largest life insurance
market, and growing at a rapid pace of 32-34 per cent annually, according to the Life Insurance
Council. Since the opening up of the insurance sector in India, the industry has received FDI to
the tune of US$ 525.6 million. The government is likely to reintroduce the Insurance Bill which
proposes to increase the FDI cap in private sector insurance companies from 26 per cent to 49
per cent
9www.ibef.org, February 2010
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BASICS OF INSURANCE
About Insurance
Insurance is a precaution against a possible unwanted outcome in life and in business. It is a
financial product where the insured pays a premium or series of premiums in return for monetary
compensation, if a particular event happens. Insurance is annually renewable except for life
insurance. The insurance business works on the principle of collective strength. Insurance
companies group together a large number of people who all feel exposed to the same possible
circumstances. The company knows that, in any one year, the total premium collected from the
group of people should cover the cost of the claims made by the unfortunate few who actually
suffer a loss.
History of insurance
Early insurance goes back to the Egyptian times. At 3000 BC, Chinese merchants were known to
disperse their shipments among several vessels to avoid the possibility of damage or loss. There
are some insurance companies around today in the United States that provided insurance back in
the mid 1700's, as well as some that provided relief to banks during the 1930's and the Great
Depression. Today, there is insurance for innumerable activities: Business, Auto, Health, Life,
Travel, etc. Each of those categories includes sub-categories, branching off into numerous
divisions.
What is Life Assurance?
Life assurance is the term used when the life of a person is insured. Life assurance is a bit
different to most insurance - most policies last many years rather than having to be renewed each
year. And "indemnity rules", whereby you cannot get back more than you have lost, do not
apply.
What is General Insurance?
All non-life Insurance is termed General insurance. It has large area of operation as almost all
kinds of things can be insured. A general insurance policy is valid for 1 year after which it has to
be renewed. This means that the insurer can change both the premium and the benefits each year
depending on the risk involved.
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3. INDUSTRY ANALYSIS
Global Insurance Sector
In 2009, worldwide insurance premiums amounted to USD 5438 bn. Of this, USD 3274 bn
accounted for Life and USD 2164 bn to non-Life Insurance. In real terms, total premium volume
grew by 3.75 percent. While Life premiums increased by 4.6 percent, non-Life premiums
increased by 1.6 percent. Profitability in Life insurance improved when compared to 2008. Non-
Life business remained profitable despite huge hurricane losses in the United States. 10While
Western Europe, the largest Life market region, expanded by 9.5%, South and East Asia
expanded by 12.5%. Premiums stagnated in North America and marginally increased in Japan
and Oceania. The emerging market has also grown by 9.5% compared to industrialized countries
at 6.4%.
Global Life insurance premium collected and market share across different continents is
given in Exhibit 1
10 http://www.plunkettresearch.com/Industries/Insurance/InsuranceStatistics
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Reasons for Growth
High economic growth
Moderate inflation
Low interest rates and
Favorable stock markets in Europe, Japan and in the emerging markets
Mergers and Acquisitions
Fast growing incomes of relatively young people which need savings as old age
protection.
Indian Insurance Sector
The Indian insurance market wrote total gross premiums of $57 billion in 2009, this representing
a compound annual growth rate (CAGR) of 30% for the five-year period spanning 2005-2010. In
comparison, the Chinese and the South Korean markets grew with CAGRs of 39% and 6.6%
over the same period, to reach respective gross premiums of $70 billion and $90 billion in 2009.
The Life segment was the market’s most lucrative in 2009, writing total gross premium of 1668
billion INR, equivalent to 79.5% of the market’s overall value. The smaller non-Life segment
contributed 430 billion INR, equating to the remaining 20.5% of the market’s aggregate gross
premiums.
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 4% of the country's GDP while general
insurance premiums to 1.15% of India's GDP.
Assocham (Associated Chambers of Commerce and Industry of India) has stated in a study that
by 2015, Insurance will become $90 billion industry. That is 500% growth in 4 years. India has a
population of over 1 billion and except few million people; millions of people are not insured.
Especially, in the rural areas and small towns, often you cannot find any person who has got
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insurance in a neighborhood. This is where the revolution is gradually taking place as thanks to
the media, now rural people are even aware about insurance.
Rural and semi-urban India will have a market size of $50 billion by 2015 and that is where the
main growth is going to come. Thus, naturally, in the coming years Insurance companies will try
to cater this market with new insurance schemes.
The other factors that would boost the growth in this sector are improving economic scenario,
increasing disposable incomes, and rising product demands.
11 In 2015, the Indian Insurance market is forecast to have a value of $70 billion, an increase of
41% since 2015. The compound annual growth rate of market in the period 2010-2015 is
predicted to be 10% and it is shown in Exhibit 2.
Indian Life Insurance Sector
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.
And that market is growing rapidly. Total Life Insurance premium grew 40% to nearly $10
billion in the financial year up to march 2010; non-Life premiums grew 18% that year to about
$7 billion. In India Life is roughly three to four times bigger than non-Life. And there is potential
within Life since most consumers see insurance as a tax-saving-cum investment vehicle rather as
then a pure cover.
11 Source: Data monitor, Insurance in India, Industry Profile
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Life Insurance Performance in the First Half of 2006-2007
The Life Insurers underwrote a premium of Rs1.09lakh crore during the six months in the current
financial year as against Rs. 87108 crore in the comparable period of last year record a growth of
125 per cent. Of the total premium underwritten, LIC accounted for Rs. 70891 crore and the
private insurers for Rs. 38399 crore. The premium underwritten by the LIC and the new insurers
grew by 133.87 percent and 112.42 percent respectively over the corresponding period in the
previous year. The number of policies written at the industry level showed a growth of 18
percent. The number of lives covered by Life Insurers under the group scheme was Rs 102 crore
recording a growth of 112 per cent over the previous period. The Life Insurers covered Rs 92.45
lakh lives in the social sector with a premium of Rs. 80.65 crore. In the rural sector the insurers
underwrote 48 lakh policies with a premium of 3275.65 crore.
There are 23 players in the Indian Life Insurance sector with LIC (Life Insurance Corporation) as
the only public player and 22 private players.
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4. IMPACT OF LIBERALIZATION ON INDIAN LIFE INSURANCESECTOR
After 9 years of opening up of the Indian Life Insurance industry to foreign joint ventures, the
share of private players have gone up to 36% at the end of FY 2009-10 from 1.4% in FY 2001-
02. This is because unlike China, which imposed severe licensing restrictions, the single
licensing norm has seen new breed of insurance companies established itself and grow market
share by rapidly increasing the market base. The Life Insurance market has registered a growth
of 18% in terms of new business during the FY 2009-10 over previous year.
Life Insurance Industry – Market Share
The entry of new players has brought in an increased product range including insurance and
pension products and therefore more choices for the customer. There has also been a significant
improvement in the level of customer service by the existing player on account of the high level
of service from new companies. All of this has benefited the customer.
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5.COMPANY PROFILE
About Kotak Group
Kotak Mahindra is one of India's leading financial institutions, offering complete financial
solutions that encompass every sphere of life. From commercial banking, to stock broking, to
mutual funds, to life insurance, to investment banking, the group caters to the financial needs of
individuals and corporate.
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About Kotak life insurance
Kotak Mahindra Old Mutual Life Insurance Ltd. is a joint venture between Kotak Mahindra
Bank Ltd (KMBL), and Old Mutual plc. Kotak Life Insurance, 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.
Old Mutual was established more than 150 years ago and has developed into an International
financial services group whose activities are focused on asset gathering and asset management.
The Old Mutual Group offers a diverse range of financial services in three principal geographies:
South Africa, the United States and the United Kingdom. The company is listed on the London
Stock Exchange with a market capitalization of approximately $6 billion and is a member of the
elite FTSE 100 index. In the 2003 rankings of the World's 500 largest corporations by Fortune
magazine, Old Mutual climbed 87 places to position number 366 and was also listed as the 14th
largest insurance company in the world. Old Mutual is the largest financial services business in
South Africa, through its life insurance, asset management, banking and general insurance
operations. The company serves 4 million life insurance policyholders and employs over 13 000
South Africans in its local operations.
In the USA, Old Mutual is one of the top ten fixed annuity businesses offering an array of
specialist asset management skills through its 23 asset management businesses. The company’s
US Life business recorded sales of $4 billion at the end of 2002. Operations in the United
Kingdom are focused on wealth management, through Gerard as one of the leading private client
stock broking businesses in the UK.
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4. WHY PEOPLE BUY LIFE INSURANCE?
While taking a policy different people have different perspectives. There can not be a
comprehensive list for this, below mentioned are the most probable reasons for taking up a life
insurance policy.
Reason No.01 - I want to save tax
It’s true that Section 80 of Income Tax Act provides deduction of the amount paid as insurance
premium (with some exceptions) from the assessor’s taxable income subject to limits. If the sole
purpose of buying insurance is to save on tax, then it’s the costliest way to do so. If someone
does this early in his/her life with policies like endowment or money back or even ULIP, their
ability to create wealth diminishes by a very high degree.
Reason No.02 - I want to save/invest
In my opinion, this is the worst reason for someone to buy insurance. Savings is generally
understood as the amount remaining with a person after he/she meets all his/her expenses and
other cash needs. If one has to build wealth, savings need to be channelized into an investment
with specific time horizon and goal. Insurance is preferred choice in this regard.
Reason No.03 - My agent asked (forced) me to buy this policy
This is one of the commonest reasons you get if you ask some one why he/she bought insurance
policy. Insurance advisors are drilled to think that “insurance is always sold and never bought”
and this results in an advisor selling insurance for all wrong reasons. Survival of the insurance
advisor is the sole driver here and not the need of the buyer
Reason No.04 - I want to plan for my retirement
Insurance companies have devised these products keeping in view the tax exemption available
under the Income Tax Act. Investing here gives the option to have immediate annuities or regular
pension after the vesting age.
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Reason No.05 - I want to provide security for my children for their education
This is one of legitimate reason for which insurance is to be bought. However, the risk to be
covered is not of the child but of the parents and that to remember in mind.
Reason No.05 - My Bank asked to purchase insurance policy
This means it’s only due to the pressure exerted by bank (to safeguard it’s loan, it could be other
types of lenders also like housing finance companies, car finance companies etc) that one will
buy insurance. Otherwise, he/she will not get the loan. In this situation, the purpose is ok but it’
will be much better if the policies are brought with knowing the feature & the charges that are in
built with the product.
Reason No.06 - My Uncle/Aunt recommended to buy insurance
If one’s uncle/aunt is retired and/or has taken up selling insurance as second innings. Its no
secrete that insurance advisors, at least in their initial years, will be asked to target their ‘natural
market’ meaning their own household members, relatives, and friends etc. to sell the minimum
number of policies to keep their license alive. Here again insurance is bought for reasons other
than the one it’s meant for.
Reason No.07 - My friends told me to buy insurance
Here’s another young person who has some awareness about insurance. But even at this stage the
purpose of insurance has not become very clear.
Reason No.08 - My parents told me to buy insurance
This is not surprising, given the fact that including people who graduate from the college have
not much idea about the concept of insurance. The advertisements one sees in TV/Newspaper
which again does not say much how insurance works. It’s always advisable to take an informed
decision rather than to wilt under any pressure.
Reason No.09 - I want to cover my life risk
I have come across very few people giving me this reason for buying a life insurance
policy. Actually, this is the right reason for which insurance is to be bought. The very
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purpose life insurance product came into existence was to provide economic security to
the dependents of the breadwinner in his/her absence.
5. WHY BRANDING IS NECESSARY?
As there are 23 players in Indian Life Insurance industry, competition is increasing day by day,
so it is very important to establish a company’s name in consumer’s mind. Further explained
analysis will elaborate the importance of branding in Indian Life Insurance industry.
26
6. COMPARATIVE ANALYSIS
New Business and Market Share
Among the private players only some private players have dominated the scene. ICICI Prudential
and Bajaj Allianz are the top two private players’ having market share 8.93% and 7.36%
respectively followed by SBI life in . Kotak Life is at 9th position with the market share of
1.19%.
Market Share and Rank by NewBusiness Premium
27
Performance by Policy Count
LIC sold the maximum number of policies in this financial year. LIC accounts for 88% of the
new policies sold. In terms of policy count the share of private players is just 12%. The reason
for LIC having more no. of policies is low premiums. Almost every private player prefer to take
policies with high premium, so there lower limit of premium is more than that of LIC’s.
Performance by Policy Count
28
Reach and Distribution
LIC has pan India presence having 2048 branches. Kotak Life has presence only in 146
cities having 213 branches.
The reach of insurers covering different cities and number of branches till date is given in
Exhibit 6.
Presence of Insurers across India
29
Distribution Tie-Ups
Insurers No ofAgents
CorporateAgents and
Brokers
Banc assuranceand Referral
Co-operativeBanks
BajajAllianz
125000 400 19 50
ICICIPrudential
100000 325 10 10
SBI Life 40000 45 9 NA
HDFCStandard
60000 170 7 NA
Birla SunLife
35000 220 8 8
Max NewYork
30000 50 5 9
Kotak Life 38000 80 6 39
Aviva 30000 70 6 26
ING Vysya 22000 150 8 55
LIC 1100000 195 50 35
LIC has maximum number of agents that is why it has the maximum reach and leading the
insurance industry whereas Kotak Life has only 12000 agents. It has to expand in terms of
number of agents and should tie up with more banks and corporate agents to reach more number
of customers
30
Customer Satisfaction
The Life Insurance Corporation of India (LIC) enjoys the confidence of two out of every three
customers. Reason behind this is more than 50 years old legacy and the tag of a government
company. When it comes to money matters people still have more faith on LIC. But customers
had one sore point, they were unhappy with LIC’s cumbersome medical examination process.
Customer Satisfaction
Above mentioned comparison on various parameters justify the need to have aggressive
marketing strategies against competitors. Further comparison can be done on basis of various
products offered by different companies.
31
7. PRODUCT COMPARISON
Product Mix
Insurers Endowment MoneyBack
WholeLife
ChildPlan
Pension Term
Plan
Ulip HealthPlan
MortgagePlan
BajajAllianz
√ √ √ √ √ √ √ √ √
ICICIPrudential
√ √ √ √ √ √ √ √
SBI Life √ √ √ √ √ √ √ √
HDFCStandard
√ √ √ √ √ √ √ √ √
Birla SunLife
√ √ √ √ √ √ √ √
Max NewYork
√ √ √ √ √ √ √ √
Kotak
life
√ √ √ √ √ √ √ √
Aviva √ √ √ √ √ √ √ √
INGVysya
√ √ √ √ √ √ √ √
LIC √ √ √ √ √ √ √ √
Although Life Insurance penetration still at 2.53% at the end of year 2004, India offers a broad
range of products covering term insurance to saving related products. Most of the insurers are
now focusing on unit linked plans backed by impressive stock market performance. Most
products are sold to individuals which accounts for 86% of the new business.
32
ULIP (Unit Linked Insurance Plans)
Company FundManagement
Charges(FMC)
EquityExposure (%)
Entry Load(%)
Premium (Rs)
Bajaj Allianz 1.35 90 3 Any Amount
ICICI
Prudential
1.35 100 6 Any Amount
ING Vysya 1.35 90 3 Any Amount
Met Life 1.35 85 4.5 Any Amount
TATA Aig 1.35 100 4.5 Any Amount
Aviva life 1.35 90 3.5 Any Amount
Max new York 1.35 70 6 Any Amount
Birla sun life 1.35 100 4.5 Any Amount
Kotak life 1.35 100 2.5 Any Amount
Reliance life 1.35 100 4.5 Any Amount
SBI Life 1.35 100 5 Any Amount
These ULIP Plans in operation for the last year have given average returns of 13.5%. While none
of them have given a negative return, individual returns are between 9.55% and 15.01%.
33
8. MARKETING STRATEGIES
Applying Marketing Tool to Analyze the Insurance Industry
The insurance industry is growing in leaps & bounds in the post liberalization era, thanks many
to the entry of private insurance firm. Insurance sector has vital role to play in the development
in the nation economy. India’s GDP growth zooming at 9.2 % & a stable & robust economy
cannot take place keeping the insurance sector growth at bay. for the insurance industry to grow
& bring more & more people under the insurance cover an aggressive an effective marketing
trategy needs to be adopted by the insurance firms. I have applied two of the most effective
marketing tools i.e. porter’s five forces model and PEST analysis to analyze the insurance
industry of India.
1). PORTER’S FIVE FORCES MODEL
i) Threat of New EntrantsAs most of the private players enter the Insurance Industry in the form of Joint Ventures the
other companies fear that they might lose out the competition because of huge capital base and
the technical and financial expertise of these new entrants. As the government is planning to
increase the FDI capital to 49% more foreign big players will be attracted. Another threat for
many insurance companies is other financial services companies entering the market.
34
ii) Power of Suppliers
Indian Insurance Industry is still in the early stages with almost 80% of the market untapped. The
player which has more money in its kitty will be able to spend more money on the promotional
activities and reach large number of customers which will give them the edge over the others.
There is also the possibility that the player offering high salary packages will attract the high
performing individuals in the Insurance Industry which will definitely boost their income level.
iii) Power of Buyers
Insurance Industry is always in look out for the high premium paying clients. Corporate these
days also look out for the Insurance companies as providing Insurance cover is a mean of
showing to the employees that the company care about them which not only motivates them but
35
also increase their productivity. This doesn’t pose a threat but increases the competition and
attract more players.
iv) Availability of Substitutes
Insurance companies offer the same type of products thus there is limited differentiation at the
product level. So the substitutes are easily available in the Insurance Industry. But the companies
focusing on Niche market have a competitive advantage as they will be able to reach more
customers and provide better service. The advantage depends upon the size of the niche and the
barriers on other firms to enter that segment.
v) Competitive Rivalry
Insurance Industry is growing at the rate of 15% annually. This is making Insurance highly
attractive and lots of new players are entering resulting in lot of competition. As there is not
much of product differentiation insurance companies are trying to attract new customers and
retain the existing ones through better customer service, customized products and greater
efficiency. As it takes almost 10 years for Insurance companies to break even new players are
entering in the form of Joint Ventures.
2). POLITICAL ECONOMIC SOCIAL TECHNOLOGICAL (PEST) ANALYSIS
DRIVER CONSIDERATION FOR INSURERS ANDCORPORATIONS
PoliticalFDI may go up to 49%No War & internal instability.Consensus across political partiesTerrorism & naxalism underControl
Will there be opportunities for cross-borderbusiness?Will tax & regulation be harmonized?Will cover be available and how much will itcost.Will cross-border competition increase?
EconomicGDP growing @ 9% plusStrong industrial growth
How the traditional insurance meet the riskfinancing needs of global corporations?
Proactive anti inflationarymeasures practicedInsurance is considered as
Increasing dominance towards servicesindustry.Inflation affects interest rates which affect the
36
priority sector. cost of capital and therefore insurance take-up.Will the equity market remain buoyant?What will be the frequency of major marketcatastrophes?
SocialRapid Demographic ShiftsIncrease in awareness amongpeopleMore fragmented & nuclearfamilyIncreasing propensity to invest infinancial instrument
Increasing need for funded pension andsecurities.Increasing need for environmental cover.Increasing need for liability & negligencecoverInsurance better priced for catastrophe andweather risk
TechnologicalAdvanced computation systemfor Modeling capabilitiesAdvanced software for betterstatistical & actuarialReliable & secure data exchangetechnology across geographicbarriersDeveloped web technology formore interactive & resourcefulwebsites.
Competitive advantage through informationoptimizationMore focus on core competencySmall players will find it difficult to competeeffectively.Increasing demand for cover plus additionalvandalism.Increasing need for sophisticated modelingtechniques.Greater need for risk management &prevention
Marketing Mix policies in Insurance
37
Different companies can choose to position themselves differently and hence the marketing mix
would be different. However, there are certain common characteristics that one can cull out from
the possible strategies that companies can 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, which has led to customization
of products for individual needs. As the insurance products are similar companies can position
their products by providing extra features in the form of add-ons which are called riders. Kotak
Life provides Accident Benefits, Disability Benefits, Term Benefits or Critical Illness Benefits to
the plans at nominal extra costs. However, companies may differentiate themselves on the basis
of product segments that they choose to focus on and excel in.
DISTRIBUTION: 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 companies will make different choices. Many
companies like Kotak 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 differentiator. In case of savings oriented products,
long term returns generated will be more relevant than just the price of the product. A focus on
38
generating good investment performance and keeping a tight control on costs will help in
generating good long-term maturity value for customers. Norms have been laid down on all of
these by IRDA and adhering to these while delivering good returns will be a challenge.
ADVERTISING AND PROMOTION: The level of demand is latent and will have to be
activated considerably. The market needs to be developed. Greater awareness of insurance 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 communication tools including advertising, direct
marketing and road shows will contribute to all this and different companies will take different
approaches on these. As Insurance is product specific, Kotak Life uses word of mouth to
promote its products rather than going for advertisements. They believe that satisfied customers
mean more customers. ICICI Prudential advertises their products through hoardings and banners
to catch the eyes of the customers.
Technology can play a crucial role in delivering the highest standards set by the company and it
will be imperative for any serious player to excel in all these. Overall, the Life Insurance is set
for rapid changes and growth in the years ahead. Delivering service, building trust and being
innovative are key areas in which any company will have to excel in order to do well in the long
road ahead. Different companies will take different approaches and it would be myriad of
solutions that will be found to delight the Indian customer.
Marketing Strategies Adopted by Players in the Insurance Sector
Gone were the days when the customers were forced to take up the kind of products, whatever,
coming from LIC's and GIC's. But now, the customer has been portrayed as the king and to his
delight, the products are redesigned and customized suiting his need taking into account his
paying capacity and multiple benefits. To much of his chagrin, he has also got an option of
withdrawing his offer within a period of 15 days (free-look period) if he is not satisfied with the
policy features.
I. SHIFT IN THE PRODUCT PORTFOLIO
39
Earlier the entire industry was revolving around traditional investment and savings oriented
plans. Now the companies are coming out with Health products as they are profitable for the
companies. The companies are coming out with many more health products to cater to various
emerging categories of health insurance. Tata-AIG has Health Protector Plan that allows hospital
cash, surgical benefit, post-hospitalization benefit and critical illness cover.
Unit linked products are also gaining momentum in this country. Kotak and Birla Sun Life have
launched unit linked schemes focusing on equity, debt and gilt edged stocks. These schemes are
expected to yield better returns when compared to normal insurance schemes. As the awareness
level about these unique products is much lower, the companies resort to educate the customers
about the salient features of the products.
II. VALUE FOR MONEY (VFM)
The sea change since the sector opened up has been on the way the basic products have been
packaged innovatively, often tailor made to provide a bundle of benefits to the customers. This is
possible through the introduction of riders, which have added value to the risk cover at minimal
cost. Riders are nothing but add-ons coming along with the base policies for a slightly additional
premium. Riders have become the major instruments for the organizations to lure the customers
away from the competitors. The removal of 30% cap on the premium of the base policy for the
health riders alone has come as a shot in the arm for many players since this is used as an Unique
Selling Proposition by many private players vis-a-vis the LIC. Later, LIC has also started
announcing riders along with the main policies dancing to the tune of the market forces. This
could see many non-life players going out of the business as life insurers offer a plethora of
personal line products as add-ons. Riders can also be availed by the existing policyholders.
III. TAPPING THE NICHE MARKETS
Private insurers are concentrating much on designing attractive products by investing heavily on
research, studying life expectancy and health statistics across age groups, income levels,
professionals and regions on their own instead of relying on data with state insurers. The
products are designed with a technical team of actuaries and a product development team
40
working closely together to target the niche market. The innovations for the niche markets are
abounded and to name a few…..
* MetLife India Insurance Company has recently launched a Charitable Trust Policy in Kolkata,
which has evoked a lot of interest especially among the Marwaris business community who want
to set up a temple in their name after their death. Similarly a Buy & Sell Agreement cover from
the same company permits a business enterprise to take out a life plan on each of its partners, to
ensure that the company continues.
* The other segments, which have attracted almost all the players, are the women and the
children segments. Though the State insurer has had a chunk of products sufficiently for a longer
time, it faces stiff competition from the private players in these segments.
* Tata AIG has offered a specialized life insurance package where the insured and the employers
of the insured have a say in it. Termed as Worksite Marketing, AIG, which has adopted this
practice in different places across the world, is spreading the concept in India too. Worksite
Marketing is a distribution method used to offer voluntary insurance
products (employee benefits) to employees at their place of work with the sponsorship or
backing of their employer, traditionally done on a deduction from the payroll. The policyholder
carries the policy with himself throughout his life, even if it happens to change the organizations.
* Any other way to promote non-smoking? Or to reward those who give up smoking? Kotak Life
has taken an initiative by offering a term insurance plan - a pure protection product - to non-
smokers at much cheaper price. As against an annual premium of Rs.2400 on an Rs.10 lacs
policy for a 10 year term for a 30 year old under the preferred term plan, the regular term
premium works out to Rs.3400 for a similar cover. Though there are apprehensions in the
industry circle about the success of the policy, the intention of the company is quite appreciated.
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* Even the unborn child's future can be safeguarded now. The offspring can be insured against
unfortunate congenital defects. State owned General Insurers have started aggressively
marketing these kinds of products.
IV. THRUST TO THE RURAL MARKETS
Thanks to the norms stipulated by the regulator IRDA, all the players have turned their eyes
towards the rural market. Towards ensuring equitable distribution of insurance policies in every
nook and cranny of the country, IRDA stipulates the rural obligations to be met by the players
over the years.
The rural obligation on part of the new private insurance companies is incremental in nature. It
goes from 5% to 15% over the period of 5 years for life insurance and from 2% to 5% in case of
general insurance.
Tata-AIG entered into micro-insurance as a condition for acquiring a license to sell insurance in
India. Unlike many other insurance companies, the company immediately saw the many benefits
of micro-insurance including fulfillment of corporate social responsibility; use of micro-
insurance to get the brand into a new market; and a means of developing a good relationship with
the insurance regulator.
Kotak Life Insurance is looking at roping in co-operative banks, primary agricultural cooperative
societies (PACS), NGOs and self-help groups to sell its products in the rural areas. "We are
planning to have rural tie-ups for distributing our policies," Mr Gaurang Shah, Managing
Director, said.
.
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V. TAPPING UNCONVENTIONAL DISTRIBUTION CHANNELS
Nevertheless all the players depend heavily on their agents force to reach out they are trying out
other distribution channels also like banks and corporate agencies in addition to the channels
mentioned above. Tata-AIG has a tie up with Punjab National Bank and City Financial for
selling their products.
VI. CAUSE RELATED MARKETING
Cause Related Marketing has become the order of the day in Insurance industry. By creating
goodwill about the organizations, the insurers are making an attempt to change the negative
attitude of the people towards insurance products. For instance,
* Towards serving the society in a better way, LIC has adopted a novel way through its Bima
Grams policy. Accordingly, LIC pays 25% of the premium collected from the villagers or
Rs.25000 whichever is lesser for undertaking developmental work in the villages.
* Birla Sun Life Insurance has adopted 600 villages around Renukoot and actively involved in
improving the lives of the residents
VII. INFUSION OF CAPITAL
Players in the Insurance sector are very confident that their pace of growth will accelerate
tremendously and the infusion of capital will enable them to continue with their expansion plans
and achieve sustained growth.
LIC will make a total investment of Rs 90,000 crore in equity, debt and other instruments during
the current fiscal, said Mr T.S. Vijayan, Chairman. Last year, the corporation had invested Rs
80,000 crore.
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VIII. EXPANDING THE DISTRIBUTION NETWORK
Kotak Life has already declared its extension plans, which include the opening of 500 full
service branches across the country by March, 2012. The strengthening of its distribution
network will enable the company to cater to a wider group of customers and provide them with
efficient customer service and enhanced support. Network expansion, entry into the pension
segment, and new products are some of the strategies chalked out by private insurer Aviva Life
Insurance. Mr Bert Paterson, Managing Director, Aviva Life Insurance told newspersons that the
company plans to add 79 branches in 2012, taking the total to 191 in the country. The sales force
would be increased from 13,500 to 31,000, he said, adding that the bank is also partnering with
cooperative and regional rural banks in different parts of the country.
The companies generally adopt two types of marketing strategies one is quantity based and other
is quality based. The quantity is driven by volume and this is done through reaching maximum
number of customers. ICICI Prudential and Bajaj Allianz are the leading private players in the
Insurance sector they are infusing large capital to open up various branches across India and
going for the advertisements. Though they are leading in terms of market share their profitability
is very low because of high claim payout ratio. On the other hand Kotak Life is quantity driven
and their profitability is high as compared to the leading players though their market share is
less.
44
12. SALES PROCESS
A sales process is a ‘roadmap’ that identifies a logical sequence of activities that are
consistently implemented from prospecting through to closing to address and satisfy the
customer’s needs.
STEP 1: PROSPECTING
Prospecting is a conscious, directed and continuous activity of seeking, identifying and
qualifying potential customers.
STEP 2: TELEPHONE APPOINTMENT
The telephone is used only to get an appointment i.e. an opportunity to meet the prospect.
STEP 3: PRESENTATION
In order to get in the door or win business, sales presentation is an important part of the
sales process.
· Opening a call effectively helps to create the first favorable impression.
· It is important to create a good rapport with te customer.
· The advisor introduces self and his company and states the purpose of the visit.
45
STEP 4: GOAL FINDING
The goal finding process is based on the need analysis. Taking into consideration the client’s
present financial position, his needs and shortfall are identified ascertaining and understanding
the financial needs of the client.
STEP 5: PRESENTING A SOLUTION
A solution is then worked out after understanding the needs of the client and the amount of
money he/she is ready to commit.
STEP 6: OBJECTION HANDLING
Objection is the prospects statements about why they don’t plan to buy your product or service.
“An objection is an opportunity and not a rejection.”
46
STEP 7: CLOSING
After a buying signal from the customer, the advisor moves in to close the sale.
STEP 8: REFERRALS
Referrals are an excellent source of new business. Beauty of referral- a much more receptive
person at the end.
13. ANALYSIS OF CONSUMER BEHAVIOR
A survey was conducted to understand the consumer perception towards Life Insurance. As
every person has his own views, so it is very important to understand the mind of the customer.
Details of the survey, methodology, sample size and results are mentioned below:
QUESTIONNAIRE FOR CUSTOMERS
1) Have you taken any life insurance policy?
· Yes
· No
2) Given a choice, whom would you prefer to buy a policy from?
· LIC
· Any private player
3) What makes you to insure with LIC (if you prefer it)?
· A government firm
· Performance
· Trust
· Other reason
47
4) How much premium you pay for your insurance policy per year?
· 0-10000
· 10000-30000
· 30000-50000
· More than 50000
5) What is the main reason for taking life insurance policies?
· Tax benefits
· Risk hedging
· Mode of investment
· Liquidity
6) Have you heard of ULIP plans?
· Yes
· No
7) Would you be investing more if insurance policies give good returns?
· Yes
· No
8) What according to you is the best place to put your money?
· Stock market
· Mutual fund
· Government bond and securities
· Insurance policies
· Any other
9) What are your investment objectives?
· Short term dividend
· Long term appreciation
48
· Security
· Liquidity
· Any other
10) Are you aware that KOTAK group as a company operates in the field of life
insurance and investments?
· Yes
· No
11) If yes, how did you come to know about it?
· Friends
· Newspaper
· TV Shows
· Any other (please specify)
12) What influences your investment plans?
· Family need
· Future
· Advice from friends and relatives
· Advertisements and promotions
13) Which mode of interaction/communication from the company would you appreciate
most?
· Personal
· Telephonic
· Online
· Letters
49
14) How often would you like to be intimated by the company regarding the state of your
life insurance policies like ULIP?
· Very frequently
· Frequently
· Quarterly
· Annually
15) Which one is the best place to get a policy from?
· ICICI Life
· KOTAK Life
· Bajaj Allianz Life
· AVIVA Life
· Birla Sun Life
· TATA AIG
· Max Newyork Life
16) What influenced your choice in the last question?
· Brand Name
· Performance
· Word to mouth effect
· Advertisements and promotions
· Trust
· Other
NAME: AGE:
Thank you for your valuable time.
50
QUESTIONNAIRE FOR EXPERTS
(Note: investment in insurance refers to ULIP policies)
1) Do you agree that this is the right time for insurance companies to accept investment
as a part of their business
· Yes
· No
2) Privatization has helped the in recognizing investment a feature in insurance
· Strongly agree
· Agree
· Disagree
· Can’t say
3) Selling investment policies is easier than selling conventional life policies nowadays
· Yes
· No
· Can’t say
4) More competition from increased number of players often lead to unethical practices
to creep in
· Mostly
· Sometimes
· Never
· No unethical practice exist
5) Investment in insurance is the best place to put in your money
· Yes
· No
51
6) If no, rate the following investment options in preference.
· Mutual funds
· Conventional life insurance policies
· Government bonds and securities
· ULIP
· Stock market
· Any other
7) In your opinion, what is the most important factor for people to buy insurance
policies?
· Tax saving tool
· Risk hedging
· Investment tool
· Liquidity
· Any other
8) Why do people refrain from buying insurance policies?
· Lack of awareness
· Lack of proper after sales services
· Insurance is long term investment
· Unavailability of customized products
· Lack of transparency
· Any other
9) Despite similar product features of different companies, what sells the product?
· Trust
· Brand
· Advertisements
· Life advisors
· Distribution channel
· Any other
52
10) Which age group buys maximum number of life insurance policies? (Preference
order)
· 21-25
· 26-30
· 31-40
· 40-50
· Above 50
11) How often does a customer go, for another policy, to the company with whom he has
already taken a policy?
· Almost every time
· Often
· Rarely
· Never
· Can’t say
12) How would you rate the performance of kotak life till now?
· Exceptional
· Good
· Satisfactory
· Below par
13) Do you feel Kotak has enough products to satisfy the needs of the customers?
· Yes
· No
NAME: AGE:
THANKS FOR YOUR VALUABLE TIME
53
ANALYSIS OF SURVEY
A survey was carried out to check the mindset of the people about insurance. Life insurance has
been considered as tax saving tool, investment option and risk hedging device. To support these
assumptions a survey was carried out.
METHOD OF SURVEYTwo separate questionnaires were prepared. One questionnaire was for industry expertand other
was for customers. Both questionnaires are put into appendices.
INDUSTRY EXPERT SURVEYSample taken – 32
Important results from survey:
1. The entry of private players in insurance sector has helped in recognizing investment as
an important feature of insurance.
54
2. ULIP is considered the best place to put money by industry expert
3. Life insurance policy is still considered as tax saving tool than any other device. People still
buy it for its tax saving benefits.
55
4. Lack of awareness and believe that insurance is long term investment refrain people from
buying insurance product.
5. Life insurance agents are still the most important vehicle in selling of life insurance products.
56
CUSTOMER SURVEY
Sample taken- 58
Important results from survey:
1. Most of the clients buy life insurance because it provides a very good tax saving advantage
rather considering it as a risk-hedging tool.
2.With market doing well and mutual fund giving huge return in short term, most people are
interested in making investment in mutual fund followed by ULIP product
3. Majority of people wants security on their investment. They don’t want to put their money in
unknown hands. Long term and short tern gain has equal influence on their investment choice
57
4. Family remains single most important influencer on the investment decision of an individual
followed by secure future
58
Purpose and objectives of undertaking primary data collection:
It helped us to explore the market on a broader basis. Selling might be a difficult issue but
getting the questionnaire being filled was not a difficult issue. In this way, we got a chance to
interact with a number of people.
SIP is meant to give the students a first hand understanding of how the actual work goes on.
Making an analysis from already available data might be anybody’s cup of tea but generating
primary data is something what was expected from us.
The ground realities might be at times very different from our perception and knowledge. A
primary survey is the best way to get a conclusion here.
We got to know as to what is the perception of customers and experts of the industry and the
company as well. The learning was vital and much more than what is depicted in the
questionnaire
A survey makes you better prepared to face the same challenge if given to you
Again
It helps to sharpen one’s analysis skill as well
The survey always helps to check the proximity between whatever which has been read and
what the ground realities are
The people we interacted were broadly based from Hyderabad as far as customers are concerned.
I had the responsibility of getting the questionnaire filled up. After having exhausted all our
connections, I got a number of questionnaires filled by the people living in my apartment in
which most of them are working. Most of the people we interacted had been very new to job like
my friends who have been working in Bhubaneswar mostly in software firms. The list also
included people working as life agents in Kotak life insurance. We also questioned some of the
59
people whom we meant to meet for sales purpose. The expert mainly included employees of
Kotak life insurance.
Learning from the Exercise
People are still reluctant to invest in private players when compared to LIC. Interestingly, it
hardly matters for them that a certain private players are working in collaboration with certain
firms which are much bigger than LIC.
We might perceive LIC as an inefficient company which is not very good at delivering
services but people which includes even the educated youth think differently( the opposite I
mean)
In most of the cases, it was very clear that the brand name matters and LIC happens to be the
biggest brand in India. People might be interested in a similar plan if offered by LIC.
People still do not consider insurance as a need and thus do not hold this industry in very high
terms.
Private players still have a long way to go to compete with LIC as their presence is most of the
areas is negligible
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14. CONCLUSION
Over the past decade there has been strong consolidation trend in the Global Insurance Industry.
In 2009, worldwide insurance premium volume grew by 3.9%. While Life premiums increased
by 4.1%, non-Life premium increased by 2.01%.
With largest number of life insurance policies in force in the world, Insurance happens to be a
mega opportunity in India. It’s a business growing at the rate of 15-20 per cent annually and
presently is of the order of Rs 450 billion. Improving economic scenario, increasing disposable
incomes, and rising product demands are the reasons behind the growth. The compound annual
growth rate of market in the period 2010-2015 is predicted to be 10%
Indian Life Insurance sector grew 41% to nearly $12 bn in the financial year up to march 2009 in
terms of premium collected. . In India Life is roughly three to four times bigger than non-Life.
And there is potential within Life since most consumers see insurance as a tax-saving-cum-
investment vehicle rather as then a pure cover.
Up To January 2010 LIC’s market share increased to 80% recording a growth of 123% as
compared to last year. Whereas private players like Kotak are striving to increase its market
share and growth to be among the top players in the Life Insurance sector.
Among the private players only some private players have dominated the scene. In terms of new
business premium Bajaj Allianz and ICICI Prudential are the top two private players whereas
Kotak Life is at the Ninth position. LIC has pan India presence having 2048 branches. Kotak
Life has presence only in 146 cities having 213 branches. Kotak Life scores very high in terms of
customer satisfaction. As it has almost 92% persistency rate, which is highest in the market.
Finally it can be said that though it is very tough to compete with LIC, but still private players
have a lot of scope in Indian Life Insurance Industry.
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Bibliography:
www.kotaklifeinsurance.com
www.wikipedia.com
www.bimaonline.com
www.irdaindia.com
www.ikw.in
www.iaifm.com
www.Indiaprwire.com/pressrelease/insurance
www.marketreserch.com
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