selling strategies adopted by aviva project by vijay
DESCRIPTION
strtergiesTRANSCRIPT
SUMMER TRAINING PROJECT REPORT
ON
SELLING STRATEGIES ADOPTED BY AVIVA LIFE INSURANCE CO. LTD.
SUBMITTED IN PARTIAL FULFILLMENT OF THE REQUIREMENT OF “BACHELOR’S OF BUSINESS ADMINISTRATION” (BBA)
GURU GOBIND SINGH INDRAPRASTHA UNIVERSITY
TRAINING SUPERVISOR: SUBMITTED BY: Vijay ThapaISHAN TANEJA Enrollment No. 00514101709B.S.A. VERTICALS
SESSION 2009-2012
JAGANNATH INTERNATIONAL MANAGEMENTSCHOOL, KALKAJI
Certificate Of Authentication
This is to certify that Mr Vijay Thapa, enrollment No. – 00514101709, student of
Jagannath International Management School pursuing Bachelor’s Of Business
Administration, affiliated to Guru Gobind Singh Indraprastha University, has
successfully completed the project titles “Selling Strategies In AVIVA Life Insurance
India Ltd.”
I hereby declare that the project report titled “ Selling Strategies In AVIVA Life
Insurance India Ltd.” Is my own work and has been carried out under the guidance of
Mr Ishan Taneja (BSA Verticals Manager) AVIVA Life Insurance India Ltd.
Ms Chania Dhall ( Program Coordinator) Jagannath International Management School,
Kalkaji, New Delhi and it is an authentic work and has not been sourced through other
means.
Ms Chania Dhall
[Internal Project Guide]
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ACKNOWLEDGEMENT
I wish to express my gratitude to my organizational guide and project in charge
for his valuable guidance and providing me an opportunity to do this project. This project
was a great source of learning and a good experience as it has made me aware of the
professional culture and conducts that exists in an organization.
I am highly obliged to “Ms Chania Dhall”(Internal Guide) from Jagannath Institution of
Management School for providing me the right kind of opportunity and facility to
complete this venture.
“Mr. Ishan Taneja”(Head B.S.A. Vertical) of AVIVA life Insurance Ltd. Company. As
my External Guide who helped me throughout my training and development program.
I would like to express my innate sense of gratitude to my parents and friends who
encouraged me a lot during the project and without their assistance and affection this
project would not have been completed. It thanks them for being there.
The help provided to me by the entire sales division of Aviva Life Insurance also obliges
me.
Vijay Thapa
00514101709
Bachelor’s Of Business Administration
Fifth Semester
JIMS Kalkaji
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PREFACE
The Insurance sector, after the opening up, provides greater opportunities. Several
global players have emerged and the market has changed significantly. In the changed
scenario, the expectation is that the low Insurance premium as a percentage of GDP
prevailing in India will improve and will offer better opportunities to the insurance
players.
Life Insurance sector is one of the key areas where enormous business potential
exists. In India currently the life insurance premium as a percentage of GDP is 1.3 per
cent against 5.2 per cent in the US, but in the liberalized scenario, the life insurance
premiums were projected to grow at around 18% to 20% from Rs 215 billion in 1998- 99
to Rs 592 billion in 2004-05 and to Rs 1450 billion by 2009-10. Corporate non-life
premium was projected to grow from Rs 84 billion in 1998-99 to Rs 386 billion in 2009-
10 and personal line non-life from Rs 4 billion to Rs 51 billion.
In the life Insurance segment the Life Insurance Corporation of India (LIC) is the
major player. The LIC has 2050 branches. It is constituted in to seven Zones. Currently
there are 5, 60,000 LIC agents in India. General Insurance is another segment, which has
been growing at a faster pace.
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INDEX
CONTENTS PAGE NUMBER
Chapter 1 – Introduction 11.1- Overview of Insurance Industry 21.2- Profile of the Organization 261.3- Problems of the Organization 351.4- Competition Information 371.5- S.W.O.T Analysis 43
Chapter 2 - Research & Methodology 462.1- Significance 472.2- Managerial usefulness of the study 482.3- Research objective 482.4-Scope of the study
482.5- Methodology 49
Chapter 3 – Conceptual Discussion 53
Chapter 4 – Data Analysis 60
Chapter 5 – Findings and Recommendations 73
Annexure 77
Bibliography 80
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LIST OF TABLES
Serial No. Table Title Page No.
1 Age of respondent
2 Qualification of respondent
3 Occupation of respondent
4 Average annual income of respondent
5 Family size of respondent
6 According to life insurance is
7 Awareness of AVIVA life insurance
8 Awareness regarding insurance
9 % respondent who are under different
plans of AVIVA prudential life insurance
10 % of respondent benefits of choosing the
particular products
11% of disadvantages in insurance plan
12 % of respondent who want to invest in
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different venues
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CHAPTER 1
INTRODUCTION
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1.1 OVERVIEW OF INSURANCE INDUSTRY
A well development and evolved insurance sector is needed for economic development as
it is provides long term funds for infrastructure development and the same time
strengthen the risk taking ability.
Life insurance is also now being regarded as a versatile financial planning tool in India.
India being a country having a huge population of around one billion people with only
33.2% of the insurance population in India possessing life insurance. The country has a
vast potential that has been left untapped till now.
Therefore, what this has led to is the flooding of life insurance market with a number of
private players which in collaboration with recognized foreign company’s promises to
deliver the best of services at the least price. All these companies are trying to grasp the
maximum of market share in life insurance sector. For that they are developing a channel
i.e. recruiting world-class insurance advisors/agents who sell their products or policies.
But what a consumer needs or what he perceives about life insurance still needs to be
answered these are some questions I have tried to answer in the project.
This report is trying to give the detail about Consumer Perception about Life Insurance in
India. Thus by going through the report one will get to know about the life insurance and
the opinion in the mind of the consumer about his judgment and perceptions.
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INSURANCE
Insurance, in law and economics, is a form of risk management primarily used to hedge
against the risk of a contingent loss. Insurance is defined as the equitable transfer of the
risk of a potential loss, from one entity to another, in exchange for a premium. Insurer,
in economics, is the company that sells the insurance. Insurance rate is a factor used to
determine the amount, called the premium, to be charged for a certain amount of
insurance coverage. Risk management, the practice of appraising and controlling risk, has
evolved as a discrete field of study and practice.
INSURANCE AS A PRODUCT
Insurance is a contingent product whose utility is tested only in the event of an
accident or a disaster.
It always has a negative connotation in the mind of the buyer—it deals with losses
to the buyer.
It is a product of future delivery and subject to benefit realization only on the
occurrence of the contingent event.
It is a technical product that has a lot of legal jargon and with numerous legal
principles peculiar to it making it difficult to comprehend.
It is a contingent financial promise made by the security provider and its benefit
can be realized only after fulfilling a number of stipulations, often, unexplained at
the time of commencement of contract.
It is a product or service that has to be resold annually to the same buyer and
hence personal relationship and mutual trust are essential.
As with all service products it has limitations, whose import is highlighted only
after the event. The fine print in the policy assumes a big role in the event of a
claim.
Both the contractual parties have passive roles unless an unfortunate claim event
of a claim.
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There is no emotional or psychological satisfaction in the purchase of insurance.
It is a sense of relief.
Since claim amounts vary substantially both the contractual parties are wary of
each other’s interest , motives and actions.
Experience of each customer is highly individualized with no standards to judge
the performance and reputation of an insurer.
Moral hazard on either side plays an important role in claim negotiation.
Product innovations to keep abreast of changes in technology, political, economic,
and social spheres provide a far wider market.
LIFE INSURANCE
One of the major types of insurance is life insurance. Life insurance companies sell life
insurance, annuities and pensions products.
Life insurance provides a monetary benefit to a decedent's family or other designated
beneficiary, and may specifically provide for burial, funeral and other final expenses.
Life insurance policies often allow the option of having the proceeds paid to the
beneficiary either in a lump sum cash payment or an annuity.
In most countries, life insurers are subject to different regulatory regimes and different
tax and accounting rules.
Insurance companies are generally classified as either mutual or stock companies. This is
more of a traditional distinction as true mutual companies are becoming rare. Mutual
companies are owned by the policyholders, while stockholders (who may or may not own
policies) own stock insurance companies.
Global insurance premiums grew by 9.7% in 2004 to reach $3.3 trillion. This follows
11.7% growth in the previous year. Life insurance premiums grew by 9.8% during the
year, thanks to rising demand for annuity and pension products.
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NEED FOR LIFE INSURANCE
As life insurance became more established, it was realized what a useful tool it was for a
number of situations, including –
I) Temporary needs/ threats - The original purpose of life insurance remains an
important element, namely providing for replacement of income on death etc.
Typically in the case of the breadwinner dying an early death.
II) Regular Saving - Providing for ones family and oneself, as a medium to long-term
exercise (through a series of regular payment of premiums). This has become
more relevant in recent times as people seek financial independence from their
family.
III) Investment - Put simply, the building up of savings while safeguarding it from the
ravages of inflation. Unlike regular saving products, investment products are
traditionally lump sum investment, where the individual makes a one-time
payment.
IV) Retirement - Provision for one’s own later years becomes increasingly necessary,
especially in a changing cultural and social environment. One can buy a suitable
insurance policy, which will provide periodical payments in one’s old age.
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ADVANTAGE OF LIFE INSURANCE
(I) It is superior to a traditional saving vehicle
As well as providing a secure vehicle to build up savings etc, it provides peace of mind to
the policyholder. In the event of untimely death, of say the main earner in the family, the
policy will pay out the guaranteed sum assured, which is likely to be significantly more
than the total premiums paid. With more traditional savings vehicles, such as fixed
deposits, the only return would be the amount invested plus any interest accrued.
(II) It encourages saving and forces thrift
Once an insurance contract has been entered into, the insured has an obligation to
continue paying premiums, until the end of the term of the policy; otherwise the policy
will lapse. In other words, it becomes compulsory for the insured to save regularly and
spend wisely. In contrast savings held in a deposit account can be accessed or stopped
easily.
(III) It provides easy settlement and protection against creditors
Once a person is appointed for receiving the benefits (nomination) or a transfer of rights
is made (assignment), a claim under the life insurance contract can be settled easily. In
addition, creditors have no rights to any monies paid out by the insurer, where the policy
is written under trust. Under the Married Women’s Property Act (M.W.P Act), the money
available from the policy forms a kind of trust which cannot be attached by judgment
creditors.
(IV) It helps to achieve the purpose of the Life Assured
If someone receives a large sum of money, it is possible that they may spend the money
unwisely or in a speculative way. To overcome this, the person taking the policy can
instruct the insurer that the claim amount is given in installments.
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(V) It can be encashed and facilitates quick borrowing:
Some contracts may allow the policy to be surrendered for a cash amount, if a
policyholder is not in a position to pay the premium. A loan, from certain policies, can be
taken for a temporary period to tide over the difficult. Some lending institutions will
accept a life insurance policy as collateral for a personal or commercial loan.
(VI) Tax Relief
The policyholder obtains Income Tax rebated by paying the insurance premium. The
specified forms of saving which enjoy a tax rebate, under section 88 of the Income Tax
Act, include Life Insurance Premiums and contributions to a recognized Provident Fund
etc., section 10 (10D) & other sub-sections of Section 80 of the Income Tax Act.
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INSURANCE SECTOR IN INDIA
Introduction
The insurance sector is of considerable importance to every developing economy; it
inculcates the savings habit, which in turn generates long-term invest able funds for
infrastructure building. The nature of insurance business ensures constant inflow of funds
- the payout is staggered and contingency related - thereby making it readily available for
investment on infrastructure building.
Insurance is one sector whose contribution to GDP is quite significant. Post
independence, the Indian Government nationalized the private life insurance companies
with a view to raise funds for the infrastructure developments, which lagged behind
pathetically. The scatter of general insurance companies was brought under one umbrella
– the General Insurance Company in 1972.
Nationalization however brought with it the public sector bureaucracies, cumbersome
procedures and inefficiencies but still these nationalized companies managed to have
millions of policyholders who had no other options. Any attempt to even suggest private
participation with a view to instill healthy competition and efficient services was only
met with stiff resistance. While the early 90s brought forth liberalization on all major
economic fronts, the insurance was left untouched. But before long, the passage of IRDA
bill in 1999 paved the way for the liberalization of the Indian insurance sector.
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History
Insurance is a federal subject in India and has a history dating back to 1818. Life and
general insurance in India is still a nascent sector with huge potential for various global
players with the life insurance premiums accounting to 2.5% of the country's GDP while
general insurance premiums to 0.65% of India's GDP. The Insurance sector in India has
gone through a number of phases and changes, particularly in the recent years when the
Govt. of India in 1999 opened up the insurance sector by allowing private companies to
solicit insurance and also allowing FDI up to 26%. Ever since, the Indian insurance sector
is considered as a booming market with every other global insurance company wanting to
have a lion's share. Currently, the largest life insurance company in India is still owned
by the government.
Insurance in India has its history dating back till 1818, when Oriental Life Insurance
Company was started by Europeans in Kolkata to cater to the needs of European
community. Pre-independent era in India saw discrimination among the life of foreigners
and Indians with higher premiums being charged for the latter. It was only in the year
1870, Bombay Mutual Life Assurance Society, the first Indian insurance company
covered Indian lives at normal rates.
At the dawn of the twentieth century, insurance companies started mushrooming up. In
the year 1912, the Life Insurance Companies Act, and the Provident Fund Act were
passed to regulate the insurance business. 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. However, the disparage still existed as discrimination between
Indian and foreign companies.
The insurance sector went through a full circle of phases from being unregulated to
completely regulated and then currently being partly deregulated. It is governed by a
number of acts, with the first one being the Insurance Act, 1938.
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The Insurance Act, 1938
The Insurance Act, 1938 was the first legislation governing all forms of insurance to
provide strict state control over insurance business.
Life Insurance Corporation Act, 1956
Even though the first legislation was enacted in 1938, it was only in 19 January 1956, that
life insurance in India was completely nationalized, through the Life Insurance
Corporation Act, 1956. There were 245 insurance companies of both Indian and foreign
origin in 1956. Nationalization was accomplished by the govt. acquisition of the
management of the companies. The Life Insurance Corporation of India was created on
1st September, 1956, as a result and has grown to be the largest insurance company in
India as of 2007.
General Insurance Business (Nationalisation) Act, 1972
The General Insurance Business (Nationalisation) Act, 1972 was enacted to nationalise
the 100 odd general insurance companies and subsequently merging them into four
companies. All the companies were amalgamated into National Insurance, New India
Assurance, Oriental Insurance, United India Insurance which were headquartered in each
of the four metropolitan cities.
Insurance Regulatory and Development Authority (IRDA) Act, 1999
Till 1999, there were not any private insurance companies in Indian insurance sector. The
Govt. of India then introduced the Insurance Regulatory and Development Authority Act
in 1999, thereby de-regulating the insurance sector and allowing private companies into
the insurance. Further, foreign investment was also allowed and capped at 26% holding
in the Indian insurance companies.
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Opening doors for private players and FDI
The insurance premium in India accounted for a mere 2% of GDP as against the world
average of 7.8% and G-7 average of 9.2% during 90s. The insurance premium as a
percentage of savings in India is 5.95% as compared to 52.5% in UK. The nationalised
insurance companies could barely unearth the vast potential of the Indian population
since the policies lacked flexibility and the Indian life insurance products are not linked
to the contemporary investment avenues.
LIC had a total premium income of $5 billion during 1995-96 and General Insurance
recorded a net premium of $1.3 billion. LIC’s income has grown substantially on an
average of 10% as against the industry’s 6.7% in the rest of Asia. LIC has catered its
services to more than 5 million people living below poverty line with a subsidized
premium rate. Claim settlement ratio of LIC stood at 95% and GIC at 74% which much
higher than the global average of 40%.
But the other side of the coin gives a dismal picture. Large-scale operations and
bureaucracies entangled in the public sector companies were the main areas of concern of
the nationalized insurers. The state owned insurance companies did not show any
initiative to venture into the rural areas to sell crop insurance or any other personal
insurance.
Another area, which requires an in-depth study, is the pension segment. Indian demand
for pension products will be huge keeping in mind the lack of a comprehensive social
security system leading to an upward trend in the savings sentiments. But LIC despite its
optimal performing abilities brought in pension premium only to the tune of $22 million.
Hence innovative measures to convert the pension products into lucrative saving
instruments became the need of the day by which the investors would be allowed to
deploy funds before the annuities commence and to invest them in different schemes that
would yield a relatively higher income.
Another potential area insufficiently served was the health insurance and other personal
insurance products such as householders, shopkeepers, personal accident, travel insurance
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and professional indemnity covers, which constitute only 12 per cent of Indian general
insurance premium. General Insurance Company’s Mediclaim scheme served only 2.5%
of the total population. The Indian health insurance products were not comprehensive in
nature – there was no cover against disability.
More liberalised reforms are inevitably essential not only to drive the Indian economy
towards an annual growth rate of 7% to 8% but also to sustain the growth. A faster
growth would attract foreign direct investment (FDI) inflow of $10 billion every year as
against the current FDI in the range of $3 billion. Given the saving scenario in India,
there is much more growth potential and the liberalised insurance sector will mobilise the
long-term funds for infrastructural investments.
Factors changed due to privatization:
(I) Market Expansion:
There has been an overall expansion in the market. This has been possible due to
improved awareness levels thanks to the large number of advertising campaigns launched
by all the players. The scope of expansion is still unlimited as virtually all the players are
concentrating on large cities and towns-except by LIC to an extent there was no
significant attempt to tap the rural markets but the private companies are also targeting
the untapped rural market.
(II) New Product Offerings:
There has been a plethora of new and innovative products offered by the new players,
mainly from the stable of their international partners. Customers have tremendous choice
from a large variety of products from pure term (risk) insurance to unit-linked investment
products. Customers are offered unbundled products with a variety of benefits as riders
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from which they can choose. More customers are buying products and services based on
the true needs and not just traditional money-back policies, which is not considered very
appropriate for long-term protection and savings. However, there are still some key new
products yet to be introduced.
(III) Customer Service:
Not unexpectedly, this was one area that witnessed the most significant change with the
entry of new players. There is an attempt to bring in international best practice in service
and operational efficiency through use of latest technologies. Advice and need based
selling is emerging through much better trained sales force and advisors. There is
improvement in response and turnaround times in specific areas such as delivery of first
policy receipt, policy document, premium notice, final maturity payment, settlement of
claims etc. However, there is a long way to go and various customer surveys indicate that
the standards are still below customer expectation levels.
(IV) Channels Of Distribution:
Till two years back, the only mode of distribution of life insurance products was through
Agents. While agents continue to be the predominant distribution channel, today a
number of innovative alternative channels are being offered to consumers. Some of them
are banc assurance, brokers, Internet and direct marketing. Though it is too early to
predict, the wide spread of bank branch network in India could lead to banc assurance
emerging as a significant distribution mechanism.
If any one analyses the history of the growth of insurance since reforms, it is marked by
all- round growth of all players. More or less all players (including the market leader
LIC) have aggressively recruited and trained advisors, appointed agents, launched new
products, improved customer service standards and revamped/expanded their distribution
networks. If at all there are major difference between players it was only in time lag in
launching of service. Every player will like the customers to believe that its service
standards are the best or that its agents are the most informed and ethical, but it is
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debatable whether there are any significant differences. In other words, each company is
trying to be “everything to everybody”.
Our argument is that the strategy of being everything to everybody is risky. Some players
justify the above strategy on the basis that the Indian market is huge and it can
accommodate everybody. Still, in a market where it is difficult to distinguish one self
sufficiently on services or on any other parameter to be able to change a premium, it will
lead to unmitigated price competition to the detriment of all players. One may achieve
sales turnover, but margins and profitability will suffer severely. In the insurance industry
where large amounts of capital are required, this is risky.
While there is room for a few scale players with a finger in every pie, it is profitable for
other players to focus on different segments to survive and thrive in a multi-firm open
environment. While each company has to choose its own unique positioning on its unique
strengths, the below-mentioned generic positioning alternatives appear worth
considering. Needless to say the positioning choices discussed here are not mutually
exclusive and can be overlapping.
Global investors prefer Indian insurance markets:
Multinational insurers are keenly watching the transformation of the Indian insurance
sector, mainly because the domestic markets have become saturated for the respective
insurer. International insurers capture a significant part of their business from their
multinational operations only. UK’s largest life and non-life insurers acquired 40% to
60% of their total premium from their multinational operations. The foreign investors are
finding the Indian market more attractive because even a small share of a growing market
looks lucrative.
The other reason as to why the global insurers are interested in investing their funds is the
nature of the Indian markets. Generally insurance companies operate on the principle of
spreading. Spreading the area of operations over a wide geographical area would
eliminate sudden dips in earnings due to the unexpected risk spread. Sigma Report
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presented by the world’s second largest reinsurer Swiss Re on global insurance, reports
complete saturation of international market.
Effects of global insurance
More job opportunities: Opening of the insurance sector to the foreign investors has led
to a renaissance in the Indian economy. Job opportunities show bright signals. The people
working in insurance sector in India are approximately the same as in the UK, which has
1/7th of Indian population. There is the new concept of bancassurance that has paved the
way for more job opportunities in the financial sector. There would be demand for
specialists in the area of marketing, finance and human resource management apart from
the demand for technical expertise from professionals in the field of underwriting and
claims management subjects.
Inflow of foreign capital: There would be huge inflow of funds into the country with
foreign capital splurging in the Indian insurance companies as start up capital.
Indigenous reinsurance: Even the reinsurance sector looks for opulence with global
players like Swiss Re and Munich Re keen on entering into the insurance industry in
India. While there will be a deep fall in the outward reinsurance, India would receive
inflow of funds from the neighboring countries. If the legislative support offers a
congenial atmosphere, a la Lloyds in India is not far off.
Technology transfer: Apart from the above monetary aspects, there would also be a
revolution in the transfer of technologies and knowledge from the global participants in
the fields of training, risk management, underwriting, introduction of new policies etc.
With more participants in the market, there would be healthy competition with increased
advertisement expenditure for brand building. There would be scientific pricing methods.
In the liberalised insurance era, we have 14 life insurance players apart from the public
sector Life Insurance Corporation of India and 9 general insurance companies apart from
the 4 state owned companies viz. The United India Insurance, New India Assurance,
Oriental Insurance, National Insurance Company. The private insurers have already
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proved their success by way of performance during the current financial year by way of
71% growth in the premium income. The investors worldwide are keeping their fingers
crossed pending the announcement of the increased cap in the FDI investment in the
Indian insurance companies to 49% from 26%.
There are two legislations that govern the sector-
The Insurance Act- 1938 The IRDA Act- 1999.
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HISTORICAL PERSPECTIVE
In 1818 it was conceived as a means to provide for English Widows.
The Bombay Mutual Life Insurance Society started its business in 1870.
It was the first company to charge same premium for both Indian and non-Indian
lives.
The Oriental Assurance Company was established in 1880.
Till the end of nineteenth century insurance business was almost entirely in the
hands of overseas companies.
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 20's and 30'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 over insurance business.
The insurance business grew at a faster pace after independence.
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.
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Nationalization was justified on the grounds that it would create much needed
funds for rapid industrialization.
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IMPORTANT MILESTONES IN THE LIFE INSURANCE BUSINESS IN INDIA:
INSURANCE SECTOR REFORMS
In 1993, Malhotra Committee- headed by former Finance Secretary and RBI Governor
R.N. Malhotra- was formed to evaluate the Indian insurance industry and recommend its
future direction. The Malhotra committee was aimed at creating a more efficient and
competitive financial system suitable for the requirements of the economy keeping in
mind the structural changes currently underway and recognising that insurance is an
important part of the overall financial system where it was necessary to address the need
for similar reforms. In 1994, the committee submitted the report and some of the key
recommendations included:
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i ) Structure: Government stake in the insurance Companies to be brought down to 50%.
Government should take over the holdings of GIC and its subsidiaries so that these
subsidiaries can act as independent corporations. All the insurance companies should be
given greater freedom to operate.
ii) Competition: Private Companies with a minimum paid up capital of Rs.1bn should be
allowed to enter the sector. No Company should deal in both Life and General Insurance
through a single entity. Foreign companies may be allowed to enter the industry in
collaboration with the domestic companies. Postal Life Insurance should be allowed to
operate in the rural market. Only one State Level Life Insurance Company should be
allowed to operate in each state.
iii) Regulatory Body: The Insurance Act should be changed. An Insurance Regulatory
body should be set up. Controller of Insurance- a part of the Finance Ministry- should be
made independent
iv) Investments: Mandatory Investments of LIC Life Fund in government securities to
be reduced from 75% to 50%. GIC and its subsidiaries are not to hold more than 5% in
any company (there current holdings to be brought down to this level over a period of
time)
v) Customer Service: LIC should pay interest on delays in payments beyond 30 days.
Insurance companies must be encouraged to set up unit linked pension plans.
Computerization of operations and updating of technology to be carried out in the
insurance industry.
The committee felt the need to provide greater autonomy to insurance companies in order
to improve their performance and enable them to act as independent companies with
economic motives. For this purpose, it had proposed setting up an independent regulatory
body- The Insurance Regulatory and Development Authority.
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
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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.
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PRESENT SCENARIO
The Government of India liberalized the insurance sector in March 2000 with the passage
of the Insurance Regulatory and Development Authority (IRDA) Bill, lifting all entry
restrictions for private players and allowing foreign players to enter the market with some
limits on direct foreign ownership. Under the current guidelines, there is a 26 percent
equity cap for foreign partners in an insurance company. There is a proposal to increase
this limit to 49 percent.
The opening up of the sector is likely to lead to greater spread and deepening of insurance
in India and this may also include restructuring and revitalizing of the public sector
companies. In the private sector 15 life insurance companies have been registered. A host
of private Insurance companies operating in life segments have started selling their
insurance policies since 2001. Table shows the current market players in the life
Insurance Industry (Source IRDA).
LIFE INSURANCE SCENARIO IN INDIA
Since 1956, with the nationalization of insurance industry, the state-run Life Insurance
Corporation of India (LIC) has held the monopoly in country’s life insurance sector.
General Insurance Corporation of India (GIC), with its four subsidiaries, was its
counterpart in the casualty sector. Over the time, taking advantages of its monopoly and
virtual prerogative in establishing premiums, LIC has evolved into a monolith. With
around 60,000 agents in every nook and corner of the vast country, it has created an
enviable brand name, particularly among the rural population of the country. It has
around $40 billion as its financial sector. However, on the qualitative side, it has every
little to take pride in. And there lies the potential for players to challenge this behemoth.
As is typical with monopolies, the premium rates charged LIC are among the highest in
the world, and its track record in customer service can at best be called shabby. With a
huge unionized, rigid workforce mostly in the clerical category, LIC run the risk of high
fixed cost, which will be the deciding factor productivity in the competitive scenario.
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While boasting full-scale automation of its operation, the truth is that its technology is
outdated. The new players, with the state-of-the –art technology under the belt, will be in
advantageous position. 80% of LIC’s business is procured by 20% of its ill-trained agent
force. The foreign player, with the domestic partner’s string band value, can test the
unconventional distribution channels like brokers, the Internet, the banking distribution
system etc., although foreign players may be tempted to keep their operations in big cities
for the ‘cream layer’ of the society, the real market lies in rural India, which accounts for
the lion’s share of LIC’s present business.. The foreign companies need to know the
“ground realities” to the details.
PRIVATIZATION OF INSURANCE
The Indian Insurance sector has finally opened up and it is with much anticipation that
new players are awaiting their share of market. License have been issued to both Indian
and foreign players- Reliance, HDFC-Standard Life, Max India-New York, Royal
Sundaram Alliance, Bharti Axa Life Insurance, IFFCO-Tokyo Marine, Bajaj Allianz,
Birla Sun life, Tata AIG, AVIVA Life Insurance, SBI Life, OM Kotak Mahindra are
some of the entrants into the newly liberalized Indian Insurance market.
Aviva Life Insurance and HDFC-Standard Life have issued their life policies-the first
from the private sector after 45 years. The first move for the liberalization came with the
Malhotra Committee Report in 1993 which recommended the privatization of insurance,
setting of an insurance regulatory authority and restructuring the government monopoly
LIC and GIC and its subsidiaries. IRDA Act passed in November 1999 had set ball
rolling for the entry of private players in domestic sector.
IRDA
The insurance sector has been opened up in India, as there was an urgent need. The
international experience indicates those country with a liberalized insurance sector have
witnessed a rapid growth in premium volumes enhancing the domestic saving rate. This
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happened in China, Malaysia and Singapore where a competitive market has led to
improvement in services and quicker settlement of claims.
It is also important to note that competition will bring about advancement in information,
communication and technology. And rightly therefore a decision was taken by the
Government of India to open up insurance sector. The establishment of IRDA in the
month of April 2000 has been important development in this direction, making the end of
monopoly in the insurance.
The IRDA Governs the critical aspect of insurance sector including:
The number and role of Private sector operates including-Roman area
intermediaries.
Regulate covering investment, solvency norms etc.
Product range.
Accounting practices.
Consumer protection norms.
Ensuring the rural and health insurance are developed.
Fixing of license fee.
Perhaps of all the most critical regulation is the 26% equity Capital for foreign Insurers.
This regulation bring in issues regarding management control and one of the reasons for
joint venture breaking up Cubb-Kotak, Liberty-Dabur, All State-Dabur, Manu Life-UTI
are some of the broken up alliances.
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LIBERALIZATION OF INSURANCE SECTOR
Liberalization commitment of the country to help in disciplining future economic policies
will include the insurance reforms. When world over insurance market has been opened
up. India cannot remain in isolation. History has shown that it is very difficult to prosper
in isolation.
Globalization is the new economic reality, which is here to stay, heralding a new era of
insurance in India.
With the opening of the insurance industry, India stands to gain with the following major
advantages.
Globalization will provide opportunities to the customer for the better production.
With more reasonable and affordable pricing.
The customer will get quicker services.
It will enhance the saving rate.
Long term funds for infrastructure development will be available to the country.
It will secure for India larger inflow of foreign capital need to sustain our GDP
growth.
ADVANTAGES OF LIBERALIZATION
With new insurance intermediaries and more distribution channels the market is bound
to develop by leaps and bounds.
In the next few years it is established that the Indian insurance sector will develop a
better understanding of consumer requirement leading to more satisfaction of
consumers.
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The world class technology will be available in the market bringing about tremendous
improvement in servicing.
Choice of price will be available to the customers.
Lead to increase in employment.
Social and rural obligations will also be served as IRDA has come out with clear
regulation in this regard, which makes the development in this area mandatory.
Global competitors will help in building expertise with practice.
Unlike west, in India, insurance is sold as the instrument of saving. About 18%of the
policies are sold as death risk consideration. Impression about LIC is that they are not
meant for the market requirements. They are only intended to find customers.
Insurance awareness is therefore low. Unit linked insurance products are not
available. Insurance covers are expensive and returns are low. Turn over the agent is
high. The choice available to the insuring public is inadequate in terms of services,
products and prices. These are the areas of weakness, which may act as opportunities
for new players who may work to offer policies to the customer with the value
additions at a competitive premium with much improved servicing.
INSURANCE IN INDIA
Only 22% of the insurance population has been extended cove r. Market penetration is
low and the potential to exploit is high. Insurance premium per capita is very low. Lack
of comprehensive social system benefit and welfare means that demand for pension
products is high. Huge middle class of approximately 300 million.
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EXISTING INSURANCE COMPANY SCORE LOW ON CUSTOMER
SERVICE FRONT
The insurance market registered growth in the Asian region even though India’s share in
global insurance premium is less than 0.5% (1998) as compared to USA (24.2%) and
Japan (21%). Studies have revealed that in an emerging market, as disposable income
rises, Insurance premium as a ratio of GDP shoots up. The confederation of Indian
Industry projected a growth of life insurance premiums from Rs. 350 billion at present to
Rs. 140 billion. The growth of non-life insurance premium is expected to increase from
75 billion to 375 billion. Out of which, only 10% is tapped by the existing insurer.
Insurance even more than banking is a volume game. A very exclusive approach in view
is unlikely to provide meaningful numbers. Currently, insurance is bought for the purpose
of tax-benefits. A higher percentage of business is in the rural market. The share of rural
new business insurance total new business is 55% in terms of policies and 47% in terms
of sum assured. However, this needs to be viewed in the light of some recent issues that
have been raised regarding as to what constitutes the rural market. Therefore, private
insurers will be best served by middle market approach, targeting the customer segments
that are presently unexploited.
How many Indians are aware that LIC has more than 60 products and GIC has more than
180 products. Not only there is a reduction in the premiums of life insurance products
have long overdue since Indian mortality rate has decreased three folds in the last 50
years. There is also scope to increase the yield on life insurance policies (presently 6%)
with proper risk management in place.
It is been debated that insurance business does not produce profit in the first five years
cross subsidization is a feature of Indian market. Even the first portfolio vote that is
considered profitable, cross subsidizes the other departments. Tariff reduction is likely to
reduce profits, further insurers have to institute proper claims management progress in
order to extract efficiencies. At present life insurance business in the country is taxed at
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12.5% of the profit in financial year. The government is soon to present a new model of
taxing life insurance companies at international rates.
New entrants should be well advised to look ahead to the stage where brand strength will
be a competitive advantage and sketch their alliances accordingly. In fact, we believe that
alliance related to distribution rather than to products and technology will prove most
valuable.
The stages where brand strength will be competitive advantage and sketch their world
accordingly. In fact we believe that alliance related to distribution rather than to produce
or technology will prove most valuable in the long run.
Banks and financial companies will emerge, as attractive distribution channel for this
insurance trend will be led by two factors, which already apply in other world markets.
First Banking food insurance, fund management and other financial services companies
are being to increase their profitability and provide maximum value to their customers.
Therefore, they are themselves looking for a range of products to distribute.
In other market notably Europe; this has resulted in bank assurance. Bank entering into
the insurance business in India to bank hope to maximize expensive existing network by
selling a range of products more of a loss alliance between insurance and bank than a
formal ownership. Some Indian entrants like Aviva, HDFC, Bharti Axa and reliance hope
to ride their existing network and customer bases.
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1.2 PROFILE OF THE ORGANIZATION
Aviva is UK’s largest and the world’s fifth largest insurance Group. It is one of the
leading providers of life and pensions products to Europe and has substantial businesses
elsewhere around the world. With a history dating back to 1696, Aviva has a 35 million-
customer base worldwide. It has more than £332 billion of assets under management.
In India, Aviva has a long history dating back to 1834. At the time of nationalisation it
was the largest foreign insurer in India in terms of the compensation paid by the
Government of India. Aviva was also the first foreign insurance company in India to set
up its representative office in 1995.
In India, Aviva has a joint venture with Dabur, one of India's oldest, and largest Group of
companies. A professionally managed company, Dabur is the country's leading producer
of traditional healthcare products.
In accordance with the government regulations Aviva holds a 26 per cent stake in the
joint venture and the Dabur group holds the balance 74 per cent share.
With a strong sales force of over 12,000 Financial Planning Advisers (FPAs), Aviva has
initiated an innovative and differentiated sales approach to the business. Through the
“Financial Health Check” (FHC) Aviva’s sales force has been able to establish its
credibility in the market. The FHC is a free service administered by the FPAs for a need-
based analysis of the customer’s long-term savings and insurance needs. Depending on
the life stage and earnings of the customer, the FHC assesses and recommends the right
insurance product for them.
Aviva pioneered the concept of Bancassurance in India, and has leveraged its global
expertise in Bancassurance successfully in India. Currently, Aviva has Bancassurance tie-
ups with ABN Amro Bank, American Express Bank, Canara Bank, Centurion Bank of
Punjab, The Lakshmi Vilas Bank Ltd. and Punjab & Sind Bank, 15 Co-operative Banks
in Gujarat, Rajasthan, Jammu & Kashmir, Bihar, West Bengal and Maharashtra and one
regional Bank in Sikkim.
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When Aviva entered the market, most companies were offering traditional life products.
Aviva started by offering the more modern Unit Linked and Unitised With Profit
products to the customers, creating a unique differentiation. Aviva’s products have been
designed in a manner to provide customers flexibility, transparency and value for money.
It has been among the first companies to introduce the more modern Unit Linked
Products in the market. Its products include: whole life (Life Long), endowment (Life
Saver, Easy Life Plus), and child policy (Young Achiever) single premium (Life Bond
and Life Bond Plus), Pension (Pension Plus), Term (Life Shield), fixed term protection
plan (Freedom Life Plan) and a tax efficient investment plan with limited premium
payment term (LifeBond5). Aviva products are modern and contemporary unitised
products that offer unique customer benefits like flexibility to chose cover levels,
indexation and partial withdrawals.
Aviva’s Fund management operation is one of its key differentiators. Operating from
Mumbai, Aviva has an experienced team of fund managers and the range of fund options
includes Unitised With-Profits Fund and four Unit Linked funds: - Protector Fund,
Secure Fund, Balanced Fund and Growth Fund.
Aviva has 112 Branches in India (including rural branches) supporting its distribution
network. Through its Bancassurance partner locations, Aviva products are available
in 378 towns and cities across India.
Aviva is also keen to reach out to the underprivileged that have not had access to
insurance so far. Through its association with Basix (a micro financial institution) and
other NGOs, it has been able to reach the weaker sections of the society and provide life
insurance to them.
For three consecutive years in 2005, 2006 and 2007, Aviva has had relatively high scores
on the parameters of Credibility, Respect, Fairness, Pride and Camaraderie in the survey
administered by Grow Talent Company Ltd. along with Great Places to Work® Institute,
Inc. and Business World magazine.
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Source : avivaindia.com
WHO IS AVIVA
DABUR
A professionally managed company, it is the country's leading producer of Founded in
1884, Dabur is one of India's oldest and largest group of companies with consolidated
annual turnover in excess of Rs 1,899 crores. Traditional healthcare products.
AVIVA
Aviva is UK’s largest and the world’s fifth largest insurance Group. It is one of the
leading providers of life and pensions products to Europe and has substantial businesses
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elsewhere around the world. With a history dating back to 1696, Aviva has a 35 million-
customer base worldwide. It has more than £332 billion of assets under management.
VISION
Aviva - where exceeding expectations through innovative solutions is "the" way of life
This is the compelling vision that Aviva India has created through the active contribution
of its employees. These lines not only define the way we live and work but also serve as a
reminder to deliver the best to our customers, shareholders, colleagues, partners &
employees at all times.
Embedded in this vision are the core values of Integrity, Customer centricity, Passion for
winning, Innovation and Empowered team that we have collectively defined and
committed to working towards.
PARTNERS
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Aviva is committed to helping our customers get 'Kal par Control' and make the most out
of their lives. It is the constant endeavour to ensure that our customers have easy access
to Aviva products and services at all times.
Aviva has pioneered bancassurance in the country through its tie-ups with 22 leading
private and nationalised Banks in the country. Aviva also focuses on bancassurance
worldwide and has a proven track record of successful bancassurance relationships. It has
40 major partnerships with leading banks across the globe. Aviva is a leading bancassurer
in countries such as France, Italy, Spain, Australia and New Zealand.
ABN AMRO Bank
ABN AMRO is a prominent international bank with European roots and a clear focus on
consumer and commercial banking gaining a competitive edge on the chosen markets and
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client segments. ABN AMRO Bank (India) ventured into the Indian market in 1920
primarily to finance the diamond trading business and evolved by mid 1990’s into a
fastest growing retail bank and a well-respected wholesale bank.
The Bank is recognized as one of the most successful consumer banking outfits in the
county, known for its innovation and aggression. ABN India consumer banking
pioneered the distribution of third party financial products like mutual funds, bonds and
life insurance.
Aviva's relationship with ABN India commenced in June 2002 under which the bank
introduces its customers to Aviva for insurance and provides access to its affluent
customer base across the country through its operations in 21 branches at 14 locations.
American Express Bank
American Express Company is a diversified worldwide travel and financial services
company founded in 1850. It is the world’s largest single card issuer, based on purchase
volume generated of nearly 55 million cards worldwide. Present in India since 1921,
American Express provides high quality travel related and financial services in India.
Aviva Life Insurance entered into a strategic alliance with American Express for
distribution of Life Insurance in June 2002 to offer top-of the line saving-cum-protection
plans to Amex bank and card customers.
Aviva offers tailor-made investment solutions to the high net worth clients of the Wealth
Management channel. The retail card segment is being tapped through outbound calling
to the Amex cardholders. The American Express Inbound call center also pitches Aviva
products to its callers.
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The Lakshmi Vilas Bank Ltd
The Lakshmi Vilas Bank Ltd, based out of Karur, is among the top private banks in India.
It has 221 branches with a customer base of 1.2 million, across 10 states. Currently Aviva
products are sold across 204 branches of LVB.
Canara Bank
Canara Bank is one of the largest retail banks in India with 2,513 branches spread across
25 States and 4 Union Territories. The customer base of Canara Bank exceeds 27 million.
With a net profit of INR 1110 Crores, deposits of over INR 96,908 Crores, 47389
employees for the year ending Mar 2005, Canara Bank is truly a Bank to be reckoned
with for the sheer magnitude of coverage it offers its clients. Canara Bank has tied up
with Aviva as a Corporate Agent for its Life Insurance Products. Aviva products are
currently offered in 1030 Canara Bank branches in 103 Cities.
Punjab & Sind Bank
Punjab & Sind Bank was established in the year 1908. Based on the principles of social
commitment to the people, help the farmers, and the weaker sections of the society to
raise their standard of living and play a significant role in the development of the country.
Even after 96 years of its inception, Punjab & Sind Bank stands committed to honor the
high ideals of its founding fathers. Punjab and Sindh Bank has a network of 759
branches and 132 extension counters all over the country with close to 9,765 employees.
42 per cent of its branches are in the rural and semi urban areas.
In line with spirit of liberalisation the Bank has laid special emphasis on International
banking, Hire purchase, Leasing, Tele-banking and Credit card facilities. The bank has
also started their Rural Development Division, High
Tech Agricultural Branches, Specialised Locker Branches, Industrial Finance and SSI
branches, besides Housing Finance Branch for the convenience of its customers.
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Centurion Bank of Punjab
Centurion Bank of Punjab is a new generation private sector bank offering a wide
spectrum of retail and corporate banking products and services. It holds leadership
positions in retail two-wheeler loans and commercial vehicle loans. It has been among the
earliest banks to offer a technology-enabled customer interface that provides easy access
and superior customer service.
RBI has approved the merger between Centurion Bank and Bank of Punjab effective
from October 1st, 2005. The merged entity, named Centurion Bank of Punjab, has a
strong nationwide franchise of 241 branches and extension counters and 389 ATMs. With
strengths in the retail, SME and agriculture businesses the bank is well poised to capture
the opportunities that exist in the Indian market. The combined bank’s 3,500 employees
will continue to provide support and an enhanced banking experience to our customers,
as part of a bigger, stronger bank. “Aviva’s key strength is its fund management
capabilities with an experience of 30 years in money management.”
EQUITY
The much-awaited correction finally materialised in the quarter ended June 2006. The
BSE Sensex, which peaked at 12612 levels on 10th May 2006, has corrected to around
10000 levels. After three years of sustained Bull Run, the recent correction has been a
timely reminder that the markets, in the short term, may see downsides too. Compared to
the rise in the market, the downtrend has not been very large though it has been quicker
than expectations. Even post this 20% or so correction from its peak, the Sensex is up
12.9% year to date. This much-needed correction has weeded out some of the euphoria
and the focus on value is back. Does this correction reflect any change in the key
fundamentals of India? We do not think so. The three-year rally was in the first place due
to appreciation of India’s sustainable growth story. The second reason was an
improvement in the global liquidity as investor’s appetite for risk iJhansieased. The India
growth story remains intact and the GDP growth in the last few quarters is an evidence of
this. We expect GDP to grow by over 7% on a sustainable basis and hence India would
36
continue to be an attractive investment destination. The major reason for the correction
has been liquidity moving out of the markets. This has been caused by fall in the
commodity prices from their peak, rising global interest rates and high crude prices
causing worries about inflation and a global meltdown. With the tightening of global
liquidity and reduced risk appetite of investors, there have been outflows from emerging
markets including India. Secondly, valuations in India were among the highest in
emerging markets and hence witnessed a greater compression. One of the major fears
globally is that of a slowing economy in the US and China. India is highly resilient to
global meltdowns as private consumption accounts for 62% of our GDP and exports
account for only 12% of GDP. With a favourable demographic profile- iJhansieasing
working population and improved disposable income in the hands of the consumer, this
resilience will only improve. This coupled with superior growth and demographics will
drive flows back to India in the long term. In the short term, the markets could continue
to witness volatility as the direction would be determined by global liquidity, progress of
monsoons and the quarterly results for June 2006. We believe, for the long-term investor,
this correction would provide a good opportunity to participate in the India growth story.
However, expectations of returns from equity should be moderate with stock returns
tracking earnings growth.
FIXED INCOME
Is virtuous cycle turning vicious? Inflation has touched one year high of 5.44%, and INR
has touched 2 year low of 46.04. Aligning with these movements, yield on benchmark 10
year Government Bond also went up to a four year high of 8.10%. The latest balance of
payments numbers for 2005-06 show an overall balance of $15 bn, helped by a less-than-
expected deficit on the current account ($10.6 bn). This was essentially due to strong
invisibles (private remittance and net software exports) providing cover for a trade
deficit, which was itself moderated by a strong 28% y-o-y growth in exports. Net inflows
on the capital account stood at $24.7 bn with $5.7 bn coming from net FDI and $12.5 bn
being accounted for by portfolio inflows. Though headline inflation recently has picked
up with prices of food and non food articles in the ‘primary goods’ category rising, the
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government has taken short-term measures in the form of liberalizing imports of wheat
and sugar and banning exports of pulses in order to ease the supply situation. Core
inflation, that is, excluding the more volatile primary and fuel categories, has picked up a
bit in comparison to last year. However it is expected to remain in a manageable range.
RBI seems committed to containing inflation and would thus act accordingly. Recently,
RBI chose to iJhansiease rates to manage inflationary expectations and in response to
various central banks hiking rates globally. This has led to a few banks raising lending
rates in addition to getting reflected in the money and bond markets. GDP growth for
2005-06 came in at a better than expected 8.4%, propped up by improved agriculture
performance. For 2006-07 also, despite inflationary pressures, the GDP is expected to
grow at over 7%. Going forward, monetary tightness will weigh on the interest rate
outlook and it is expected to remain firm.
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1.3 PROBLEMS OF ORGANIZATION
To determine customers level of satisfaction aspire plans with the quality of their
transaction with Aviva Life Insurance.
The biggest challenge faced by the Government today is that of a regulator with the
prospect of about 30 or 40 players, each represented by thousands of agents, brokers and
intermediaries. To evolve a free and fair method of assessing the companies, to ensure
fair play between the competitors and to safeguard the interests of the largely uninformed
customers are the main tasks ahead. The other and equally serious aspect is to ensure that
the vast amounts collected by the insurance and pension funds are utilised for the welfare
of the people. Though the Government itself would not be the guarantor of the policy
monies, nevertheless, it is accountable through its regulatory mechanism, to put in place
prudential norms of investment and accounting, revenue recognition, fair valuation of
assets and liabilities, determining necessary margins towards any contingencies and
proper reserves for shrinkage of investments will have to be made. Nevertheless, care has
to be taken to see that there is not too much of control and regulation. A certain degree of
autonomy in the functioning of insurance companies has to be allowed so that they get
necessary freedom and space to perform and excel. The IRDA, along with the advisory
committee constituted recently, is eminently qualified to undertake these tasks. In
addition, a proposal has also been mooted to constitute a federation of insurance
companies analogous to the Indian Banks’ Association. Such an institution will provide
guiding principles, lay down a code of insurance ethics and generally act as a facilitator
for both the life and non-life industry.
As for the existing player, the public sector giant, the Life Insurance Corporation of
India, the challenge is one of sustaining the huge growths it has shown in the recent
times. It has to face competition for the first time in its history, particularly in the urban
centers. It has to manage its huge operations more efficiently than at any other time in the
past. It has to think of equipping its personnel (staff and agents) to face competitors and it
may have to think of diversifying its activities to achieve economies in some areas.
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As far as the prospective entrants are concerned, the greatest challenge is to establish
their presence in the minds of the public. Insurance, particularly life insurance, it is said,
is never bought but sold. To convince a large population, which is comparatively not well
informed about the intangible benefits of life insurance is indeed an onerous task. On top
of that, to establish the brand equity of a new name in a new field is quite a challenge.
The second most important challenge facing a new entrant is that of setting up
infrastructure and to reach out to as many areas as possible, since life insurance is based
on probability and the wider the spread, the greater are the chances of success in
maintaining the expense ratios at a reasonable level.
Modern life perhaps offers challenges that will be common to all the above.
Improvements in health and longevity, the recent breakthroughs in the mapping of the
human genome and the frequent changes in the economy may have far-reaching effects
on life and health insurance. Devising products that match the changing needs of the
people and managing the funds in a volatile scenario are two problems that will have to
be tackled by every player in the days to come.
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1.4 COMPETITION INFORMATION
In INDIA there are a total of 14 Life Insurance Companies operating in India including
the mammoth LIC. Listed below is the list of operators
1. Life Insurance Company (LIC)
2. Birla Sun-Life Insurance Company Limited
3. Allianz Bajaj Life Insurance Company Limited
4. HDFC Standard Life Insurance Company Limited
5. ICICI Prudential Life Insurance Company Limited
6. ING Vysya Life Insurance Company Limited
7. Max New York Life Insurance Company Limited
8. MetLife Insurance Company Limited
9. OM Kotak Mahindra Life Insurance Company Limited
10. SBI Life Insurance Company Limited
11. TATA AIG Life Insurance Company Limited
12. Reliance Life Insurance Company Limited
13. SAHARA Life Insurance Company Limited
Life Insurance Company (LIC)
LIC had a variety of insurance plans to cater to various categories of people and their
diverse needs. The company offered life insurance and group insurance. It also provided
social security schemes and pension schemes. Each of its business products offered a
variety of different plans to suit different customers and situations. Investment in LIC
was considered by a majority of its customers to be reliable and secure. Housing loans
were granted through its subsidiary and LIC sold its market savings and investment
41
products through its mutual fund subsidiary, LIC Mutual Fund Ltd. To serve its 140
million policyholders (2001 end), the insurance giant had 1.25 lakh employees and 6.51
lakh agents across the country.
Birla Sun Life Insurance
Birla Sun Life Insurance Company Limited is a joint venture between Aditya Birla Group
and Sun Life Financial of Canada. Aditya Birla Group is an Indian multinational
conglomerate with presence in India, Thailand, Indonesia, Malaysia, Philippines, Egypt,
Canada, Australia and China.
Sun Life Assurance, Sun Life Financial's primary insurance business, is one of the
leading insurance companies of the world and ranks amongst the largest international
financial services organizations in the world. The Group has presence in several countries
such as Canada, United States, Philippines, Japan, Indonesia, India and Bermuda.
Bajaj Allianz General Insurance Company Limited
Bajaj Allianz General Insurance Company Limited is a joint venture between Bajaj Auto
Limited and Allianz AG of Germany. Both enjoy a reputation of expertise, stability and
strength.
Bajaj Allianz General Insurance received the Insurance Regulatory and Development
Authority (IRDA) certificate of Registration (R3) on May 2nd, 2001 to conduct General
Insurance business (including Health Insurance business) in India. The Company has an
authorized and paid up capital of Rs 110 crores. Bajaj Auto holds 74% and the remaining
26% is held by Allianz, AG, Germany.
In its first year of operations, the company has acquired the No. 1 status among the
private non-life insurers. As on 31st March 2003, Bajaj Allianz General Insurance
maintained its leadership position by garnering a premium income of Rs.300 Crores.
Bajaj Allianz also became one of the few companies to make a profit in its first full year
of operations. Bajaj Allianz made a profit after tax of Rs.9.6 crores.
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HDFC Standard Life Insurance
HDFC Standard Life Insurance Company Ltd. is one of India’s leading private life
insurance companies, which offers a range of individual and group insurance solutions. It
is a joint venture between Housing Development Finance Corporation Limited (HDFC
Ltd.), India’s leading housing finance institution and one of the subsidiaries of Standard
Life plc, leading providers of financial services in the United Kingdom. Both the
promoters are well known for their ethical dealings and financial strength and are thus
committed to being a long-term player in the life insurance industry – all important
factors to consider when choosing your insurer
ING Vysya Life Insurance
ING Vysya Life Insurance Company Limited is a joint venture between Vysya Bank and
ING Group of Holland, the world's 4th largest financial services group, with presence
across 50 countries, and a heritage of over 150 years.
ING Vysya Life Insurance Company Private Limited entered the private life insurance
industry in India in September 2001. With in a short span of time ING Vysya Life
Insurance has registered an impressive growth. The company currently has over 10,000
active advisors working from 75 branches (in 30 cities) across the country and over 2300
employees.
ING Vysya Life has launched "conquering life critical illness plan", a total protection
plan combining a term life cover and a unique critical illness benefit. It plan covers the
basic need for protection and also provides for cover against 10 major critical illnesses.
Max New York Life Insurance
Max New York Life Insurance Company Limited is a joint venture between Max India
Limited, a multi-business corporate, and New York Life International, a global expert in
life insurance.
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New York Life is a Fortune 100 company that has over 160 years of experience in the life
insurance business. Max India Limited is a multi-business corporate dealing in Clinical
Research, IT and Telecom Services, and Specialty Plastic Products businesses.
Max New York Life Insurance started its operations in India in 2000. It is the first life
insurance company in India to be awarded the IS0 9001:2000 certifications. Max New
York offers customized products tailored to suit individual's needs. With its various
Products and Riders, there are more than 400 product combinations to choose from.
Today, Max New York Life Insurance has a network of 57 offices spread over 37 cities all
over India.
MetLife India Insurance
MetLife India Insurance Co. Pvt Ltd is a joint venture between MetLife Group and its
Indian partners. The Indian partners include J&K Bank, Dhanalakshmi Bank, Karnataka
Bank, Karvy Consultants, Geojit Securities, Way2Wealth, and Mini Muthoothu.
Met Life Group has presence in America and Asia and has an experience of over 137
years in providing financial services. The MetLife companies are the number one life
insurer in the U.S. with approximately US $2.8 trillion of life insurance in force. MetLife
serves 88 of the top one hundred FORTUNE 500 companies. MetLife entered Indian
insurance sector in 2001.
Kotak Mahindra Old Mutual Life Insurance Limited
Kotak Mahindra Old Mutual Life Insurance Ltd. is a joint venture between Kotak
Mahindra Bank Ltd. (KMBL), and Old Mutual plc. Kotak Mahindra is one of India's
leading financial institutions and offers a range of financial services such as commercial
banking, stock broking, mutual funds, life insurance, and investment banking.
Old Mutual was established more than 150 years ago and offers a diverse range of
financial services in South Africa, the United States and the United Kingdom. The
company is listed on the London Stock Exchange with a market capitalization and has its
headquarters in London.
44
OM Kotak Mahindra Life has launched an investment-cum-protection plan - the Kotak
Safe Investment Plan -- that offers safety of capital while permitting the policyholder to
benefit from investment opportunities in the equity, debt and money markets. This unit-
linked insurance plan is unique in that the various funds give the policyholder access to
growth markets while the plan guarantees the sum assured – on maturity or death —
regardless of the performance of the funds.
SBI Life Insurance:
With SBI Life, we can take care of such happy and unhappy surprises of life; it makes
this a bit easier, so that there is no worry about your children's education, or your family's
future. Whether you are looking for a safe investment vehicle with good returns or life
cover with regular returns in the future, all it needs is one small action on your part.
As the tag line says for SBI “With SBI Life, you're sure”.
Tata AIG Life Insurance
Tata AIG Life Insurance Company Limited (Tata AIG Life) is a joint venture company,
formed by the Tata Group and
American International Group, Inc. (AIG). Tata AIG Life combines the Tata Group’s
pre-eminent leadership position in India and AIG’s global presence as the world’s leading
international insurance and financial services organization. The Tata Group holds 74 per
cent stake in the insurance venture with AIG holding the balance 26 percent. Tata AIG
Life provides insurance solutions to individuals and corporates.
Reliance Life Insurance
Reliance Life Insurance Company Limited is a part of Reliance Capital Ltd. of the
Reliance - Anil Dhirubhai Ambani Group. The company acquired 100 per cent
shareholding in AMP Sanmar Life Insurance Company in August 2005. Taking over AMP
Sanmar Life provided Reliance Life Insurance a readymade infrastructure and a portfolio.
45
AMP Sanmar Life Insurance was a joint venture between AMP, Australia and the Sanmar
Group. Headquartered in Chennai, AMP Sanmar had over 90 offices across the country,
9,000 agents, and more than 900 employees.
Sahara India Life Insurance Company Ltd.
First Wholly Indian Life Insurance Company in the Private Sector
With Life Insurance Penetration in India at just about 22% of the Insurable population
and premium income of 2% of GDP, the group sees it as a very high growth sector of
Indian economy. Sahara India Life Insurance Company Ltd. (SILICL) is today the first
wholly Indian-owned Life Insurance Company in the private sector. We launched our
operations on 30 October 2004 after being granted license to operate as a life insurer in
India by Insurance Regulatory and Development Authority on 6 February 2004 .
46
1.5 SWOT ANALYSIS
STRENGTHS
1. Aviva Life offers a wide range of insurance policies covering all types of income
groups.
2. The organization offers maximum number of riders / Add On benefits along with
the insurance policies
3. Aviva offers triple cover in case of accidental death in mass surface public
transport.
4. Only Aviva Life offers major surgical benefit rider.
5. Under savings plan or money back, Aviva Life is the only company to offer 120
% as surgical benefit.
6. In case of money back or savings plan, liquidity is maximized at Aviva Life at an
interval of 3 years for 15 years term.
7. Aviva offers accidental death, disability benefit and waiver of premium into one
rider.
8. Most competitive premium rates of base plan and riders are that of Aviva Life.
9. Under Term Assurance, Aviva Life has no maximum limit on Sum Assured
which is not offered by any other existing insurer.
10. Under single premium policies, in case of death, Aviva Life offers a death benefit
of 25 % addition to the face amount.
47
WEAKNESS
1. Aviva Life does not offer a critical illness rider, i.e. the policy continues even
after claim to the full face amount. This rider is only offered by HDFC Standard
Life Insurance Company.
2. Only Max New York Life offers COMA, Multiple Sclerosis in critical illness
rider.
3. LIC charges Re. 1 per thousand for accidental death, disability benefit and waiver
of premium rider, but Aviva Life charges Rs. 1.35 per thousand for the same.
4. Aviva Life does not offer competitive group insurance policies.
5. Aviva does not offer minimum S.A. of Rs. 50,000 as offered by LIC in case of
Term Assurance.
OPPORTUNITIES
1. Change in business cycles contributes as an opportunity for the company because
it offers various policies suitable in different economic scenarios.
2. Large size of untapped population is also an opportunity for Aviva Life.
3. Change in life style and perception in favor of Life insurance is another
opportunity for Aviva Life.
4. Increased awareness among people regarding benefits of life insurance also
contributes to the opportunities of the company.
5. Continuous improvement in technology is an opportunity for the organization.
6. Lower inflation rate is also an opportunity for Aviva Life.
48
THREATS
1. Reducing interest rates for government securities also poses a threat to the
organization.
2. Competition posed by the existing life insurers and new entrants is also a threat to
the company.
3. A fast technological obsolescence is another threat posed by the organization.
49
CHAPTER 2
RESEARCH AND
METHODOLOGY
50
2.1 SIGNIFICANCE
(i) Significance of the Industry
The other reasons for opening up the insurance sector to the private
insurers are as under:
To provide better Insurance coverage to Indian citizens.
To augment the flow of long-term financial resources to finance the growth of
Infrastructure.
The Public Sector Insurance Companies had not succeeded in extending the
insurance cover to all the needy people of the country due to various reasons.
Hence this onerous responsibility now has been entrusted to the private insurers.
1. Penetration of Insurance: LIC and GIC could not ensure very fast growth of
insurance in India even in a long period extending over four decades. Hence
the penetration of insurance is very low in India.
(ii) Significance for the Researcher
The primary study will be targeted towards the marketers. The study will also include
semi-structured interview with marketing managers of various Insurance companies who
are successfully selling Life Insurance Policies to Indian Consumers.
51
2.2 MANAGERIAL USEFULNESS OF THE STUDY
2.3 RESEARCH OBJECTIVE
1. To know the consumer feedback.
2. To know the marketing strategies adopted to promote these products. To make the
private players responsible to the investors and not to the government. To increase
the competition in this sector so that the common people has the advantage of
enjoying quality services at a reasonable cost
3. Insurance has a far reaching effect in synchronizing between the various service
sectors. So if this sector can grow, the prospects of the various other service
sector remains to be promising.
4. No study is generally full proof this report suffers from certain limitation with
respect to information and analysis
2.4 SCOPE OF THE STUDY
The research process consists of series of closely related activities. At times, the first step
determines the nature to the last step to be undertaken why a research study has been
undertaken, how the research problem has been defined, in what way and why the
hypothesis has been formulated, what data has been collected and what particular
methods has been adopted and a host of similar other questions are usually answered
when we talk of research methodology concerning a research problems or study
The reason for the above are related to:
1) It was difficult to get appointment from the person whom I know because of their
busy schedule.
52
2) Since the project had to be submitted within seven weeks and within this time
period it’s very difficult to convert.
Since the study involved a through analysis of the insurance market and relative study
of various players offering the similar products and that of similar, it was required a
dedicated labor in term of both time and effort. Since the curriculum did not permit
more time, the study had to be very limited.
2.5 RESEARCH AND METHODOLOGY
RESEARCH DESIGN:
Research Design is the conceptual structure within which research is conducted. It
constitutes the blueprint for collection, measurement and analysis of data. The design
used for carrying out this research is Descriptive.
DATA SOURCE:
In this research the source of data collection is:
Primary data
Secondary data
The sources of collection of secondary data are:
Questionnaire
Books
Websites
Magazine
Brochure
. Research Design
(i) Probability / Non- probability
53
The sampling design for this study was non- probability sampling.
Under this design, the method of sampling used was quota
sampling. In quota sampling, interviewers are simply given quotas
to be filled from different strata’s, with some restrictions on how
they are to be filled.
(ii) Exploratory/ descriptive/ experimental Research etc.
The adopted research methodology is based upon the collected primary data
through which the most recent and accurate piece of first hand information could
be collected. Secondary data is used to support primary data wherever needed.
54
Sampling Methodology
(i) Sampling unit
Sample design: It refers to the technique or the procedure adopted in selecting
the item from the sample I have used both random.
(ii) Sampling Technique
It is very difficult to collect information from every member of a population .As
time and costs are the major limitation that the researcher faces.
(iii) Sampling Area
Area of sampling: Survey was conducted in the different location of Delhi
(iv) Sampling Size
The size of the sample was around 100 people considering the time constraint.
METHODOLOGY
Research Design:
Research Design is the conceptual structure within which research is conducted. It
constitutes the blueprint for collection, measurement and analysis of data.
DATA SOURCE:
In this research the source of data collection is:
Primary data
Secondary data
Primary Data: which was collected through the means of the Questionnaires and
one-to-one Interaction of the researcher and respondent.
55
Sources:
1. Data collection method: Questionnaire
2. Location: North Delhi
3. Research duration: 2 months
4. Sample Size: 100 people
5. The Respondents: The Associate Sales Manager, Sales Managers, Associate
Partner and Branch Head of Aviva Life Insurance
Secondary Data: secondary data is a kind of data which have already being
collected for purpose other than the problem at hand.
Sources:
Websites
Magazine
Brochure
Books on Insurance marketing
Yellow pages
56
CHAPTER 3
CONCEPTUAL
DISCUSSION
57
CONCEPTUAL DISCUSSION
SELLING STRATEGIES OF AVIVA LIFE INSURANCE
Aviva Life Insurance mission, vision and values were all directed towards becoming the
most admired and preferred Life insurance Company in India. They also aimed to be the
first choice for employees as well as agents. In 2000, Aviva realized that to compete
against LIC, the only large player in the life insurance segment, it had to build a huge
network and implement a product differentiation strategy to gain customers.
There was also an opportunity in the Indian markets as penetration rates were only 1.3%
and insurance policies were mainly considered as a tax-saving investment, rather than
risk coverage. The leading player (LIC) concentrated only on selling and very little
qualitative advice was offered to the customer buying its insurance policies. This service
gap enabled a customer-oriented player like Aviva to impress the potential customers.
Aviva laid stress on training of agents, as personal relationships were the key to success
in selling insurance. For this purpose, it took special measures to train agent advisors who
were the primary source of distribution. In 2002, it had around 1900 agent advisors who
underwent 152 hours of training before selling as against 100 hours stipulated by IRDA.
These training programs were spread over 2 years for 500 hours and ensured up gradation
of skills and knowledge. The training program covered consumer psychology, the
financial markets, and development of selling skills, discipline and the right attitude in
the agents. These agents were groomed to become financial advisors to customers.
Aviva will also be focusing on internal brand-building, since brand-building has a larger
context in the service sector. Internal employees are all opinion shapers and indirect
brand-builders and brand promise needs to be replicated down the chain at every
customer touch point.
58
To strengthen its distribution system further, in 2003, Aviva adopted alternative
distribution channels viz. franchisee model, rural business, telemarketing, banc assurance
and corporate alliances. It appointed ‘gram sahayaks’ in some rural locales who were
trained to identify and sell specialized insurance products.
There are tapping opinion leaders in the village like schoolteachers, social workers and
chemists, and creating products which suit rural needs," commented Sarkar. The
company tied up with Shoppers' Stop and reached out to customers who held the chain's
"First Citizen" discount card and bought children's clothes more than once a month. Such
customers were tapped for child saving schemes as well.
Aviva created product differentiation by giving “Whole Life policies" that offered
customers the correct balance between protection and savings. They offered for the first
time in India a free-look period i.e., a customer had 15 days period to weigh the various
options offered by Aviva which helped him to take an informed decision. This standard
was adopted by IRDA as the best practice to be emulated by all players in the Indian
insurance market. They were also the first company to sell a policy with riders.
For example, 5-Year Term Renewable and Convertible Policy had two riders attached to
it viz. Personal accident benefit and Dread disease benefit, which could be attached at the
time of purchase of policy or later, subject to certain conditions. Aviva also offered a
specialized rural policy provided term insurance for Rs10,000 for a sum of Rs100, which
was affordable to that particular segment of society.
Aviva offered cash bonus in May 2003 to its Whole Life policyholders, who joined
before February 6, 2002. As a value added service, this bonus could be used in five
different ways: accumulated with the company and earn interest, buy paid up additions to
raise the death benefit of the base policy, offset against future payable premiums, taken in
cash or buy an additional term cover for one year.
In 2003, Aviva realized that it needed a new workflow system, as the existing one was
unable to meet the customer requirements efficiently. Therefore, it tied up with nugent to
supply business process management tools. These technological improvements helped to
59
reduce the turnaround time for customer request by 45%, aided in immediate retrieval of
information, and generated savings on paperwork and telephone costs.
Aviva also fixed benchmarks on claim processing time, processing of complaints and
customer satisfaction and monitored these regularly. All these measures served to
enhance customer service levels in the company.
At the outset, the mission and vision of Aviva clearly defined its objective to be the most
admired and preferred insurance company in India. It then went about doing a SWOT
analysis that formed the basis for its marketing strategy. It had the advantage of variety of
products from New York Life, a leading insurance player in the US, which had to be
introduced with Indian perspective.
The largest threat was LIC, which had a big distribution network. Aviva Prudential also
saw an opportunity in the under-penetrated insurance market where insurance policies are
considered as an investment or tax-saving tool. Using this market analysis it went about
building its distribution network through direct sales personnel called “agent advisors”.
Special attention was given to training them so that they could go beyond selling and
offer professional advice to customers. Aviva leveraged the fact that insurance policies
were mainly treated as tax savers or investment tools.
Therefore, it emphasized on protection against risk in its products and combined savings
with protection creating a differentiated product. These measures coupled with other
product differentiations and customized processes helped it to gain a presence in the
insurance market.
Aviva mainly used the concept of protection against risk to promote its products. It felt
that existing insurance products, although having a money-back offer, did not offer
protection to the customer.
60
The “Whole Life” policies of Aviva, therefore concentrated on a unique combination of
protection and saving that appealed to the customer. Along with this, riders in the form of
supplementary policies served as an additional benefit to the customer.
Another first for Aviva was its cash bonus offer which offered cash back on certain
policies. As a value addition, there were various options wherein this cash could be
invested with the company. Continuing with its innovations, Aviva also offered a free-
look for 15 days, which later became the norm for insurance industry.
With a focused approach to the rural areas, Aviva introduced a rural policy with
minimum investment to suit the pockets of the lower income groups residing in villages.
To make this section of customers understand the benefits of their policies, they adopted
a unique strategy of appointing schoolteachers and social workers as agents, who being
opinion leaders helped convince the villagers about the product.
Other distribution channels like banks and corporate alliances were a means to expand
the customer base of Aviva via customers visiting these places.
The direct selling agents established personal rapport with customers on one-to-one basis,
thereby increasing goodwill and loyalty towards Aviva.
To support their products and distribution, they built a customized business process
system using the web platform to generate quick customer response.
This model also helped them to track complaints and measure customer satisfaction. The
improved productivity and low costs helped to improve Aviva's profits and gave them
increased business.
61
VARIOUS SELLING STRATEGIES ADOPTED BY AVIVA LIFE
ARE DISCUSSED BELOW :
1. BONUS STRATEGY
Bonus is a function of surplus funds available after adjusting for future liabilities and
current assets. This is based on actuarial experience.
Therefore, based on actuarial experience, bonuses will be announced not before three
years of operations.
Aviva offers innovative and immediate (not reversionary) bonus options, which add value
to customers. Bonuses can be received in cash, employed to offset premium, left on
deposit with interest, used to buy additional insurance by way of paid-up additions or
term insurance.
2. RURAL STRATEGY
Aviva recognizes the rural market and social sectors as being distinct, requiring different
selling and product strategies. Therefore, Aviva have designed specific products and
appointed village cooperatives in various districts across India. These village
cooperatives help increase awareness of life insurance.
3. COMMUNICATION STRATEGY
Aviva objective is to build India’s most admired Life Insurance Company. Aviva seeks to
build trust with customers.
Aviva focus on life insurance and experience of over 158 years has helped position us as
life insurance specialists.
The selling strategy is to provide a consistent brand experience across all stakeholders —
customers, shareholders, employees, agents, regulator and the public.
62
The brand experience will be based on positioning of being a trusted life insurance
specialist that can partner the customer for life.
Aviva is also sparing no efforts to increase awareness for the true value of life insurance,
which lies in risk protection.
4 TRONG AGENCY FORCE AND DIFFERENT AGENCY
COMMISION STRUCTURE
Aviva has over 3,000 agents / advisors. Aviva Prudential believe in a quality approach to
business and therefore select and train only the best in class people so that they can
deliver value to the customer.
The company places a lot of emphasis on its selection process, which comprises four
stages — screening, psychometric test, career seminar and final interview.
The agents are given in-house training to ensure optimal control on quality.
Commission is purely a function of the business that they generate. Given approach to
business it will not be unusual to see some agents earn more remuneration than the
managing director of the company.
63
CHAPTER 4
DATA ANALYSIS
64
1. Age of the respondents
PARTICTULARS NO.OF.RESPONDENT PERCENTAGELess than 25 11 11%25 - 35 40 40%
35 - 45 20 20%Above 45 29 29%TOTAL 100 100
0
20
40
60
80
100
Lessthan 25
25 - 35 35 - 45 Above45
TOTAL
Age of the Respondents
NO.OF.RESPONDENT PERCENTAGE
ANALYSIS:
From the survey it was found that amongst 100 respondents
a) 11% of the respondents are less than 25 years old.b) 40% of the respondents are between 25 and 35 years of age.c) 20% of the respondents are between 35 and 45 years of age.d) 29% of the respondents are more than 45 years of age.
65
2. Qualification of the respondents.
PARTICUALR NO.OF.RESPONDENT PERCENTAGEGraduate 52 52%Post Graduate 29 29%Diploma 8 8%Other discipline 11 11%TOTAL 100 100%
0
20
40
60
80
100
NO.OF.RESPONDENT
PERCENTAGE
Qualification of the Respondents
Graduate Post Graduate Diploma
Other discipline TOTAL
ANALYSIS:
From the survey it was found that amongst 100 respondents
a) 52% of the respondents were graduateb) 29% of the respondents were post graduatec) 8% of the respondents were diplomad) 10% of the respondents were other discipline
66
3) Occupation of the respondents
PARTICULARS NO.OF.RESPONDENT PERCENTAGEBusiness man 34 34%Professionals 18 18%Job holders 37 37%Others 11 11%TOTAL 100 100%
0
20
40
60
80
100
NO.OF.RESPONDENT
Occupation of the Respondents
Business man Professionals Job holders
Others TOTAL
ANALYSIS:
From the survey it was found that amongst 100 respondents
a) 34% of the respondents are businessmen.b) 18% of the respondents are professionals.c) 37% of the respondents are job holders.d) 11% of the respondents are background.
67
4) Average annual income of respondents. PARTICULARS NO.OF.RESPONDENT PERCENTAGEUp to 1 lakh 33 33%1 lakh - 3 lakh 43 43%3 lakh - 5 lakh 20 20%5 lakh & above 4 4%TOTAL 100 100%
0
20
40
60
80
100
NO.OF.RESPONDENT
Average annual income of respondents.
Up to 1 lakh
1 lakh - 3 lakh
3 lakh - 5 lakh
5 lakh & above
TOTAL
ANALYSIS:
From the survey it was found that amongst 100 respondents
a) 33% of the respondents have an average annual income up to 1 lakh
b) 43% of the respondents have an average annual income from 1 lakh to 3 lakh
c) 20% of the respondents have an average annual income from 3 lakh to 5 lakh
d) 4% of the respondents have an average annual income above 5 lakh
68
5) Family size of respondents
PARTICULARS NO.OF.RESPONDENT PERCENTAGEBelow 5 members 50 50%5 - 10 members 32 32%Above 10 members 28 28%TOTAL 100 100%
FAMILY SIZE
50%
32%
28%
below 5 members
5- 10 member
above 10 member
ANANLYSIS:
From the survey it was found that amongst 100 respondents
a) 50% of the respondents are below 5 members.b) 32% of the respondents are between 5 to 10 members.c) 28% of the respondents are above 10 members.
69
6) According to life insurance is. PARTICULARS NO.OF.RESPONDENT PERCENTAGERisk Coverage 10 10%Tax Savings 3 3%Good return 4 4%Security 3 3%All the above 80 80%TOTAL 100
0
20
40
60
80
100
NO.OF.RESPONDENT
Life Insurance is
Risk Coverage Tax Savings Good return
Security All the above TOTAL
ANALYSIS:
From the survey it was found that amongst 100 respondents
a) 10% of the respondents say risk coverage.b) 3% of the respondents say tax savings.c) 4% of the respondents say good returns.d) 3% of the respondents say financial security.e) 80% of the respondents say all of the above.
70
7) Awareness of Aviva life insurance
PARTICULARS NO.OF.RESPONDENT PERCENTAGE
Yes 17 17%
No 83 83%
TOTAL 100 100%
0
20
40
60
80
100
NO.OF.RESPONDENT
Awareness of ICICI Pru
Yes No TOTAL
ANALYSIS:
From the survey it was found that amongst 100 respondents
a) 83% of the respondents say that they are aware of ICICI Prudential life insurance co.
b) 17% of the say that they are unaware of ICICI Prudential life insurance co
71
8) Awareness regarding insurance.
PARTICULARS NO.OF.RESPONDENT PERCENTAGE Yes 2 2% No 98 98%TOTAL 100 100%
010203040506070
8090
100
Yes No TOTAL
INSURANCE AWARENESS
NO.OF.RESPONDENT
PERCENTAGE
ANALYSIS:From the survey it was found that amongst 100 respondents
a) 98% of the respondents say that they are aware of insurance.b) Only 2% are unaware of insurance.
72
9) % of respondents who are under different plans of Aviva Prudential life insurance co.
PARTICULARS NO.OF.RESPONDENT PERCENTAGE
Invest gain plan 41 41%Unit gain plan 36 36%Child gain plan 8 8%Whole life plan 15 15%Pension plan No NoTOTAL 100 100%
INSURANCE PLANS OF ICICI PRUDENTIAL
41%
36%
8%
15%
Invest gain plan Unit gain planChild gain planWhole life planPension plan
ANALYSIS:
From the survey it was found that amongst 100 respondents
a) 41% of the respondents are under invest gain planb) 36% of the respondents are under unit gain planc) 8% of the respondents are child gain pland) 15% of the respondents are whole life plan
e) No body under pension plan
73
10) % of respondents benefits of choosing the particular products PARTICULARS NO.OF.RESPONDENT PERCENTAGERisk coverage 60 60%Additional benefit 20 20%Maturity date 12 12%Sum Assured 8 8%TOTAL 100 100%
0
10
2030
4050
6070
80
90100
1 2
Benefits of Particular Products
Risk coverage
Additional benefit
Maturity date
Sum Assured
TOTAL
ANALYSIS:a) 36% of the respondents say that a benefit of choosing the particular
Product is for Safety of life.b) 20% of the respondents say that a benefit of choosing the particular
products is for additional benefit to familyc) 12% of the respondents say that a benefit of choosing the particular
products is for maturity date d) 8% of the respondents say that a benefit of choosing the particular
products is for sum assured
74
11) % of disadvantages in insurance plan PARTICUALRS NO.OF.RESPONDENT PERCENTAGELiquidity 35 35%Lapsation 20 20%Unable to decide premium 19 19%High risk coverage 14 14%Fixed Term 12 12%TOTAL 100 100%
0
20
40
60
80
100
NO.OF.RESPONDENT
Disadvantages in Insurance Plans
Liquidity Lapsation
Unable to decide premium High risk coverage
Fixed Term TOTAL
ANALYSIS:From the survey it was found that amongst 100 respondents
a) 35% of the respondents say that disadvantages in insurance plan are liquidity.
b) 20% of the respondents say that disadvantages in insurance plan are lapsation.
c) 19% of the respondents say that disadvantages in insurance plan is unable decide premium.
d) 14% of the respondents say that disadvantages in insurance plan are high risk coverage at high premium.
e) 12% of the respondents say that disadvantages in insurance plan is fixed term
75
12) % of respondents who want to invest in these different avenues. PARTICUALRS NO.OF.RESPONDENT PERCENTAGERecurring Deposit 40 40%Equity Fund 25 25%Balanced Fund 10 10%Mutual Fund 11 11%Debt Fund 5 5%Cash Fund 9 9%TOTAL 100 100%
INVESTMENT AVENUES
40%
25%
10%
11%
5%9%
R.D
Equity
Balanced fund
Mutual Fund
Debt Fund
Cash Fund
ANALYSIS:
From the survey it was found amongst 100 respondents
a) 40% of respondents say that they want to invest in R.Db) 25% of respondents say that they want to invest in equity c) 10% of respondents say that they want to invest in balanced fundd) 11% of respondents say that they want to invest in mutual funde) 5% of respondents say that they want to invest in debt marketf) 9% of respondents say that they want to invest in cash
76
CHAPTER 5
FINDINGS AND
RECOMMENDATIONS
77
FINDINGS
On an analysis and evaluation of the data collected from the respondents the
following findings were found.
Before establishment of private concerns the share of LIC was 22% hence there is
a wide scope for private concerns to enter in to market.
Total 100 respondents have been approached out of which 75 are the potential
respondents who have shown interest for investment and finance plan
Above 20% of respondents are shown interest for investment and financial plan
About 33.33% of respondents are not interest to give their personal records.
About 12.67% of respondents have already been covered by other insurance
companies.
About 10% of respondents have given invalid records.
About 10% of respondents are newly employed or trainees.
About 10% of respondents interested for investment plan after knowing AVIVA
LIFE INSURANCE products.
78
RECOMMENDATIONS TO COMPANY:
Since Aviva Life Insurance co. ltd is the largest in terms of FDI invested, in terms of
work force, in terms of market share, in terms of no. of customers. All these positive
stands of the company place at the number one position. On second aspect whatever
amount of money Aviva save, can be used to increase the no. of policies, which will
helpful to increase the market share of the company. Since the customers think about the
companies in the industry, when they invest money in the life insurance industry. So it’s
necessary to increase the market share of the company. There are some
recommendations.
Open some more branches in semi urban and rural area.
Aviva Prudential has almost its branches in urban area or metros. So in order to
increase the no. of customer, Aviva should increase the approach towards
potential customers. For that it has to increase the branches in the semi urban
cities like C, D grade cities. And the rural marketing is the best option for Aviva
to increase its base in the market
Improve customer services.
In order to take the advantage of being industry leader in private sector, Aviva has
to improve its customer services. According to my experience in the company, a
good number of customers forget to pay their premium at time so it causes a big
loss to the company. Aviva has already collaborated with the Aviva for its
Bancassurance facility and then can include another feature in it.
Bring some unit linked life insurance plans in the market.
Being a market leader doesn’t ensure the leadership in the future. Since after
increment in FDI from 26% to 49% all player will have the opportunity to capture
the market share. So in order to maintain its position Aviva should Introduce
79
some new market linked insurance plan, which will give a competitive advantage
to the Aviva against its competitors.
Trained the financial advisors more efficiently.
In the changed scenario, more efficient training will be needed, so Aviva should
provide good and efficient training to their financial advisors. Because they are
the one who interact directly with the customers. So good training will give them
the right way to deal with the potential customers.
80
CONCLUSION
81
ANNEXURE
82
QUESTIONNAIRE
1. Name _________________________________
2. Address _________________________________ _________________________________ _________________________________3. Age
a. Less than 25 c. 35-45b. 25 – 35 d. 45 and above
4. Qualification
a. Graduate c. Diplomab. Postgraduate d. Other discipline
5. Occupation
a. Business c. Job holder b. Professional d. Other
6. What is your average annual income?
a. Up to 1 lakhb. 1 lakh to 3 lakhs c. 3 lakhs to 5 lakhsd. 5 lakhs and more
7. Your family sizea.Below 5 members b. 5 – 10 membersc.Above 10 members
8. According to you life insurance is,a.A tax saving planb. A saving scheme with good returnc.A financial security for the familyd. Risk coveragee.All the above
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9. Have you taken any life insurance product of Aviva Life insurance?
YES NO
If yes10. Which are in these?
a. Unit gain plan b. Invest gain planc.Whole life pland. Children plane.Pension planf. Others __________________
11. Are you aware of the benefits in your policy? Yes No
If yes what are they?
Sum assured Additional benefits Maturity date Risk coverage
12. According to you what are the disadvantages in an insurance plan?
Lapsation Liquidity Fixed term Unable to decide your premium Unable to decide the sum assured High risk coverage at high premiums Other disadvantages
13. In which of the following would you like to invest?
Equity fund Debt fund Balanced fund Cash fund Mutual fund Recurring deposits
14. Any suggestion for Aviva Life Insurance ______________________________________________________ ______________________________________________________
Thank you for sparing your valuable time
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BIBLIOGRAPHY
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BIBLIOGRAPHY
INTERNET WEBSITE
www.kampusonline.com
www.google.com
www.wikipedia.org/wiki/Insurance
www.avivaindia.com
www.marketresearch.com
www.policybazaar.com
www.economictimes.indiatimes.com
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