service mkting project report final ok

8/7/2019 service mkting PROJECT REPORT final ok

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CHAPTER 1:

Introduction to Life Insurance Sector in IndiaInsurance in its basic form is defined as A contract between two parties whereby one party

called insurer undertakes in exchange for a fixed sum called premiums, to pay the other party

called insured a fixed amount of money on the happening of a certain event.

Insurance sector in India

The insurance sector in India has come a full circle from being an open competitive market to

nationalization and back to a liberalized market again. Tracing the developments in the Indian

insurance sector reveals the 360-degree turn witnessed over a period of almost two centuries.

Today Insurance Companies in India have grown manifold. The insurance sector in India has

shown immense growth potential. Even today a giant share of Indian population nearly 80% is

not under life insurance coverage, let alone health and non-life insurance policies. This clearly

indicates the potential for insurance companies to grow their market in India. In simple terms it

is a contract between the person who buys Insurance and an Insurance company who sold the

Policy. By entering into contract the Insurance Company agrees to pay the Policy holder or hisfamily members a predetermined sum of money in case of any unfortunate event for a

predetermined fixed sum payable which is in normal term called Insurance Premiums. Insurance

is basically a protection against a financial loss which can arise on the happening of an

unexpected event. Insurance companies collect premiums to provide for this protection. By

paying a very small sum of money a person can safeguard himself and his family financially

from an unfortunate event.

The business of life insurance in India in its existing form started in India in the year 1818 with

the establishment of the Oriental Life Insurance Company in Calcutta.

Some of the important milestones in the life insurance business in India are:


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y 1912: The Indian Life Assurance Companies Act enacted as the first statute to regulate

the life insurance business.

y 1928: The Indian Insurance Companies Act enacted to enable the government to collect

statistical information about both life and non-life insurance businesses.

y 1938: Earlier legislation consolidated and amended to by the Insurance Act with the

objective of protecting the interests of the insuring public.

y 1956: 245 Indian and foreign insurers and provident societies taken over by the central

government and nationalised. LIC formed by an Act of Parliament, viz. LIC Act, 1956,

with a capital contribution of Rs. 5 crore from the Government of India.

The General insurance business in India, on the other hand, can trace its roots to the Triton

Insurance Company Ltd., the first general insurance company established in the year 1850 inCalcutta by the British.

Some of the important milestones in the general insurance business in India are:

y 1907: The Indian Mercantile Insurance Ltd. set up, the first company to transact all

classes of general insurance business.

y 1957: General Insurance Council, a wing of the Insurance Association of India, frames a

code of conduct for ensuring fair conduct and sound business practices.y 1968: The Insurance Act amended to regulate investments and set minimum solvency

margins and the Tariff Advisory Committee set up.

y 1972: The General Insurance Business (Nationalization) Act, 1972 nationalized the

general insurance business in India with effect from 1st January 1973.

y 107 insurers amalgamated and grouped into four companies viz. the National Insurance

Company Ltd., the New India Assurance Company Ltd., the Oriental Insurance Company

Ltd. and the United India Insurance Company Ltd. GIC incorporated as a company.

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 set up with the objective of complementing the reforms

initiated in the financial sector.


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The reforms were 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 recognizing that insurance is an important part of the overall financial system where it was

necessary to address the need for similar reforms. Thereafter many changes have taken place in

the insurance sector. Insurance sector in India was liberalized 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. There is a 26% equity cap for foreign partners in an insurance company.

There is a proposal to increase this limit to 49%. The opening up of the insurance sector has led

to rapid growth of the sector. Presently, there are 16 life insurance companies and 15 non-life

insurance companies in the market. The potential for growth of insurance industry in India is

immense as nearly 80% of Indian population is without life insurance cover while health

insurance and non-life insurance continues to be well below international standards.

Furthermore, over the medium and long term, Indias insurance market will continue to

experience major changes as its operating environment increasingly deregulates. On the one

hand, a mix of new products, new delivery systems and a greater awareness of risk will generate

growth. On the other hand, competition will remain intense as private sector insurers and those

about to enter India seek to win market share from the more established public sector entities.

Financial Ratings of Life Insurance Companies

Financial ratings of life insurance companies analyze the risks that could affect their long-term

survival. Before you make a decision about your life insurance, you should be aware of the

financial ratings of the companies you are considering. If your beneficiary needs to file a claim

many years from now, will your life insurance company be able to pay the claim?

There are several large rating services that analyze life insurance companies' financial strength.

The oldest of these is A.M. Best, established in 1899. Other rating services include Standard

and Poor's and Fitch Ratings. The financial rating services all use different letter grades for their

ratings. A general rule of thumb used by some advisors is to select a company within the top

four ratings. Going any further down the list exposes yourself to unnecessary risk. That's


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because the top-rated companies happen to have the best and most competitive products

anyways.

Following are the few methodologies of rating classification:

A.M. Best

A Best Financial Ratings Strength is an independent opinion, based on a comprehensive

quantitative and qualitative evaluation, of a company's balance sheet strength, operating

performance and business profile. The rating process uses specific methodologies designed to

address the life and health insurance industry. The top four ratings are A++ (Superior), A+

(Superior), A (Excellent), and A- (Excellent).

Standard and Poor's

A Standard and Poor's Insurer Financial Ratings Strength is a current opinion of the financial

security characteristics of an insurance organization with respect to its ability to pay under its

insurance policies and contracts in accordance with their terms. This opinion does not take into

account deductibles, surrender or cancellation penalties, timeliness of payment, nor the

likelihood of the use of a defense such as fraud to deny claims. The top four ratings are AAA

(Extremely Strong), AA (Very Strong), A (Strong), and BBB (Good).

Fitch Ratings

A Fitch Ratings Insurer Financial Ratings Strength (IFS Rating) provides an opinion as to the

financial strength of an insurance organization, and its financial capacity to meet obligations to

policy holders and contract holders on a timely basis. The IFS Rating does not address the

willingness of an insurance organization's management to honor its company's obligations, nor

does the IFS Rating address the quality of an insurer's claims handling services. The top four

ratings are AAA (Exceptionally Strong), AA+ (Very Strong), AA (Very Strong), and AA-

(Very Strong).


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Life Insurance Financial Analysis

Life insurance is a financial contract that protects yourfamily from your debts if you die

prematurely. The insurer pays a death benefit to your family that may be used to pay for your

funeral costs or to pay for your child's college education or to provide an income for your

spouse. Make sure you understand how much you need before you make any purchasing

decisions.

Types

1. There are two types of life insurance. Term life insurance provides death benefits in exchange for

premium payments. Term life insurance lasts for a set number of years. When the term is up, the

policy terminates. Permanent life insurance is designed to last for your whole life. The policy

may or may not build cash value. A cash value is a cash reserve that builds up against the death

benefit. The cash value represents a savings that you may use during your lifetime for any

purpose.

Purpose

2. Your life insurance policy choice will be determined by your purpose for buying the policy. If

you need a short-term contract to cover a short-term loan, then a term life policy is ideal for you.

If you think you will need a policy that will last for your entire life, then you'll want a permanent

life insurance policy.

Benefits

3. Determine what benefits you want to get out of the policy. The benefits of a policy may include

various riders (modifications to the original policy) that allow you to access the cash value of

your policy in the early years of the policy, or that allow you to access the death benefit if you

need nursing home care. Some riders pay for your policy premiums if you become disabled or

even unemployed.

Size4. The size of the policy death benefit is determined largely by your financial liabilities, or how

much you want to cover. Add up all of your debts and other financial liabilities (i.e., a future

income for your spouse), and this will determine your death benefit needs. If your life insurance

policy death benefit increases every year, then you won't need to worry about adjusting the


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policy for inflation. If the policy death benefit does not increase every year, then you will need to

adjust the death benefit for inflation. To do this, you need to adjust the death benefit upward by

the rate of inflation you think will occur over the life of the policy.


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CHAPTER 2:

INTRODUCTION TO TOP 10 COMPANIES

1. LIC (Life Insurance Corporation of India) still remains the largest life insurance company

accounting for 64% market share. Its share, however, has dropped from 74% a year

before, mainly owing to entry of private players with innovative products and better sales

force.

2. ICICI Prudential Life Insurance Co Ltd is the biggest private life insurance company

in India. It experienced growth of 58% in new business premium, accounting for increase

in market share to 8.93% in 2009-10 from 6.97% in 2008-09.

3.

Bajaj Allianz Life Insurance Co Ltd has reported a growth of 52% and its market sharewent up to 6.98% in 2009-10 form 5.66% in 2008-09. The company ranked second (after

LIC) in number of policies sold in 2009-10, with total market share of 7.36%.

4. SBI Life Insurance Co Ltd in terms of new number of policies sold, the company ranked

6th in 2009-10. New premium collection for the company was Rs 4,792.66 crore in 2009-

10, an increase of 87% over last year.

5. Reliance Life Insurance Co Ltd Total collected was Rs 2,792.76 crore and its market

share went up to 2.96% from 1.23% a year back. It now ranks 5th in new business

premium and 4th in number of new policies sold in 2009-10.

6. HDFC Standard Life Insurance Co Ltd with an income of Rs 2,680 crore in FY2009-10,

registering a year-on-year growth of 64%. Its market share is 2.88% and it ranks 6th

among the insurance companies and 5th amongst the private players.

7. Birla Sun Life Insurance Co Ltd market share of the company increased from 1.22% to

2.11% in 2009-10. The company moved to the 7th position in 2009-10 from 8th a year

before, pushing down Max New York Life insurance company.

8. Max New York Life Insurance Co Ltd has reported growth of 73% in 2009-10. Total new

business generated was Rs 641.83 crore as against Rs 387.51 crore. The company was

pushed down to the 8th position from 7th in 2009-10.


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9. Kotak Mahindra Old Mutual Life Insurance Ltd the fiscal 2009-10, the company reported

growth of 80%, moving from the 11th position to 9th. It captured a market share of

1.19% in 2009-10. Last year the company doubled its branch network to 150 from 74.

10.Aviva Life Insurance Company India Ltd ranking dropped to 10th in 2009-10 from 9th

last year. It has presence in more than 3,000 locations across India via 221 branches and

close to 40 bancassurance partnerships. Aviva Life Insurance plans to increase its capital

base by Rs 344 crore. With the fresh investment, total paid-up capital of the insurer

would go up to Rs 1,348.8 crore.

1.LIC-

The Life Insurance Corporation of India (LIC) (Hindi: ) is the largest

state-owned life insurance company in India, and also the country's largest investor. It is fully

owned by the Government of India. It also funds close to 24.6% of the Indian Government's

expenses. It has assets estimated of 9.31 trillion (US$202.03 billion). It was founded in 1956

with the merger of more than 200 insurance companies and provident societies.

Headquartered in Mumbai, financial and commercial capital of India, the Life Insurance

Corporation of India currently has 8 zonal Offices and 101 divisional offices located in different

parts of India, at least 2048 branches located in different cities and towns of India along with

satellite Offices attached to about some 50 Branches, and has a network of around 1.2 million

agents for soliciting life insurance business from the public.

Offers life insurance protection under group insurance policies to various groups such as

employer-employees, professionals, co-operatives, weaker sections of society, etc. LIC

provides insurance coverage to people at subsidized rates under Social Security Group Schemes.

Besides providing insurance coverage, life insurance corporation of India (licindia.in) also offers

group schemes to employees, which provide funding of gratuity, pension liabilities and leave

encashment liabilities of the employers.


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2.ICICI Prudential Life Insurance Company Limited

Their presence all over India is with 2100 branches including 1,116 micro-offices, over 290,000

advisors and 18 bancassurance partners. They were also the first life insurance company to

receive the National Insurer Financial Strength rating of AAA(Ind) from Fitch ratings. It does

not stop here they were also rated thrice in a row by The Economic Times AC Nielson ORG

Marg survey of Most Trusted Brand' as the Most Trusted Private Life Insurer.Various Types of

Insurance Plans Life Insurance Plan-(Protection Plan, Premium Guarantee plan,

Education Plan & Wealth Creation Plan)

ICICI Prudential Life Insurance Company is a joint venture between ICICI Bank, which is one of

India's foremost financial services companies, and Prudential plc, which is a leading

international financial services group headquartered in the United Kingdom. ICICI Prudential

began the operations in December 2000. Today, this company has over 2100 branches, which

include 1,116 micro-offices, over 290,000 advisors and 18 banc assurance partners.

ICICI Prudential Life Insurance Company is the first life insurer in India that received a National

Insurer Financial Strength rating of AAA (Ind) from Fitch ratings. ICICI Prudential has been

voted as India's Most Trusted Private Life Insurer for three consecutive years. ICICI Prudential

Life Insurance Company has various insurance plans that have been designed for differentindividuals, as every individual has different insurance needs. Given below is a list of plans

provided by ICICI Prudential Life Insurance Company:

3.Bajaj Allianz Life Insurance Company Limited

Bajaj Allianz Life Insurance is a union between Allianz SE, one of the largest Insurance

Company and Bajaj Finserv. Allianz SE is a leading insurance conglomerate globally and one othe largest asset managers in the world, managing assets worth over a Trillion (Over INR. 55,

00,000 Crores). Allianz SE has over 119 years of financial experience and is present in over 70

countries around the world.At Bajaj Allianz Life Insurance, customer delight is our guiding

principle. Our business philosophy is to ensure excellent insurance and investment solutions by


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offering customised products, supported by the best technology.

Bajaj Allianz Life Insurance Co Ltd is a unique joint venture among the global giants Allianz

Group (AG) and Bajaj Auto. Allianz AG's world ranking establishes it among the top insurance

companies in the world. Bajaj is the biggest two and three wheeler manufacturer in the world.

Bajaj Allianz Life Insurance Company boasts of a nationwide presence with 876 offices and over

4 million satisfied customers. The various insurance products include.

4.SBI Life Insurance

SBI Life Insurance is a joint venture between State Bank of India and BNP Paribas Assurance

of France. We are the first private life insurance company to make profit for three consecutive

years, and to receive AAA rating from CRISIL signifying highest financial strength. In the

2007 survey conducted by ACNielsen ORG MARG and Economic times, we have been voted

as the most trusted private life insurance brand. Join us for a rewarding and enriching career.

Following are the few fact and figures

Reported a robust Net Profit of Rs.276 Crores in FY 09-10.

Crossed Rs.10,000 Crores in Gross Written Premium (GWP) in FY 09-10

Assets Under Management (AUM) grew by 96% to Rs.28, 551 Crores in FY 09-10.

Globally topped the prestigious MDRT 2009 for having Maximum number of MDRT

Members.

ICRA reaffirmed iAAA rating to SBI Life indicating highest claims paying ability.

Awarded ISO Certification (ISO/IEC 27001:2005) for Information Security Management

System (ISMS).

Retained ISO 9001:2000 certificate for superior claim settlement process.

bagged the most coveted personal financial services award Outlook Money NDTV Profit

"Best Life Insurer" 2008

5.Reliance Life Insurance

Reliance Life Insurance Company Limited is a part of Reliance Capital Ltd., a part of

Reliance - Anil Dhirubhai Ambani Group. Reliance Capital is one of India's leading private


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sector financial services companies, which ranks among the top 3 private sector financial

services and banking companies. Reliance Life Insurance is not only one of India's fastest

growing life insurance companies, but also counts among the top 4 private sector insurers. In

ust 2 years, the Company has crossed the mark of 1.7 Million policies.

RLIC launched around 600 branches in 10 months, taking the overall branch network above

to 740. Reliance Life Insurance Co. is one of the only two ISO 9001:2000 certified Life

Insurance companies in India. It has been awarded with the Jamnalal Bajaj Uchit Vyavahar

Puraskar 2007- Certificate of Merit in the Financial Services category by Council for Fair

Business Practices (CFBP). Given below is the list of the policies provided by Reliance Life

Insurance Company:

6.HDFC Standard Life Insurance

Established on 14th August 2000, HDFC Standard Life Insurance Co. Ltd. is a joint venture

between Housing Development Finance Corporation Limited (HDFC Limited) - India's

leading housing finance institution, and a Group Company of the Standard Life Plc, UK. The

Company is one of leading private insurance companies, offering a range of individual and

group insurance solutions, in India. Being a joint venture of top financial services groups,

HDFC Standard Life has adequate financial expertise to manage long-term investments safely

and resourcefully.

HDFC Standard Life Insurance offers a range of individual and group solutions, which can be

easily personalized to specific needs. Its group solutions have been planned to offer complete

flexibility, together with a low charging structure. As of 31 December, 2008, the Company's

new business premium income stood at Rs. 1,839.70 Crores; it has covered over 812,811 lives

so far. Given below is a comprehensive list of policies and products on offer by HDFC

Standard Life Insurance:

HDFC Standard Life Insurance Company Limited., being one of the key players in the

insurance sector in India, offers a host of individual and group insurance solutions, suiting


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customer requirements. It happens to be a joint venture between Housing Development

Finance Corporation Limited (HDFC Limited), and a Group Company of the Standard Life

Plc, UK. It was per the data on February 28, 2009 that HDFC Ltd. held 72.43% and Standard

Life (Mauritius Holding) 2006, Ltd. held 26.00% of equity in the JV. The remaining stake is

held by others.

7.Birla Sun Life Insurance

Birla Sun Life Insurance Co. Ltd. is a joint venture between Aditya Birla Group, an Indian

multinational corporation, and Sun Life Financial Inc, a leading global insurance company.

Birla Sun Life Insurance is distinguished as the first company in the sector of financial

solutions to begin Business Continuity Plan. This insurance company has pioneered the

unique Unit Linked Life Insurance Solutions in India. Within 4 years of its launch, BSLI

became one of the leading players in the industry of Private Life Insurance Scheme.

The mission of the company is to help people with risk management. It also helps in

managing the financial situation of firms as well as individuals. Here is given a

comprehensive list of policies and products offered by Birla Sun Life Insurance Co. Ltd

Birla Sun Life under the management of Mr. Nani B. Javeri as the CEO is a Rs. 180 crore

equity capital company. Birla Sun Life Insurance Co. Ltd is a 26:74 joint venture between

Sun Life Financial Services Canada and Aditya Birla Group. Just four years down the

industry pipeline, Birla Sun Life Insurance or BSLI has secured a lead in private life

insurance market. The distribution channels by BSLI include direst sales force, alternate

channels, IT systems and groups to ensure convenience of the potential customers. Highly

professional dealing, corporate governance and complete transparency have earned Birla Sun

Life Insurance Co Ltd the trust of the customers.

8.Max New York Life Insurance

Max New York Life Insurance Company Limited is a joint venture between Max India

Limited, which is a one of India's leading multi-business corporate, and New York Life

International, which is a Fortune 100 company & global expert in life insurance. Max New


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York Life Insurance started its commercial operations in India in 2001. It is the first life

insurance company in India to be awarded the IS0 9001:2000 certification. The company has

around 133 offices all over the country.

Max New York Life offers a variety of flexible products covering both life and health

insurance including 8 riders that can be customized to over 800 combinations which enable

the customers to choose the policy that suits their needs. Max New York Life also offers 6

products and 7 riders in group insurance business. The company has a plan for every need,

designed as to meet your long term financial goals & aspirations. They help you fulfilling

your dreams & commitments. The list of few plans provided by Max New York Life

Insurance Company Limited is given below.

9.Kotak Mahindra Old Mutual Life Insurance

Founded in 2001, 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 which offer a range of financial services, such as, commercial

banking, stock broking, mutual funds, life insurance, and investment banking. And, Old

Mutual is an international insurance and investment management company based in London,

offering a diverse range of financial services in South Africa, the United States and the United

Kingdom since more than 150 years.

Kotak Mahindra Old Mutual Life Insurance Ltd. is a company which offers Life Insurance

products. It is one of India's most rapidly growing insurance companies, employing over 1000

people, across various offices in India. Kotak Mahindra Old Mutual Life Insurance Ltd offers

different types of Life Insurance Policies, which are.

10. Aviva Life Insurance

Aviva Life Insurance Company India Ltd. is a private insurance company, formed by a joint

venture between the Aviva insurance group of UK and the Dabur group of India. In reference

to the government regulations, Aviva holds 26 percent stake and the Dabur group holds the


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balance 74 percent share in the joint venture. Not only largest in the UK, Aviva is also known

as the fifth largest insurance group in the world. Since 1834, Aviva is ensuring the lives of

Indians. At the time of nationalization, Aviva was the largest foreign insurer in India in terms

of the compensation paid by the Government of India.

Aviva is distinguished for being the first foreign insurance company to set up its

representative office in India, in 1995. Aviva Life Insurance Company established the concept

of Bancassurance in India, and has leveraged its global expertise in Bancassurance

successfully here. The company boasts of 223 branches in India, supporting its vast

distribution network. Aviva offers various products that are meant to provide customers

flexibility, transparency and value for money. Given here is a complete list of products &

services offered by Aviva Life Insurance Company India Ltd.


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CHAPTER 3: TOP 5 SERV

ICE PRODUCTS1. LIC- ANMOL JEEVAN

2. ICICI PRUDENTIAL LIFE- LIFEGUARD I

3. AVIVA- AVIVA NEW FREEDOM LIFE PLAN

4. RELIANCE- RELIANCE SUPER INVEST ASSUREBASIC PLAN

5. TATA AIG- RAK

SHA1. LIC Anmol Jeevan I

Anmol Jeevan-I Summary:

Life Insurance Corporation Of Indias Anmol Jeevan-I (Plan No. 164) is a unique plan of

assurance, by far the cheapest policy to buy; cheaper than even a whole life policy to start with.

Anmol Jeevan-I is a pure term cover provides only life cover unlike endowmentand money back

policies which have a built-in saving element too.

Benefits:

On Maturity: On Maturity no amount will be paid to the Policyholder.

On Death: On death of the Policyholder during policy term, S.A. will be paid to the nominee.

Income tax rebate: The premium paid towards Anmol Jeevan-I is eligible for tax deduction

under section 80C of the Income Tax Act, 1961.

Eligibility Conditions and Restrictions for LIC Of IndiasAnmol Jeevan-I:

Minimum Age at entry: 18 years (completed)

Maximum Age at entry: 55 years (nearest birthday)


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Maximum Age at maturity: 65 years (nearest birthday)

Policy Term: 5 years to 25 years

Minimum Sum Assured: Rs.5,00,000/-

Maximum Sum Assured: Less than 25,00,000 /-

(Policies will be issued in multiples of Rs.1,00,000/- for Sum Assured above the minimum Sum

Assured)

Loan: Not available

Surrender Value: Nil

Dating Back: Allowed

Grace Period: 15 days

Payment Of claims: No Claims concession will be applicable to this Policy.

Mode of Premium : Premium can be paid either in Yearly, Half-yearly & Single Premium.

2. ICICI PRUDENTIAL LIFE- LIFE GUARD I

ICICI Prudential Lifeguard plan is a pure insurance plan with 3 inbuilt variants:

y Level term assurance: under this variant, sum assured will be paid in case of death and there are

no maturity benefits and on survival at maturity policy will terminate. This is a regular premium

paying policy

y Level term assurance with return of premium: An annual premium paying policy, which will pay

sum assured on death and in case of survival till maturity, all premiums shall be returned. It also

provides an extended life cover for 5 years after maturity, for 50% of sum assured withoutfurther payment of premium paying term.

y Single premium: A onetime premium paying plan, sum assured will be paid in case of death and

there are no maturity benefits and on survival at maturity policy will terminate. This is a regular

premium paying policy

Asset allocation


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The asset allocation can be dealt with by adopting any one of the two available strategies:

y Fixed portfolio strategy: Under this strategy, the FMC gives you a free hand to choose from any

one of the 8 available options. If you are an active investor and believe in managing your fund on

your own you can adopt this strategy

y Life cycle based portfolio strategy: Under this strategy the funds will be automatically allocated

to the pre-decided fund basis your age. This strategy is devised for passive investors who want

the FMC to invest on their behalf. The asset allocation is such that to safeguard you from any

kind of capital erosion in later part of your life due to unexpected volatility in short to midterm.

Such a fund allocation will be reviewed every quarter and reset to prescribed limits-

Riders available:

y Accidental death and disability benefit rider(ADBR)

Riders are available with a marginal additional cost and help a great deal mitigating risks which

could befall the family due to occurrence of untoward incidents.

Charges:

No mention in the brochure

3. AVIVA- AVIVA NEW FREEDOM LIFE PLAN

y It is a flexible plan which will help you to fulfill all your financial goals and objectives.

Features:

y Flexibility to choose the amount of savings as per your requirements.

y The premium payment term can be of 3, 5, 10, 15, 20 ,25,30 years.

y Flexibility to reduce the premium and increase/decrease life cover.

y It offers you the flexibility to insure you and your spouse under a single policy.

y It provides you indexation to protect your savings and protection against market ups and

downs.

y Flexibility to invest in any of the 8 funds available.


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y The maximum age at maturity of the parent is 70 years.

y The minimum top-up premium is of rs 1000 and maximum is up to 25% of the total

regular premiums paid.

Benefits:

y You get additional benefit through the benefit rider options available.

y Accidental death and Dismemberment rider.

y Comprehensive Health benefit rider.

y Hospital cash benefit rider.

4. RELIANCE- RELIANCE SUPER INVESTS ASSUREBASIC PLAN:

UNDER THIS PLAN THE INVESTMENT RISK IN THE INVESTMENT PORTFOLIO

IS BORNE BY THE POLICYHOLDER.

Here's a unique plan which combines protection and savings. It also offers complete flexibility to

gain control over your investments vis--vis your financial needs and risk appetite.

We value your regular investments and thus reward you with Guaranteed Addition thus

promising unmatched benefits. This plan also offers you a unique option of moving from a

conservative fund to an aggressive fund systematically, to take advantage of the Rupee cost

averaging model.

A plan that promises you, what you ought to deserve as you reach greater heights in life. What

more can you ask for except gifting yourself with Reliance Super Invest Assure Basic Plan.

Key features - Reliance Super Invest Assure Basic Plan

y Twin benefit of market linked return and insurance protection

y Guaranteed addition of 250% of basic regular annualized premium at maturity


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y Investment opportunity with flexibility -Choose from 8 pure investment fund options

y Liquidity in the form of partial withdrawals

y

A host of optional rider benefits to enhance protection cover

y Option to pay Top-up Premium.

5.TATA AIG- RAKSHA:

This is a pure term insurance policy which offers high coverage at low and an affordable

premium which is best suited for people with high financial responsibilities. In such policies,

if the policy holder dies then the nominee is given the sum assured. If the policyholder

survives the entire term, then he does not get anything in return.

Our Advice This is a pure term vanilla product that has one of the lowest premiums for

really high coverage to make it extremely affordable. Having a high amount of term

insurance is the best insurance one can take for their families. So get the maximum protection

you can and be secured for the rest of your lives.

Key Features of Raksha Plan

y It is a pure Term Insurance Policy with Death Benefit only.

y This plan provides for an option to shift to any of the Tata AIG Savings Plans.

y Adequate Life Cover with low premium.

Benefits you get from Raksha Plan

Death Benefit In case of death of the policy holder, the nominee gets the sum assured

under the plan as selected at the beginning of the policy tenure.

Maturity Benefit There are no maturity benefits under this plan.

Income Tax Benefit - Life Insurance premiums paid up to Rs. 1,00,000 are allowed as a

deduction from the taxable income each year under section 80C


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CHAPTER 4:

CUSTOMER EXPECTATIONS FROM THE SECTOR

Expected Service: Levels of Expectations

The life and property/casualty sectors of the insurance industry continue to enjoy good growth

rates in line with economic expansion in the developed world. But most senior executives in the

industry admit that in the critical area of customer relationships, they have fallen behind their

peers in other sectors of financial services. Insurers generally remain wedded to a product-centric

rather than a customer-focused approach, and this is hampering their expansion. A few leading

companies have recognised that a change of course is needed as consumers, faced almost dailywith multiple choices, abandon brand loyalty.

These companies are investing heavily in technology and human resources to achieve a

holistic or 360-degree view of their customers. This view integrates customer information

across product lines, departments and sales channels, providing a complete profile of each

customer and enabling firms better to understand and meet customer expectation.

Customers hold different types of expectations about service. For purposes of our discussion in

the rest of this chapter, we focus on two types. The highest can be termed desired service or core

expectation: the level of service the customer hopes to receive the wished for or allied

expectation level of performance. Desired service is a blend of what the customer believes can

be and should be. The expectation reflects the hopes and wishes of these consumers; without

these hopes and wishes and the belief that they may be fulfilled.

Cultural Influences On Service Expectations

Consumers behave differentially across cultures, there are five universal values across cultures.

The universal values, which collectively distinguish members of different cultures, include

power distance, uncertainty avoidance, individualism- collectivism, masculinity-femininity.


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y Power Distance involves the way that the less powerful members of institutions and

organizations within a country except and accept that power is distributed unequally. Part

of power distance involves human inequality in areas such as prestige, wealth, power and

law. People from cultures high in power distance are comfortable with power hierarchy,

discriminitation, and tolerance of inequalities.

y Uncertainty avoidanceis the extent to which the members of a culture feel threatened by

uncertain or unknown situations. People with high uncertainty avoidance like clear rules

and explicit situations; people with low uncertainty avoidance can accept uncertainty

without discomfort and tolerate inexplicit rule.

y Individualism exists in societies in which the ties between individuals are loose; all

individuals are expected to look after themselves and their immediate family.

Collectivism, the opposite, exists in societies in which people from birth onward are

integrated into strong, cohesive groups that offer lifetime protection in exchange for

loyalty. This sub dimension can be summed up in three words: I versus we.

y Masculinity and femininityare the dominant sex role patterns in the vast patterns in the

vast majority of both traditional and modern societies. Masculine societies value

assertiveness, performance, ambition and independence, whereas feminine societies value

nurturance, quality of life, service and interdependence.

y The Confucian dynamic or long term v/s short term orientation dimension , refers tothe way people look at the future . Long term orientation emphasizes perseverance,

ordering relationships by status, thrift, and a sense of shame .On the other hand , short

term orientation focus on personal steadiness and stability, saving phase , respect of our

tradition , and reciprocation of greetings , favours , and gifts.

What customers think first, when they purchase Life Insurance Policy? (Core

expectations)

Policy Benefits

All insurance policies are different. We evaluated insurance providers largely on the variety and

flexibility of the life insurance policies they offer. From five year term life insurance to variable


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universal policies, our leading picks for life insurance providers provide comprehensive coverage

for every set of needs.

Pricing and Premiums

Premium payments are going to be different with different providers depending on risk factors

such as your health, lifestyle, age and occupation. In general, insurance providers receiving a

high score on our site gave more lucrative quotes than competitors regardless of age or lifestyle.

Customer Support

Red tape and poor customer service are the last things a grieving family member wants to deal

with. Our top picks for life insurance provider boast excellent customer service, approach claims

in a timely and professional manner and go out of their way to meet customer expectations.

The death of a loved one is one of the most difficult moments in life. With a balanced life

insurance policy, you can ensure that you take care of your family even after youre gone.

Different types of customer expectations..(ie.allied expectations)

Resolution of Customer Anxiety

In a service industry, one of the factors that motivates a customer to opt for a service is whether

the service provider is able to reduce his or her anxieties, articulated or not, in relation to the

same. In case of insurable products, many customers are not fully aware of the benefits being

offered as well as the terms and conditions underlying the same. There is always an apprehension

in the minds of the customers that insurance companies are only interested in collecting the

premium without explaining the conditions for seeking future claims. Because of this fear, the

general tendency is to avoid taking insurance covers. This problem is particularly acute in the

personal line of insurance where the decision is taken in an individual capacity.


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Simplification of documents

Complex documentation acts as a deterrent to seeking services because most customers are not

knowledgeable about insurance products. When faced with long and complicated paperwork, an

immediate reaction of the customers is to assume that the cover is not in their favour.

Simplification of documents, therefore, is a must. Enhanced responsiveness

Though they expect superior service all the time, customers do realise that once in a while, there

can be specific problems when service providers, such as insurance companies, are not able to

honour the predefined service standards in the normal course. However, if a service provider is

responsive to customer needs, it goes out of its way to make up for the failure in service

offerings. The customers enjoy the special treatment meted out by the service provider during the

post-complaint stage, and this builds loyalty.

Improve post-sale service

In a service industry, a significant amount of customer value is created during the post-sale

phase. For example, in the insurance industry, the past experience of customers in settling claims

influences their future decision on renewals as well as taking additional policies. Research shows

that unhappy customers tend to share a bad experience with potential customers more than they

share a good one.

Courtesy shown

The customers perception of the quality of services is also influenced by the courtesy extended

to him when he comes face-to-face with the employees of the service provider. Lack offriendliness, warmth and an unhelpful attitude drive away many prospective clients despite the

intrinsic quality of the products.


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Minimize effective cost of service

This includes not only direct loss e.g. premium, but also the hidden costs such as cost of follow-

up, delay in settlement of claims, long waiting time etc. While taking a decision, customers

evaluate the total value received against the total cost as defined, incurred by them. Insurance

companies will need to minimize the effective cost of their offerings for growing their business.

Customer dissatisfaction in the personal line of insurance

According to various reports available from the press, there is a general feeling of

discontentment among customers regarding the quality of services offered by Indian insurance

companies. The dissatisfaction manifests in many areas of servicing, a few of which arementioned below.

Pre-Sale Service

Proper pre-sale service, which goes a long way in helping customers arrive at a decision on

purchasing a product, is generally not given due importance by Indian insurers. Counselling of

customers by the intermediaries of the insurance companies regarding the options available, the

appropriate policy to be selected at the minimum premium, the pros and cons and nuances of the

policy, the procedures to be followed in the event of claims etc. are generally not upto the

satisfaction of customers. As a result, the latter dither in taking a decision or remain

uncomfortable after purchasing insurance products.

Quality of Documentation

Most proposals and policies tend to be long, complicated and sometimes inexplicit. For example,

in case of individual health policies, certain guidelines which can affect the quantum of premium

payable are not always made clear to the customers. Another frequent grievance aired by buyers

of health insurance is the disputes regarding pre-existing diseases and the fact that insurance


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companies dont take adequate care to explain what a pre-existing disease is and why no claim

can be settled arising out of the same.

This failure on the part of insurance companies leads to much heartburn among customers when

their claims are rejected.n post-sale services too, Indian insurance companies have lagged

behind. The practice of sending reminders for renewals in time is not diligently followed by

insurers. The most important feature of post-sale service, as far as insurance products are

concerned, is the handling of claims. On an average, it takes insurance companies about one to

three months to settle a claim. Further, too many documents and delay in settlement of claims,

without payment of interest for the delay, add to the woes of the insurance holders.

Indian insurance companies, for reasons well known, have not responded too well to the service

aspects of their offerings. The good news is that they are now gearing up to improve their

services in order to meet the impending new competition.

customer loyalty

Given the current levels of dissatisfaction experienced by customers, it is time insurance

companies, both existing and new ones, concentrated on providing high-quality services for

differentiating their offerings. Some areas on which they should concentrate immediately are:

Gear up pre-sale services, particularly those that will help in reducing customers anxieties.

Simplify documents, wherever necessary, without losing control Enhance post-sale services in

such areas as sending all renewal notices in time, expeditious settlement of claims and refunds

etc. Customize products to cater to the needs of each individual Empathise with the customers.

Employees coming in contact with customers must show courtesy and good behaviour.

To deliver the above, insurance companies will need to build a suitable organisation with an

appropriate management system, optimum physical infrastructure and a culture of innovation,

productivity and customer-orientation that will enable them to survive and grow in the exciting

and fast-growing line of personal insurance.


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Keep the Human Touch

Some people found that online Life Insurance Services will loss the human touch. Employees

lost eye contact with their customers. Keep the human touch--don't let automation get between

the front-line employee and the customer. Eye-to-eye contact may be lost with computers.

Act Quickly

If you receive constructive criticism in any form, act quickly to resolve any issues stemming

from that criticism. If someone simply writes or phones you to say your company sucks,

theres not much you can do with that because it isnt specific to any problems that person

experienced. However if someone takes the time to walk through an unpleasant circumstance

inflicted upon them by your company, take that opportunity to right the wrong as much aspossible. Mistakes are bound to happen, but preventing those mistakes from happening again and

immediately addressing problems that impact others will minimize the damage and may also

present an opportunity for an upset customer to become a happy one again.

Openly Accept Feedback

If you are going to give an ultimatum to your company and the industry it competes, it makes no

sense to hide from criticism and feedback. Take the responsibility to welcome feedback of any

sort, and respond to it quickly. If someone takes the time to compliment your organization, thank

them immediately. Thats all you have to do. If they complain, allow them to express themselves

openly, but dont send them back a canned response. Take the appropriate time to acknowledge

the complaint, and outline some definitive actions you intend to take to alleviate the problem. If

someone is motivated enough to complain to you, you can bet they are motivated enough to

express their displeasure to family, friends, and colleagues.

Customer Complaints

One public agency found that three quarters of its customers had no idea who to talk to if they

had a problem. Many customers think it's simply not worth the hassle to complain. They are

skeptical that the organization will do anything or they may even fear retribution.


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Best-in-business organizations actively encourage customer complaints. Some companies even

refer to what they do to encourage complaints as "marketing" their complaint system. Companies

make consumer service cards available at the place of business. Many solicit feedback wherever

they post or publish customer service standards, on all correspondence, on bills, and in the

telephone directory.

Some offer discount coupons to encourage customer feedback. Many publish information on

how they can be contacted in more than one language. They publish 1-800 and other numbers for

the company where consumers are most likely to see them, e.g., on the product packaging.

Companies also market their complaint handling systems during conferences and meetings, in

annual reports, newspapers, association circulars, videos, audio tapes, letters, press releases,

speeches, training sessions and via electronic mail.

Additional Services

Life insurance is a must, but there are many other services we expect to see available in addition

to, or as an alternative to, life insurance. Annuities, retirement planning, estate planning, mutual

funds and plans tailored for small business are services we expect from the best providers.


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CHAPTER.5 : Segmentation Dimensions

Segmentation is essentially the identification of subsets of buyers within a market who share

similar needs and who demonstrate similar buyer behavior. The world is made up from billions

of buyers with their own sets of needs and behavior. Segmentation aims to match groups of

purchasers with the same set of needs and buyer behavior. Such a group is known as a 'segment'.

Think of you r market as an orange, with a series of connected but distinctive segments, each

with their own profile.

Geographic segmentation

Geographic segmentation is an important process - particularly for national, multi-national and

global businesses or brands. Many companies use regional sales and marketing programs and

adjust their products, advertising and/or promotional activities to meet the varied needs inherent

in the different regional segments.

Geographic segmentation is used to section markets into various geographical units:

1. Worldwide Geographic regions: i.e. The Americas; Asia Pacific; Europe & the Middle East;Africa.

2. Countrywide Geographic regions: (i.e. In the INDIA (East, West, South and North )

3. Specific Countries

4. Within a Country/State: City or Town size: e.g. population within ranges or above a certain

level

5. Population density: e.g. urban, suburban, rural

Example in life insurance sector people in Urban areas prefers ULIP or investment oriented

policies, whereas in semi urban and rural areas traditional policies are preferred.


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Demographic segmentation

Demographic segmentation divides the market into groups based on variables such as age,

education, family size, gender, income, nationality, occupation, race, and/or religion.

Segmentation by demographic variables is generally the most often used basis for segmentingcustomer groups. This is for several reasons:

1. There is much more data available to companies using demographics for segmenting their

markets, including considerable government information

2. Many individual consumer needs are affected by such demographic dimensions as Age,

Income, Gender, etc.

3. This is the type of segmentation most often used in political and governmental analyses

The demographic segmentation variables used most often are summarized below:

Age:

Consumer needs and wants often change with age although they may still wish to consumer the

same types of product. So manufactures/marketers design, package and promote products

differently to meet the wants of different age groups. One example in life insurance following

kind of preferences could be seen

Age - Preferences

25-30- Tax benefit, High and secure return

30-50 - Child plan, Tax benefit, High and secured return

50 and above- Pension plans, Secured returns

Considerable attention is paid to the variations of the age related cohorts, which are often

discussed and covered by the press. The cohorts are relatively broad groups of people born in

different periods, and who share historic experiences that gives them a different perspective from

those who are older and/or younger. These include: the Depression cohort (born from 1912 to

1921); the Pre 'World War II cohort' (born from 1922 to 1927); the World War II cohort (born

from 1928 to 1945); the Baby Boomer cohort #1 (born from 1946 to 1954); Generation Jones or


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Boomer cohort #2 (born from 1955 to 1964); Generation X aka Baby Busters, the 13th

Generation, and the nomad generation, cohort (born from 1965 to 1980); Generation Y or

Millennial Generation cohort (born from 1981 to 2001).

Life-stage (somewhat age related)

Many products and services are directed at the specific needs of individuals in a specific stage of

life, from young children, twins, teens young adults, marriage and partnering, parents, and

aging/retirement, A consumer life-stage is a very important variable for many products and

services such as fast food, life insurance, leisure activities, travel and tourism.

Gender:

Segmentation by gender is widely used in consumer marketing. A few examples include

toiletries, cosmetics, and clothing, however the variations in needs, thinking and decision making

by men and women have made this an essential element in many other categories as well.

In life insurance woman are classified into 3 catogeries based on giving insurance cover

1. Salaried

2. Self employed

3. Housewives

Housewives and . self employed women could at max be insured with 25 lacs but there is no

limit on salaried women as such.

Income:

Income is another popular basis for segmentation. Many companies target affluent consumerswith luxury goods and convenience services; others focus on marketing products that appeal

directly to consumers with relatively low incomes. For example in life insurance HNI or HIG

people prefer high premium,high return or investment bound policies as they could avail tax

benefit only upto 1 lac.LIG people would like to buy low premium, low risk and high security

policies.


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Psychographic segmentation

When a relatively complete assessment of a person or group's psychographic make-up, based

on attributes relating to an individuals personality, values, attitudes, interests, and/or lifestyles is

constructed, this is called a psychographic profile. Psychographic profiles are often used inconducting a market segmentation, The value of using psychographics, generally in conjunction

with another segmentation approach, is that it provides a mental picture of the individual you are

marketing to that helps refine your marketing communications to reach them on an emotional

level.

Specific attitude, life-style, values, or personality segmentation dimensions Social class/values

Many Marketers believe that a consumers "perceived" social class influences their preferences

for cars, clothes, home furnishings, leisure activities and other products & services. There is a

clear link here with income-based segmentation.

Lifestyle:

Marketers are increasingly interested in the effect of consumer "lifestyles" on demand. For

example in life insurance If Mr A aged 25 years monthly expense is X He would like to

maintain his life style even after his income is less so he has to make a coffer of amount Y

which could give him consistent return Z which will be equal to amount X in todays value.

Behavioral segmentation:

Behavioral segmentation is based more on how a customer uses and/or interacts with a

product/brand than on who they are as individuals. Among the most often behavioral

segmentation methods are:

Usage Occasions:

When a product is consumed or purchased, For example in life insurance Child plans could be

gifted to a child on his birthday by parents or grandparents so it could be pitched by company on

these type of ocassion , Expanding fast food restaurants into the breakfast space is another

example of the use of occasion based segmentation that has produced significant improvements

for a brand. With Major soft drink brands having almost universal occasional usage, occasion


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based appeals are seen as an opportunity to expand their share of usage on the various occasions

to gain share overall.

Usage:

It is often highly effective to segment a market into light, medium and heavy user groups. One

often discussed rule of thumb is that the top 20% of users, use/purchase/consume 80% of the

product in most categories. Clearly looking at the attitudes and behavior of these essential

customers will permit much more successful marketing programs. For example life insurance

product heavy users exists in urban and semi urban areas as rural areas are yet to catch up in

terms of life insurance.

Loyalty:

Loyal customers - those who buy and use one brand exclusively or a majority of the time - are a

brands most valuable customers. Many companies try to segment their markets to differentiate

their customers to permit programs that will focus on and enhance the quality of their

relationship with their most loyal customers. For example most customer of semi urban and rural

areas are loyal to LIC as they have strong faith in it.

Product Benefits:

Benefit segmentation focuses on the specific benefits customers look for in a product Forexample HNI or HIG people preferring high premium, high return or investment bound policies;

the actual number of specific benefits are varied and related to the specific product and

consumer. However, this is a type of segmentation that has provided many

manufacturers/marketers with the ability to identify and effectively market their products against

their competition.

Problem Segmentation

Problem segmentation focuses on a specific problems that customers have relative to the product

category and for which they seek solutions. The method identifies the problems that people have,

classifies them in terms of frequency and bothersomeness (problems that are infrequently

experienced and or not very bothersome are generally ignored) and then identifies groups of

consumers that share an interest in their resolution.


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CHAPTER6: Usage of7 Ps in the Sector

INSURANCE MARKETING: The term Insurance Marketing refers to the marketing of

Insurance services with the aim to create customer and generate profit through customer

satisfaction. The Insurance Marketing focuses on the formulation of an ideal mix for Insurance

business so that the Insurance organization survives and thrives in the right perspective.

MARKETING --MIX FOR INSURANCE COMPANIES: The marketing mix is the

combination of marketing activities that an organization engages in so as to best meet the needs

of its targeted market. The Insurance business deals in selling services and therefore due weight-

age in the formation of marketing mix for the Insurance business is needed.

The marketing mix includes sub-mixes of the 7 P's of marketing i.e. the product, its price, place,

promotion, people, process & physical attraction. The above mentioned 7 P's can be used for

marketing of Insurance products, in the following manner:

7 P

Proce

ssProdu

ct

Price

Promot

ionPlace

People

Physical

Evidence


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1. PRODUCT:

A product means what we produce. If we produce goods, it means tangible product and when

we produce or generate services, it means intangible service product. A product is both what a

seller has to sell and a buyer has to buy. Thus, an Insurance company sells services and therefore

services are their product.

In India, the Life Insurance Corporation of India (LIC) and the General Insurance Corporation

(GIC) are the two leading companies offering insurance services to the users. Apart from

offering life insurance policies, they also offer underwriting and consulting services.

When a person or an organization buys an Insurance policy from the insurance company, he not

only buys a policy, but along with it the assistance and advice of the agent, the prestige of the

insurance company and the facilities of claims and compensation.

It is natural that the users expect a reasonable return for their investment and the insurance

companies want to maximize their profitability. Hence, while deciding the product portfolio or

the product-mix, the services or the schemes should be motivational. The Group Insurance

scheme is required to be promoted, the Crop Insurance is required to be expanded and the new

schemes and policies for the villagers or the rural population are to be included.

The Life Insurance Corporation has intensified efforts to promote urban savings, but as far as

rural savings are concerned, it is not that impressive. The introduction of Rural Career Agents

Scheme has been found instrumental in inducing the rural prospects but the process is at infant

stage and requires more professional excellence. The policy makers are required to activate the

efforts.

It would be prudent that the LIC is allowed to pursue a policy of direct investment for rural

development. Investment in Government securities should be stopped and the investment should

be channelized in private sector for maximizing profits. In short, the formulation of product-mix

should be in the face of innovative product strategy. While initiating the innovative process it is

necessary to take into consideration the strategies adopted by private and foreign insurance

companies.


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Ex: Protection Plans

Save n Protect

Cash back

Life Guard

Premium Guarantee Plans

InvestShield CashBack

Education Insurance Plans

SmartKid New Unit-linked Regular & Single Premium

Wealth Creation Plans

PremierLife Gold

Life Stage RP

Wealth Advantage

2.PRICING:

In the insurance business the pricing decisions are concerned with:

i) The premium charged against the policies,

ii) Interest charged for defaulting the payment of premium and credit facility, and

iii)Commission charged for underwriting and consultancy activities.

With a view of influencing the target market or prospects the formulation of pricing strategy

becomes significant. In a developing country like India where the disposable income in the hands

of prospects is low, the pricing decision also governs the transformation of potential

policyholders into actual policyholders.

The strategies may be high or low pricing keeping in view the level or standard of customers or

the policyholders. The pricing in insurance is in the form of premium rates. The three main

factors used for determining the premium rates under a life insurance plan are mortality, expense


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and interest. The premium rates are revised if there are any significant changes in any of these

factors.

Mortality (deaths in a particular area):

When deciding upon the pricing strategy the average rate of mortality is one of the main

considerations. In a country like South Africa the threat to life is very important as it is played

by host of diseases.

Expenses:

The cost of processing, commission to agents, reinsurance companies as well as registration are

all incorporated into the cost of installments and premium sum and forms the integral part of the

pricing strategy.

Interest:

The rate of interest is one of the major factors which determines people's willingness to invest in

insurance. People would not be willing to put their funds to invest in insurance business if the

interest rates provided by the banks or other financial instruments are much greater than the

perceived returns from the insurance premiums.

Ex:

AgePremiun

5 7,608

10 8378

15 9444

20 9889

3.PLACE:

This component of the marketing mix is related to two important facets

i)Managing the insurance personnel, and

ii) Locating a branch.


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The management of agents and insurance personnel is found significant with the viewpoint of

maintaining the norms for offering the services. This is also to process the services to the end

user in such a way that a gap between the services- promised and services -- offered is bridged

over. In a majority of the service generating organizations, such a gap is found existent which

has been instrumental in making worse the image problem.

The transformation of potential policyholders to the actual policyholders is a difficult task that

depends upon the professional excellence of the personnel. The agents and the rural career

agents acting as a link, lack professionalism. The front-line staff and the branch managers also

are found not assigning due weight-age to the degeneration process. The insurance personnel if

not managed properly would make all efforts insensitive. Even if the policy makers make

provision for the quality upgrading the promised services hardly reach to the end users.It is also

essential that they have rural orientation and are well aware of the lifestyles of the

prospects or users. They are required to be given adequate incentives to show their excellence.

While recruiting agents, the branch managers need to prefer local persons and provide them

training and conduct seminars. In addition to the agents, the front-line staff also needs an

intensive training programme to focus mainly on behavioral management.

Another important dimension to the Place Mix is related to the location of the insurance

branches. While locating branches, the branch manager needs to consider a number of factors,

such as smooth accessibility, availability of infrastructural facilities and the management of

branch offices and premises. In addition it is also significant to provide safety measures and also

factors like office furnishing, civic amenities and facilities, parking facilities and interior office

decoration should be given proper attention.

Thus the place management of insurance branch offices needs a new vision, distinct approach

and an innovative style. This is essential to make the work place conducive, attractive and

proactive for the generation of efficiency among employees. The branch managers need

professional excellence to make place decisions productive.


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Ex:ICICI Prudential has:

1,960 branches (including 1,096

micro-offices)

Advisor base of over 2,30,000

4. PROMOTION:

The insurance services depend on effective promotional measures. In a country like India, the

rate of illiteracy is very high and the rural economy has dominance in the national economy. It is

essential to have both personal and impersonal promotion strategies. In promoting insurance

business, the agents and the rural career agents play an important role. Due attention should be

given in selecting the promotional tools for agents and rural career agents and even for the

branch managers and front line staff. They also have to be given proper training in order to create

impulse buying.

Ex:

Advertising and Publicity, organization of conferences and seminars, incentive to

policyholders are impersonal communication.

Arranging Kirtans, exhibitions, participation in fairs and festivals, rural wall paintings .

Publicity drive through the mobile publicity van units would be effective in creating the

impulse buying and the rural prospects would be easily transformed into

actual policyholders.

5. PEOPLE:

Understanding the customer better allows to design appropriate products. Being a service

industry which involves a high level of people interaction, it is very important to use this


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resource efficiently in order to satisfy customers. Training, development and strong relationships

with intermediaries are the key areas to be kept under consideration. Training the employees, use

of IT for efficiency, both at the staff and agent level, is one of the important areas to look into.

Ex:people strategy of the business. It includes:

Focus on operational excellence to deliver benefits and service stostaff members.

Building capability through state of the art processes.

Delivering value to the organization through robust performance management system,

compensation system and segmented training architecture.

Providing environment to foster growth and learning to the employee.

6. PROCESS:

The process should be customer friendly in insurance industry. The speed and accuracy of

payment is of great importance. The processing method should be easy and convenient to the

customers. Installment schemes should be streamlined to cater to the ever growing demands of

the customers. IT & Data Warehousing will smoothen the process flow. IT will help in servicing

large no. of customers efficiently and bring down overheads. Technology can either complement

or supplement the channels of distribution cost effectively. It can also help to improve customer

service levels. The use of data warehousing management and mining will help to find out the

profitability and potential of various customers product segments.

Ex: Client approaches the insurer (ICICI Prudential) through an agent, with:

Personal details

Income details

Medical history

Products


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Sum assured

Term

Premium

7. PHYSICAL DISTRIBUTION:

Distribution is a key determinant of success for all insurance companies. Today, the nationalized

insurers have a large reach and presence in India. Building a distribution network is very

expensive and time consuming. If the insurers are willing to take advantage of India's large

population and reach a profitable mass of customers, then new distribution avenues and alliances

will be necessary. Initially insurance was looked upon as a complex product with a high adviceand service component. Buyers prefer a face-to-face interaction and they place a high premium

on brand names and reliability. As the awareness increases, the product becomes simpler and

they become off-the-shelf commodity products. Today, various intermediaries, not necessarily

insurance companies, are selling insurance. For example, in UK, retailer like Marks & Spencer

sells insurance products.

The financial services industries have successfully used remote distribution channels such

as telephone or internet so as to reach more customers, avoid intermediaries, bring down

overheads and increase profitability. A good example is UK insurer Direct Line. It relied on

telephone sales and low pricing. Today, it is one of the largest motor insurance operator.

Technology will not replace a distribution network though it will offer advantages like better

customer service. Finance companies and banks can emerge as an attractive distribution channel

for insurance in India. In Netherlands, financial services firms provide an entire range of

products including bank accounts, motor, home and life insurance and pensions. In France, half

of the life insurance sales are made through banks.

In India also, banks hope to maximize expensive existing networks by selling a range of

products. It is anticipated that rather than formal ownership arrangements, a loose network of

alliance between insurers and banks will emerge, popularly known as bancassurance.


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Another innovative distribution channel that could be used are the non-financial organisations.

For an example, insurance for consumer items like fridge and TV can be offered at the point of

sale. This increases the likelihood of insurance sales. Alliances with manufacturers or retailers

of consumer goods will be possible and insurance can be one of the various incentives offered.

Ex: Internet/Web Pages - http://www.iciciprulife.com

Brochures - Various Plans Info Brochures

Business Cards -Visiting Card & Occasional Communication

Building & Offices - CDiafrfdersent Branch Locations

Signage -Logos & Posters

Financial Reports - Annual Report

Punch Lines & Statements - We cover you at every step of Life

- Jeetey Raho

Tangibles -Pen of ICICI Prudential

Employees Dress Code -ICICI Prudential Employee Uniform


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CHAPTER7: FUTURE OF THE SECTOR

India is a big market for Life Insurance Industry.

Indian Life Insurance Segment is growing at a rapid rate due to more liberal approach from

Govt. of India and due to the upward trends in Indian economy and share market. More financial

groups and banks including global players are eyeing the Indian Life Insurance Market.

Three key points

y Life Insurance Industry yet to penetrate the Indian market.

y Life Insurance awareness at very low levels among population.

y Scope for trying out different models to suit different segments of the population.

India is a very under-insured country and life insurance is turning out to be a very lucrative

business. Insurance penetration levels are abysmally low at 2 % of the population. With a huge

population of 1.1 billion there is a vast market out there ready to be tapped.

When economic reforms were thought of in India way back in 1991 one of the priority sectors

for privatisation and reforms considered by the Government of India was the insurance sectors.

Almost 5 years after the formation of the Insurance Regulatory and Development Authority

(IRDA), the first licence to start insurance business was issued. Today there are about 15 life and

non-life insurance companies operating in India for a population of 1.1 billion.

After Indian insurance markets record-breaking growth in the first months of 2007, many

international players are eyeing the life, non-life and health insurance market of India. A good

number of companies have already applied to IRDA for licences such as;

HSBC

Future Generally Life Assurance


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Future Generally India Insurance Company

Apollo DKV Insurance

Principal PNB Life Insurance

Universal Sompo General Insurance.

Indian Banks and businesses are also welcoming foreign players as they are looking to diversify

their businesses into the ever-growing and as yet untapped field of life and non-life insurance

market.

What is the current scenario?

y Insurance penetration has increased from about 1.5 % to 2% of the population.

y Selling insurance is no longer a part-time job. For most consultants it is a full-time job.

y Although insurance is supposed to be solicited, competition is so severe; it is now being

aggressively sold.

y Several innovative marketing avenues have opened up, like banking channels, departmental

stores, telemarketing, mailers etc for marketing insurance.

y Presence of IRDA- industry watch dog.

y Premiums can be paid online.

Many insurance companies have registered 3-digit growth figures recently. For example, SBI

Life has shown 210 % growth in its business last fiscal year and Life Insurance Corporation

(LIC) grew by 118%. This has also led many analysts to aggressively evaluate the insurance

companies.

Another business model that is fast catching up and becoming popular, is the combining of

insurance and banking into a single entity known as banc assurance. Banc assurance has

contributed substantially to the premium accretions of the financial players in the business.

Banc assurance also raises possibilities of collaboration of multiple players for providing better

insurance options. It works this way, one insurance company might tie-up with a bank having a

presence in urban areas and another bank having a better reach in rural areas. Most importantly,

it will generate new business opportunities for agents and would simultaneously provide reliable

insurance cover to the population.


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The Indian life insurance industry has played a significant role in the development of the

countrys financial services sector. However, recent regulatory changes have pushed the industry

into a state of flux that will inevitably cause disruption to the industrys development.

In the Oliver Wyman report titled Charting a New Course: The Future ofLife Insurance in

India, we identify the key trends that will dominate the industrys evolution in the near to mid-

term. Not only does the current flux offer an opportunity for new incumbents to reassess their

strategy and re-align their business models to best take advantage of industry changes, it also

offers new entry opportunity for next generation business models from domestic or international

players.

By identifying and analyzing the six key trends, we then examine management actions and

strategies players can adopt to successfully capitalize on the opportunity provided by this phase

of uncertainty. The management agenda described in this report offers insight to life insurers

seeking to capture the tremendous opportunities in one of the worlds most exciting, challenging

and especially rewarding life markets.

As per the report of 'Booming Insurance Market in India' (2008-2011), concentration of

insurance markets in many developed countries of the world has made the Indian insurance

market more magnetic in terms of international insurance players. Furthermore, the report says

y Home insurance sector is likely to achieve a 100% growth since home insurance are made

compulsory for housing loan approvals by the financial institutions.

y In the coming three years Health insurance sector is all set to become the second largest

business after motor insurance.

y During the period of 2008-09 to 2010-11 the non life insurance premium is likely to have a

growth of 25%.

Opportunity of online insurance

Future of online insurance in India Online insurance may be of life or non life, have not picked

well in India. In the life insurance sectors many companies have started giving online life


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insurance covers like ICICI prudential, LIC. However very people are takers of online polices. I

have an ICICI direct online account from where I can also purchase life insurance policies of

ICICI prudential but still having account for more than one year; I have not purchased any online

life insurance. Same or even is the fate of general insurance online few insurance companies like

ICICI Lombard launched online general insurance, but very few are taker of this. There are many

reasons behind all this. The major reasons among all this are lot of government rule and

regulations and second less accessibility to internet.

Even the awareness level about the availability of these kinds of services is very less. Many

Indians still prefer to buy their life or car insurance from an agent because whom they can

track if any eventuality happens. A human touch is still prevailing in Indian insurance sector.

Whereas on the reverse online insurance are a big hit in western countries. People their mostlylike to buy online all their insurance policies. This may due to the fact of deeper penetration of

internet and high awareness. People in western countries found it very simple to search and

found different car insurance prices online. There are few companies like Norwich union

which are pioneer in the selling of online car insurance policies. Documentation is so simple

and can be easily downloaded in minutes from the net which could be distinct dream in India.

NEW JOINT VENTURE SET UPS

Canara Bank, Oriental Bank of Commerce (OBC) and HSBC Insurance (Asia-Pacific)

Holdings Ltd have signed an agreement to jointly establish a life insurance company in the

country. The company has been christened Canara HSBC Oriental Bank of Commerce Life

Insurance Company Limited. Canara Bank would take a 51 per cent stake in the company,

while HSBC and OBC will hold 26 per cent and 23 per cent stake respectively. The new life

insurance company will be capitalised at Rs 325 crore, of which Canara Bank will contribute

Rs 102 crore, HSBC Rs 177 crore and OBC Rs 46 crore. Under the terms of the agreement,

HSBC would provide a range of management services, which would include nominating

executives for certain senior roles. While both Canara Bank and OBC offer an extensive

client base, complementary distribution networks and broad local market knowledge, HSBC

brings to the partnership its considerable insurance experience, product range and proven

bancassurance capabilities. IRDA gave clearance to a joint venture between Kishore Biyanis


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Pantaloon Retail India and Italian insurance firm The Generali Group to start insurance

businesses. The joint venture, Future Generali India Life Insurance Company Ltd, would

transact life insurance business. Besides, it also granted approval to Future Generali India.

Insurance Company to transact general insurance business. Generali is one of the largest

insurance groups in the world, operating in 40 countries through 107 companies. It ranks 22 in

the list of Fortune 500 companies and is the largest corporation in Italy with an asset base of

over 300 billion euro.

RIDING ON WOMAN POWER

A woman has unique needs and concerns when it comes to preparing for the future. While

the basic life insurance policy protects the bread-earner and his loved ones, he also needs

some protection against health risks specific to women. In todays society, there is no difference

in professional men and women and they both have the same earning power and both contribute

to the family kitty. Both incomes are important for family lifestyle and standard. When the

whole world seems to be riding on woman power, can insurance companies remain far

behind?

Today even banks and financial institutions are regularly churning out innovative

schemes to woo the dames? Insurance traditionally has been targeted at the earning member

of the family as insurance means helping the family to maintain the standard of living for a

few years in case something unfortunate happens to the main breadwinner. Moreover,

insurance products not only provide security for family, but also help in savings, investment

towards creating a fortune for needs in future or pension for the golde

service mkting project report final ok

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