MBA project reports and insurance industry overview

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CHAPTER I
INTRODUCTION

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1.1 INTRODUCTION OF THE STUDY

“The Business of Insurance is related to the protection of the economic values of the
assets”.
Every human being has the tendency to save to protect him from risks or
events of future. Insurance is one form of savings where in people try to assure
themselves against risks or uncertainties of future. It is assurance against risks or events
or losses. People can save their earnings either in the form gold, fixed assets like property
or in banking and insurances. All the savings of people of a country account for gross
domestic savings. In India, although savings rate is high but people prefer to invest either
in gold or fixed assets so that they can make money out of it. Hence insurance sector is
still untapped in India.


1.2 INDUSTRY PROFILE

OVERVIEW OF CURRENT INSURANCE INDUSTRY

1. WHAT IS INSURANCE?
Insurance is a tool by which fatalities of a small number are
compensated out of funds (premium payment) collected from plenteous. Insurance is a
safeguard against uncertain events that may occur in the future.
It is an arrangement where the losses experienced by a few are extended over
several who are exposed to similar risks. It is a protection against financial loss arising on
the happening of an unexpected event. Insurance companies collect premium to provide
security for the purpose. Loss is paid out of the premium collected from people and the
insurance companies act as trustees to the amount so collected. These companies have
proposal forms which are filled to give details of insurance required. Depending upon the
answers in the proposal form insurance companies assess the risk and decide on the
premium.
Insurance companies are risk bearers. They underwrite the risk in return for an
insurance premium. the function of insurance is to provide protection, prevent losses,
capital formation etc. hence insurance can be defined as a tool in which a sum of money
as a premium is paid by the insured in consideration of the insurer’s bearing the risk of
paying a large sum .it may also be defined as a contract wherein one party (insurer)
agrees to pay the other party (insured) or his beneficiary, a certain sum upon a given
contingency against which insurance is required.
Insurance industry commands massive funds through sales of insurance products
to large number of clients. Insurers also create liabilities and commit themselves to
compensate for losses occurring to the policyholders on future date. It also plays an
important role in process of capital formation.

2. NATURE OF INSURANCE


a) Risk sharing and risk transfer: Insurance is used to share the financial losses that
might occur to an individual or his family on the happening of specified events. The loss
arising from such events are shared by all the insured in the form of premium.
Example: suppose in a village, there are 250 houses, each valued at Rs.200000.Every
year one house gets burnt, resulting into a total loss of Rs 200000.If all the 250 owners
come together and contribute Rs.800 each, the common fund would be Rs200000.This is
enough to pay to the owner whose house gets burnt. Thus the risk of one owner is spread
over 250 house owners of the village.

b) Risk assessment in advance: Insurance companies are risk bearers. They assess the
risk before insuring to charge the amount of premium.

c) Its not gambling or charity: The uncertainty is changed to certainty by insuring
property and life because the insurer promises to pay a definite sum at damage or death.
Insurance is antithesis of gambling. Failure of insurance amounts to gambling because
the uncertainty of loss is always looming. Moreover insurance is not possible without
premium. So it is different from charity because charity is given without consideration.

d) Huge number of insured people: It is essential to insure larger number of people or
property to make cost of insurance less consequently premium would also be less.

e) Assists in capital formation: Insurance provides capital to society. Accumulative
funds are invested in productive channels.

3. SEMANTICS
1. Risk: It is defined as an uncertainty of a financial loss. It is the unintentional
decline in or disappearance of value arising from contingency.
2. Policy: It is the document which embodies the insurance contract
3. Whole life policy: It is the policy under which the amount of policy will be paid
only on death of the insured. Premiums may be payable throughout the life or for
a limited period.


4. Endowment policy: Endowment policies entitle the insured to receive the
amount of the policy on his reaching a certain age and premiums also stops. If
death occurs earlier, amount of the policy will be paid at that time and payment of
premium will also stop at that time.
5. Claim: It is the amount which an insurer has to pay against a policy.
6. Reinsurance: It refers to placing a part of the risk by an insurer with another
insurer. The object is to reduce the possible loss to be borne by the original
insurer, who pays premiums at the ordinary rates to the reinsurer. Reinsure must
pay commission to the original insurer.
7. Premium: A periodic payment made on an insurance policy.
8. Insurance penetration: It is defined as insurance premium as a share of gross
domestic product.
9. Insurance density: Insurance density is defined as per capita expenditure on
insurance premium i.e. premium per capita.
10. Actuary: The actuary is a specialist who combines an understanding of risks and
mathematical technique to develop financial products to manage these risks, price
these products. He helps in designing insurance plans and then evaluates the
financial risk of the company which it takes while selling an insurance policy.

4. TYPES OF INSURANCE

Insurance is broadly divided in two segments, based on the nature of insurance, those are:

1. Life Insurance &
2. Non-Life Insurance or General Insurance. It can be again subdivided into the
following categories:
a) Fire Insurance.
b) Marine Insurance.
c) Social Insurance &
d) Miscellaneous Insurance. (Health insurance, Liability Insurance etc….)


5. HISTORY OF INSURANCE GLOBAL
For now we know the meaning of insurance, different types of insurance. Now let
us know the history and reasons for and behind different types of insurance.
Insurance has existed for thousands of years. The first ever type of insurance was
Property Insurance. It became popular about 3000 BC in China. It all started when
Chinese merchants, as well as their investors, wanted to ensure that they would see a
profit from their goods that they shipped overseas. In the event that a ship was lost at sea,
an insuring partner would reimburse the owners of the ship and goods. To pay for the loss
the merchant would be sold into slavery to the insurer until the debt was repaid. This was
so because, a merchant could not afford to pay for the lost goods or even to buy a ship
unless someone invested.
Property insurance was also seen in Babylon as well. In Babylon, merchants and
investors entered into a contract, in which the supplier of money for a trade agreed to
cancel the loan if the trader was robbed of his goods. The trader who borrowed the
money paid an extra amount for this protection in addition to the usual interest. As for the
lender, collecting these premiums from many traders made it possible for him to absorb
the losses of the few. Later this contract was extended to include provisions for a family's
home and even the death of the insured, where life insurance came into existence. Slowly
this concept started to spread across other places like Greek, Roman.
Since ancient times, communities have pooled some of their resources to help
individuals who suffer loss. Like, about 3500 years ago, Moses instructed the nation of
Israel to contribute a portion of their produce periodically for "the alien resident and the
fatherless boy and the widow."
Later the origin of credit insurance, which was included in the Code of
Hammurabi, a collection of Babylonian laws said to predate the Law of Moses. Credit
insurance means, in ancient times the ship owners obtained loans from investors to
finance their trading expeditions. In case, if a ship was lost, the owners were not
responsible to pay back the loans to the investors. The risk to the lenders was covered by
the interest paid by numerous ship owners, since many ships returned safely.


By the middle of the 14th century, marine insurance was one of the most popular
types of insurance among nations of Europe. Things changed dramatically in the 17th
century in Europe. In 1666, the Great Fire of London bought the need for fire
insurance .The Great Fire of London burned for four days and nights. It destroyed 436
acres, 13,200 houses, 89 churches (including Saint Paul's Cathedral), the Custom House,
the Royal Exchange and dozens of other public buildings. Only six people were victims
in the flames, but hundreds died from shock and exposure.
By 1688, Edward Lloyd was running a coffeehouse in London. Where, London
merchants and bankers met informally to do business. There financiers who offered
insurance contracts to seafarers wrote their names under the specific amount of risk that
they would accept in exchange for a certain payment, called premium. These insurers
came to be known as underwriters. Finally, in 1769, Lloyd's became a formal group of
underwriters that in time grew as an insurance company.
The concept of insurance developed at a fast pace with the growth of British
commerce in the 17th and 18th century. The first stock companies to engage in insurance
were chartered in England in the year 1720.
In 1735, the first insurance company in the American colonies was founded at
Charleston. Later in the year 1787, fire insurance corporations were formed in New York.
Then later in the year 1759, the life insurance corporation was started in Philadelphia,
America.
The New York fire which occurred in the year 1835 was the main reason to draw
attention to create reserves to meet unexpected losses. In the year 1837, Massachusetts
was the first state to require companies by law to maintain such reserves. After 1840, life
insurance entered a boom period.
The Workmen's Compensation Act of 1897 in Britain required employers to
insure their employees against industrial accidents. Public liability insurance, fostered by
legislation, made its appearance in the 1880s.It attained major importance with the advent
of the automobile.
Until the 1950s, most insurance companies in the United States were restricted to
provide only one type of insurance, but then legislation was passed to permit fire and


casualty companies to underwrite several classes of insurance. Many firms have since
expanded and also were responsible for many mergers.
From this brief accounting of history we can see how insurance came into
existence. Fortunately for us we no longer have to sell ourselves into slavery if our car is
stolen nor we have to be scared of losses due to absence of reserves. However we can be
confident that we will be compensated for our loss. Without people wanting to secure
their investments and great tragedies throughout history we may not have insurance as we
know it today resulting in peace of mind.

6. HISTORY OF INSURANCE INDUSTRY IN INDIA
The insurance industry in India over the past century has gone through big
changes. In India this industry reveals the 360 degree turn. 360 degree turn means that it
started in India from being an open competitive market to nationalization and back to a
liberalized market again.
Insurance industry in India started as a fully private system with no restriction on
foreign participation in the Nineteenth Century. Before independence, a few British
insurance companies dominated the Market. Life insurance was first set up in India
through a British company called the Oriental Life Insurance Company in 1818, followed
by the Bombay Assurance Company in 1823 and the Madras Equitable Life Insurance
Society in 1829.All of these companies operated in India but did not insure the lives of
Indians. They were there insuring the lives of Europeans living in India. Some of the
companies that started later did provide insurance for Indians. But, they were treated as
"substandard" and therefore had to pay an extra premium of 20% or more. The first
company that had policies that could be bought by Indians with "fair value" was the
Bombay Mutual Life Assurance Society starting in 1871.
The first general insurance company, Triton Insurance Company Ltd., was
established in 1850. It was owned and operated by the British. The first general insurance
company was the Indian Mercantile Insurance Company Limited set up in Bombay in
1907.By 1938; the insurance market in India had nearly 176 companies (both life and
non-life).


After the independence, the industry went to the other extreme. It became a state-
owned monopoly. The industry started to witness a problem like fraud. Hence many
regulations were put in place to reduce and control the problems in the industry. After
which Insurance was nationalized. In 1956, the then finance minister S. D. Deshmukh
announced nationalization of the life insurance business and then the general insurance
business was nationalized in 1972. Only in 1999 private insurance companies have been
allowed back into the business of insurance with a maximum of 26% of foreign holding.


7. INDIAN SCENARIO

INDIAN
INSURANCE INDUSTRY

LIFE NON LIFE
INSURANCE INSURANCE

Public Private Public Private
Sector (1) Sector (15) Sector (4) Sector (9)

8. LIFE INSURANCE
After the entry of new players and increase in the penetration levels, could see the
insurance sector cross the Rs 2,00,000-core mark in business by 2010.The current size of
the sector is estimated to be at Rs 50,000 crore, which has seen a compound annual
growth rate (CAGR) of around 175 percent in the last few years.
The insurance sector, both life and non life, is likely to grow by over 200 percent,
and private insurers are expected to achieve a growth rate of 140 percent as a result of
aggressive marketing technique. It added that state owned insurance companies are likely
to be 35-40 percent.
On account of intense marketing strategies adopted by the private insurance
players, the market share of state-owned insurance companies like GIC, LIC and others
has come down to 70 percent in last 4-5 years from over 97 percent. Despite regulation,


the private players are offering 35 percent rate of return to is policy holders against 20
percent by public-sector insurers.
The industry body also noted that India’s life insurance premium is 1.8 percent as
a percentage of GDP whereas it is 5.2 percent in the US, 6.5 percent in the South Korea.
The services sector offers immense opportunities for expansion opportunities for
expansion opportunities and the rural market, also, offers tremendous growth
opportunities for insurance companies.

9. GENERAL INSURANCE
General insurance in India has been expecting growth except in some portfolios
like motor insurance, fire and engineering. These portfolios are still under tariff- this
means that premium depends on a fixed predetermined rate structure.
In India, GDS as a proportion of GDP at current prices increased from 26.1% in
2002-03 to 28.1% in 2003-04.house hold sector continued to be the major contributor to
GDS at 24.3% in 2003-04.this can be attributed to soft interest rates prevailing in housing
sector. General Insurance has low market penetration. It is 1.95% and ranks 51st.
However in collection of premium it is ranked 23rd. The ratio of the premium collected to
that of GDP is 0.58. The main reason for the general insurance industry to perform very
poorly was because of the slow settlement of claims. Moreover the rates of claim in India
were highest in the world. It was 70 percent compared to 40 percent internationally. This
meant that out of 100 people who had insured their commodities 70 claimed for a loss or
damage. The main reason for the lack of demand for general insurance is that people
consider it as an unnecessary expenditure. However it must be noted that the general
insurance has been earning consistent profits and has an efficient dividend paying record
accompanied by a steady growth in its financial resources. The industry is recognized as
one of the largest financial Institutions in the country. Some of the private players in this
sector are- ICICI – Lombard, Reliance, Royal-Sundaram, Chholamandalam etc.


10. PRIVATE PLAYERS IN THE LIFE INSURANCE SECTOR

The different private players in the life insurance sector and their associations with
foreign companies are being given below:

COMPANY INDIAN FOREIGN TOTAL FDI FOREIGN
PROMOTER/PARTNER INSURER CAPITAL (%) CAPITAL
(RS MN.) (RS MN.)
AMP RELIANCE None 2,170 0 0
SANMAR GROUP(ADAG)
Aviva Life Dabur Aviva (UK) 4,590 26 1193.4
Bajaj- Bajaj Auto Allianz 3680 26 960
Allianz (Germany)
Birla Sun Aditya Birla Group SunLife (Canada) 4,000 26 1,040
Life
HDFC HDFC StandardLife 2,500 18.9 470
Standard (UK)
ICICI ICICI Bank Prudential (UK) 10,850 26 2,820
Prudential
ING Vysya Vysya Bank ING Ins. 4,400 26 680
(Netherlands)
Kotak Kotak Mahindra Bank OldMutual (South 2,600 26 680
Mahindra Africa)
Old Mutual
Max Max India NewYorkLife 5,000 26 1,300
Newyork (US)
Met Life J&K Bank Met Life (US) 3,550 26 920
Sahara Life Sahara India None 1,000 0 0
Ins. I
SBI Life SBI Cardiff (France) 3,500 26 910


TATA AIG TATA Group AIG (US) 3,810 26 990
Shriram Shriram Sanlam Life Ins.
Bharti AXA Bharti Group AXA(Australia)

Some of the new companies who are waiting to come in to the life insurance sector are:
a. IDBI-FORTIS.
b. Syndicate Bank


11. CONTRIBUTION OF THE INSURANCE SECTOR TO INDIAN ECONOMY

Some surveys have predicted that India and China will play a very vital role in the
years to come. Indian economy can be termed as an emerging economy as it is doubling
its GDP in 3 to 5 years and moreover it is not dependent on any particular sector for its
GDP.
If we look at the GDP of the Indian economy very closely over the years, we can
easily come to know the changing structure of the economy. We can also come to know
the changing contribution of the various sectors like agriculture, manufacturing and the
service sector. In the financial year 1993-94, agricultural sector contributed to 31%,
manufacturing accounted to 26.3% and the service sector contributed to 42.7% of the
total GDP of the country. Thus over the years as India became an emerging economy in
2003-04 manufacturing sector contributed for 21.7 %, manufacturing contributed for 26.8
whereas service sector contributed for 51.4% of the total GDP.
There has been 7.5% growth in the total GDP of the country and is estimated to
grow at 8.0% in 2006-07. The Indian economy has shown signs of strong performance
despite a rise in oil prices, high inflation rate and abnormal rains in many parts of the
country. The overall growth of the Indian economy has been equally supported by all the
three sectors of the economy, i.e. the agriculture, manufacturing and the service sector.
Insurance, together with the banking sector, contributes to about 7.3 % of the total GDP
of India, and the gross premium collected contributes to about 2% of the total GDP of the
country
The insurance sector in India has completed 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 200 years.


12. GOVERNMENT POLICIES REGARDING LIFE INSURANCE

Insurance Regulatory and Development Authority (IRDA) 1999
Reforms in the insurance sector were initiated with the passage of the IRDA bill in
December 1999.it was set up as an independent body and it has been able to frame
globally compatible legislations.
The IRDA was set up to protect the interests of holders of insurance policies ,to
regulate ,promote and insure orderly growth of the insurance industry and for matters
connected therewith or incidental thereto.
This act extends to whole of India. With the establishment of this act, government
amended Insurance act 1938, Life Insurance Act 1956 and General Insurance Act 1972.
IRDA was formed on the recommendations of Malhotra Committee. In 1999 government
of India has set up Malhotra Committee to examine the structure of insurance industry
and recommend changes, under R.N Malhotra –former governor of RBI.


1.3 COMPANY PROFILE

The Industrial Credit and Investment Corporation of India Limited (ICICI) was
formed in 1955 which is incorporated at the initiative of the World Bank, the
Government of India and representatives of Indian industry, with the objective of creating
a development financial institution for providing medium-term and long-term project
financing to Indian businesses. Mr.A.Ramaswami Mudaliar elected as the first Chairman
of ICICI Limited. ICICI emerges as the major source of foreign currency loans to Indian
industry. Besides funding from the World Bank and other multi-lateral agencies, ICICI
was also among the first Indian companies to raise funds from international markets.

1. WHAT IS ‘ICICI GROUP’?
We are a part of the renowned ICICI Group, a diversified universal banking
group, with a track record of over 50 years in a variety of financial services.
ICICI was formed in 1955, as a result of the focused efforts of the World Bank, the
Government of India and the representatives of Indian Industry. Today, ICICI Bank has
grown to become India’s second largest bank, with over 24 million customers worldwide.
It is also the first bank from Asia (excluding Japan) to be listed on the NYSE.
ICICI Bank is a truly global bank, with presence at key locations across the globe in
Bahrain, Bangladesh, Belgium, Canada, China, Dubai, Hong Kong, Indonesia,
Malaysia, Russia, Singapore, South Africa, Sri Lanka, Thailand, UK, USA and Quatar.
ICICI Group’s expertise spans a vast range of financial services, including banking,
broking, mutual funds, insurance, home loans, venture funds and much more. The
Group is the largest consumer credit provider and the biggest private sector, life and
general insurer in India. Expertise across a vast range of products. All blended to bring
you seamless financial solutions that ensure you have the advantage in every financial
decision. Wherever you may be in the world.


2. STRUCTURE OF ‘ICICI GROUP’

3. OBJECTIVES OF ICICI GROUP
TRUST
We view each client relationship as a “partnership for success”. We regard your financial
needs as our own and aim to achieve your investment goals with you. We put our best
resources behind you to ensure that your investment objectives are more than met.
AGILITY
We seek to deliver superior value to you. We respond quickly and efficiently to market
opportunities, and offer the most apt financial solutions so that you can reap the best
possible benefits.


INNOVATION
We believe that the cornerstone of success in today’s competitive environment is
Innovation. We seek newer opportunities constantly, to fulfill your emerging needs and
wants.

4. ICICI BANK

ICICI Bank is India's second-largest bank with total assets of Rs. 3,767.00 billion
(US$ 96 billion) at December 31, 2007 and profit after tax of Rs. 30.08 billion for the
nine months ended December 31, 2007. ICICI Bank is second amongst all the companies
listed on the Indian stock exchanges in terms of free float market capitalization*. The
Bank has a network of about 955 branches and 3,687 ATMs in India and presence in 18
countries. ICICI Bank offers a wide range of banking products and financial services to
corporate and retail customers through a variety of delivery channels and through its
specialised subsidiaries and affiliates in the areas of investment banking, life and non-life
insurance, venture capital and asset management. The Bank currently has subsidiaries in
the United Kingdom, Russia and Canada, branches in Unites States, Singapore, Bahrain,
Hong Kong, Sri Lanka, Qatar and Dubai International Finance Centre and representative
offices in United Arab Emirates, China, South Africa, Bangladesh, Thailand, Malaysia
and Indonesia. Our UK subsidiary has established branches in Belgium.

ICICI Bank's equity shares are listed in India on Bombay Stock Exchange and the
National Stock Exchange of India Limited and its

5. COMPANIES UNDER ‘ICICI BANK’
A) ICICI PRUDENTIAL AMC AND TRUST:
ICICI Prudential Asset Management Company enjoys the strong parentage of
prudential plc, one of UK's largest players in the insurance & fund management sectors
and ICICI Bank, a well-known and trusted name in financial services in India. ICICI
Prudential Asset Management Company, in a span of just over eight years, has forged a
position of pre-eminence in the Indian Mutual Fund industry as one of the largest asset
management companies in the country with assets under management of Rs. 37,906.24


crore (as of March 31, 2007). The Company manages a comprehensive range of schemes
to meet the varying investment needs of its investors spread across 68 cities in the
country.
Key Indicator:
During the year march 1998 Asset Under Management was Rs160 cores with only
two funds managed, as on February 29, 2008 now it raised up to Rs 62,008.95 cores with
35 funds.

B) ICICI SECURITIES – INDIA’S LEADING INVESTMENT BANK

A subsidiary of ICICI Bank - the largest and most recognized private bank in
India – ICICI Securities Ltd is premier Indian Investment Bank, with a dominant position
in its core segments of its operations - Corporate Finance including Equity Capital
Markets Advisory Services, Institutional Equities, Retail and Financial Product
Distribution With a full-service portfolio, a roster of blue-chip clients and performance
second to none, we have a formidable reputation within the industry.

The Corporate Finance team regularly ranks highest among the leading capital
markets league tables and recently topped the Prime Database League tables for funds
mobilized through equity instruments in the first half of CY 07.

ICICI Securities Inc., the step down wholly owned US subsidiary of the company
is a member of the National Association of Securities Dealers, Inc. (NASD). As a result
of this membership, ICICI Securities Inc. can engage in permitted activities in the U.S.
securities markets. These activities include Dealing in Securities and Corporate Advisory
Services in the United States and providing research and investment advice to US
investors.

ICICI Securities Inc. is also registered with the Financial Services Authority, UK
(FSA) and the Monetary Authority of Singapore (MAS) to carry out Corporate Advisory
Services and Dealing in Securities.


C) ICICI VENTURE
ICICI Venture is one of the largest and most successful private equity firms in
India with funds under management in excess of USD 2 billion.

ICICI Venture, over the years has built an enviable portfolio of companies across sectors
including pharmaceuticals, Information Technology, media, manufacturing, logistics,
textiles, real estate etc thereby building sustainable value.

It has several “firsts” to its credit in the Indian Private Equity industry. Amongst them are
India’s first leveraged buyout (Infomedia), the first real estate investment ( Cyber
Gateway), the first mezzanine financing for a acquisition (Arch Pharmalabs) and the first
‘royalty-based’ structured deal in Pharma Research & Development (Dr Reddy’s).

ICICI Venture is a subsidiary of ICICI Bank, the largest private sector financial services
group in India.

D) ICICI LOMBARD GENERAL INSURANCE COMPANY LIMITED
ICICI Lombard General Insurance Company Limited is a 74:26 joint venture
between ICICI Bank Limited and the Canada based $ 26 billion Fairfax Financial
Holdings Limited. ICICI Bank is India's second largest bank, while Fairfax Financial
Holdings is a diversified financial corporate engaged in general insurance, reinsurance,
insurance claims management and investment management.
Lombard Canada Ltd, a group company of Fairfax Financial Holdings Limited, is
one of Canada's oldest property and casualty insurers. ICICI Lombard General Insurance
Company received regulatory approvals to commence general insurance business in
August 2001.


E) ICICI PRUDENTIAL LIFE INSURANCE COMPANY
ICICI Prudential Life Insurance Company is a joint venture between ICICI Bank,
a premier financial powerhouse, and Prudential plc, a leading international financial
services group headquartered in the United Kingdom. ICICI Prudential was amongst the
first private sector insurance companies to begin operations in December 2000 after
receiving approval from Insurance Regulatory Development Authority (IRDA).

ICICI Prudential Life Insurance Company is a joint venture between ICICI Bank,
a premier financial powerhouse, and Prudential plc, a leading international financial
services group headquartered in the United Kingdom. ICICI Prudential was amongst the
first private sector insurance companies to begin operations in December 2000 after
receiving approval from Insurance Regulatory Development Authority (IRDA).

ICICI Prudential Life's capital stands at Rs. 37.72 billion (as on February, 2008)
with ICICI Bank and Prudential plc holding 74% and 26% stake respectively. For the
nine months period April 1 to December 31, 2007, the company garnered new business
weighted premium of Rs. 4,586 crore and has underwritten around 18 lakh policies
during the period. The company has assets held over Rs. 28,000 crore.

ICICI Prudential Life is also the only private life insurer in India to receive a
National Insurer Financial Strength rating of AAA (Ind) from Fitch ratings. The AAA
(Ind) rating is the highest rating, and is a clear assurance of ICICI Prudential's ability to
meet its obligations to customers at the time of maturity or claims.

For the past seven years, ICICI Prudential Life has retained its leadership position
in the life insurance industry with a wide range of flexible products that meet the needs of
the Indian customer at every step in life.


a) VISION
To be the dominant Life, Health and Pensions player built on trust by world-class
people and service.

This we hope to achieve by:

• Understanding the needs of customers and offering them superior products and
service
• Leveraging technology to service customers quickly, efficiently and conveniently
• Developing and implementing superior risk management and investment
strategies to offer sustainable and stable returns to our policyholders
• Providing an enabling environment to foster growth and learning for our
employees
• And above all, building transparency in all our dealings

The success of the company will be founded in its unflinching commitment to 5 core
values ,Integrity, Customer First, Boundaryless, Ownership and Passion. Each of the
values describe what the company stands for, the qualities of our people and the way we
work.

b) VALUES

Every member of the ICICI Prudential team is committed to 5 core values:
Integrity, Customer First, Boundary less, Ownership, and Passion. These values shine
forth in all we do, and have become the keystones of our success.


c) DEPARTMENTS AND BRANCHES OF ICICI PRUDENTIAL LIFE
INSURANCE COMPANY LIMITED
Branches:
ICICI Prudential Life has one of the largest distribution networks amongst private
life insurers in India. It has a strong presence across India with over 945 branches in
addition to 550 micro-offices and an advisor base of 270,000.

Distribution Network:

There are four different ways of distributing a Life insurance product namely;

1. Agents (Financial Advisors):- Anybody possessing the minimum qualification
of 10+2 after completing 100 hrs of training from the training institute approved
by IRDA can sell life insurance products of any particular company which has
sponsored him to take the training. This is the most popular distribution channel.

2. Corporate Agents Any corporate may apply for license to sell insurance after
complying with the requirements of IRDA.

3. Bancassurance If the corporate agent is a bank, then it is known as
bancassurance. Banks can sell the policies to their existing as well as prospective
clients. This is becoming quite popular these days and the bank earns huge fund
based income. Bancassurance has 1% share in total premium collection in
2004-05.

4. Broker They are like corporate agents with only difference that they can sell
the products of more than one insurance company.

Departments:
The various departments that can be seen in an insurance organization and that has
been observed by me are as follows:

a) Marketing Department: This department mainly deals with the marketing and
promotion part of the Insurance Company. They spend most of their time in


formulating strategies to make their products known to the common people and to
promote the same in a easy and cost effective way.
b) Sales Department: This department mainly deals with the sales part of the
Insurance Company; the department includes designations like Sales Manager and
Financial Advisor who personally contacts with people for performing the task of
sales of various products.
c) Accounts/ Financial Department: This department has the task of keeping track
of the various expenses incurred by the various other departments of the
organization and also performs the task of allocating various funds to different
departments according to their requirements.
d) Human Resource Department: This department is handled by the Human
Resource manager of the company. The function of this department involves the
well being of the employees of the company, I,e, to see whether there is employee
grievance in the organization or not and if it is there what are the possible causes
for that and also try to find out solutions for the same if possible.
e) Investment Department: This department deals with the task of investing the
money of the policy holders in such way that will ensure both safety of the money
and also a steady return on the same. The task of this department is very difficult
as it deals with the money given by the policy holders, so it requires lot of
thinking on the part of the personnel of this department before deciding where to
invest the money.
f) Actuarial Department: This department is under the supervision of an Actuary
who decides the premiums and charges to be taken from the policy holder on the
basis of certain information’s (like Age, Annual Income etc.) provided by the
prospective customer. The task also involves the calculation of mortality charges
which requires high statistical knowledge from one’s point of view. So, this
department involves in the calculation of various amounts to be charged from the
prospective customers.


d) ICICI PRUDENTIAL LIFE INSURANCE PRODUCTS
Insurance Solutions for Individuals

ICICI Prudential Life Insurance offers a range of innovative, customer-centric
products that meet the needs of customers at every life stage. Its products can be
enhanced with up to 4 riders, to create a customized solution for each policyholder.

Savings & Wealth Creation Solutions

• Save'n'Protect is a traditional endowment savings plan that offers life protection
along with adequate returns.
• CashBak is an anticipated endowment policy ideal for meeting milestone
expenses like a child's marriage, expenses for a child's higher education or
purchase of an asset. It is available for terms of 15 and 20 years.
• LifeTime Gold & LifeTime Plus are unit-linked plans that offer customers the
flexibility and control to customize the policy to meet the changing needs at
different life stages. Each offer 6 fund options - Preserver, Protector, Balancer,
Maximiser, Flexi Growth and Flexi Balanced.
• LifeLink Super is a single premium unit linked insurance plan which combines
life insurance cover with the opportunity to stay invested in the stock market.
• Premier Life Gold is a limited premium paying plan specially structured for
long-term wealth creation.
• InvestShield Life New is a unit linked plan that provides premium guarantee on
the invested premiums and ensures that the customer receives only the benefits of
fund appreciation without any of the risks of depreciation.
• InvestShield Cashbak is a unit linked plan that provides premium guarantee on
the invested premiums along with flexible liquidity options.
• LifeStage RP is a unique and powerful wealth creation insurance solution, which
combines the benefits of automatic asset allocation and quarterly rebalancing
along with increased protection.


Protection Solutions

• LifeGuard is a protection plan, which offers life cover at low cost. It is available
in 3 options - level term assurance, level term assurance with return of premium
& single premium.
• HomeAssure is a mortgage reducing term assurance plan designed specifically to
help customers cover their home loans in a simple and cost-effective manner.

Education insurance plans

• Education insurance under the SmartKid brand provides guaranteed educational
benefits to a child along with life insurance cover for the parent who purchases
the policy. The policy is designed to provide money at important milestones in the
child's life. SmartKid plans are also available in unit-linked form - both single
premium and regular premium.

Retirement Solutions

• ForeverLife is a traditional retirement product that offers guaranteed returns for
the first 4 years and then declares bonuses annually.
• LifeTime Super Pension is a regular premium unit linked pension plan that helps
one accumulate over the long term and offers 5 annuity options (life annuity, life
annuity with return of purchase price, joint life last survivor annuity with return of
purchase price, life annuity guaranteed for 5, 10 and 15 years & for life thereafter,
joint life, last survivor annuity without return of purchase price) at the time of
retirement.
• LifeLink Super Pension is a single premium unit linked pension plan.
• Immediate Annuity is a single premium annuity product that guarantees income
for life at the time of retirement. It offers the benefit of 5 payout options.
• PremierLife Pension is a unique and convenient retirement solution with a
limited premium paying term of three or five years, to suit professionals and
businessmen, especially those who require more flexibility and customization
while planning their finances.


Health Solutions

• Health Assure Plus: Health Assure is a regular premium plan which provides
long term cover against 6 critical illnesses by providing policyholder with
financial assistance, irrespective of the actual medical expenses. Health Assure
Plus offers the added advantage of an equivalent life insurance cover.
• Cancer Care: is a regular premium plan that pays cash benefit on the diagnosis
as well as at different stages in the treatment of various cancer conditions.
• Cancer Care Plus: is a wellness plan that includes all the benefits of Cancer Care
and also provides an additional benefit of free periodical cancer screenings.
• Diabetes Care: Diabetes Care is a unique critical illness product specially
developed for individuals with Type 2 diabetes and pre-diabetes. It makes
payments on diagnosis on any of 6 diabetes related critical illnesses, and also
offers a coordinated care approach to managing the condition. Diabetes Care Plus
also offers life cover.
• Diabetes Care Plus: is a unique insurance policy that provides an additional
benefit of life cover for Type 2 diabetics and pre-diabetics
• Hospital Care: is a fixed benefit plan covering various stages of treatment -
hospitalisation, ICU, procedures & recuperating allowance. It covers a range of
medical conditions (900 surgeries) and has a long term guaranteed coverage upto
20 years.
• Crisis Cover : is a 360-degree product that will provide long-term coverage
against 35 critical illnesses, total and permanent disability, and death.

Group Insurance Solutions
ICICI Prudential Life also offers Group Insurance Solutions for companies seeking to
enhance benefits to their employees.

Flexible Rider Options
ICICI Prudential Life offers flexible riders, which can be added to the basic policy at a
marginal cost, depending on the specific needs of the customer.


1.4 SCOPE OF THE STUDY

• The result of this research would help the company to have a better understanding
about the consumer’s perception towards life insurance.
• The study helps the company by creating awareness about the consumers of
different ages and income levels.
• The study also enables the company to focus the consumer’s preferences and
expectations on the product which they offer.


1.5 OBJECTIVES OF THE STUDIES

a) To know about the various Investment alternatives that is mostly preferred by the
people.
b) To find out the important criteria that people think about before investing in a life
insurance policy.
c) To find out whether gender bias involved in investing life insurance or not.
d) To find out the awareness of ICICI Prudential Life Insurance among the people.


1.6 RESEARCH METHODOLOGY

Methodology is a systematic way of solving a problem it includes the research
methods for solving a problem it includes the research methods for solving the
problem.
Type of research - Descriptive research
Data source -Primary and Secondary data
Data collection method -Interview and survey
Data collection tools -Questionnaires
Sampling universe -Erode
Sample size -100

SAMPLE DESIGN
The target population of the study consists of various respondents of various
places. This survey was done by collecting the data from the respondents.

SAMPLE SIZE
After due consultation with the company supervisor as well as with the college
guide, also keeping in mind the requirements of the company for the research, the sample
size that was found to be appropriate for the study was 100.

SAMPLING TECHNIQUE
The sampling technique that adapted to conduct the survey was ‘Convenient
Random Sampling’ and the area of the research was concentrated in the city of Erode
only. The survey was conducted by visiting different places like colleges, corporate
offices, respondent’s home etc...


DATA SOURCE
The task of data collection begins after a research problem has been defined. In
this study data was collected through both primary and secondary data source.

A. PRIMARY DATA
A primary data is a data, which is collected for gathering information first time
and to analyze the problem. In this study the primary data was collected among the
consumers using questionnaire.

B. SECONDARY DATA
Secondary data consist of information that already exits somewhere, having been
collected for some other purpose. In this study secondary data was collected from
company websites, magazines and brochures.

STATISTICAL TOOLS
Simple percentage analysis, ranking method and chi square analysis are the main
statistical tool used for the study.

SIMPLE PERCENTAGE ANALYSIS
Percentage refers o a special king of ratio in making comparison between two or
more data and to describe relationships. Percentage can also be used to compare the
relation terms between two or more sources of data.

Percentage of respondents = Number of respondents * 100
Total respondents


RANKING METHOD (WEIGHTED AVERAGE METHOD)
This technique was used to rank out the opinion about the consumers preference
towards different investment alternatives. The order of merit given by the respondents
was converted into ranks by using the following formula.
Weightage Score = Σ Wi * Xj
Where Wi = Weightage value and Xj = Ranking position value

CHI SQUARE TEST
Chi Square is a statistical measure used in the context of sampling analysis for
comparing the variance to a theoretical variance. In order to judge the significance of
association between two attributes, we make use of chi square test by finding the values
of chi square using the chi square distribution.


1.7 LIMITATIONS OF THE RESEARCH

The following limitations can be pointed out from the research that I conducted in
relation to the problems that were given to me by ICICI Prudential Life Insurance
Company Limited:

a) The sample size chosen for the questionnaire was only 100 and that may
not represent the true picture of the consumer perception about the Life
Insurance sector.

b) The research got confined to the city of Erode. The respondent belonged
only to Erode and not others who were out of Erode.

c) Nearly 98% of the respondent belonged to the age group of 20-50 years
and only 2% were above 50 years. So, the responses and the opinions of
the experienced and aged were not available. So, the findings may not be
correct when we think about the opinion of the elderly people about the
life insurance.

d) The selection of people for the questionnaire was done on the basis of
convenient random sampling, so, there were certain cases in which the
people selected did not have any life insurance policy, so they could not
give any positive feedback regarding the important criteria to be
considered before taking an life insurance policy. So, this further reduced
the actual number of respondents to 76 from 100.

e) The product offered by different companies had different options and
names in them, so at the time of comparison it became very difficult. The
parameters for comparison were also different in the selected companies.


f) One of the important criteria that was selected by the respondents which
they consider before taking an insurance policy was ‘Company Image’,
but there was no parameter available to compare criteria like this between
the companies.


CHAPTER-II
DATA ANALYSIS AND INETERPRETATION

Table-2.1

GLOBAL SCENARIO OF THE INSURANCE INDUSTRY
If we see the table-2.1 in terms of both the premium value and the total market share of
some of the leading countries operating in the Insurance sector, the following picture
emerges in front of us.

Country Total Life Premium Market
(in $bn.) Share in
percentage
US 517.0 26.2
Japan 375.9 19.5
UK 194.0 10.11
France 154.0 7.81
Italy 91.7 4.65
Germany 90.2 4.57
China 39.5 2.1
Taiwan 38.8 1.97
India 20.1 1.08
Others 452.8 22.07

The above table shows that US is still the leader in Life Insurance sector, closely
followed by Japan. India’s share in the global market has doubled since 2000 (0.50%) to
2006 (1.08%), but the growth of china is the maximum from 0.79% in 2000 to 2.10% in
2006. The total premium received in life insurance sector has increased from $ 1,521 bn.
in 2000 to $ 1,974 bn. in the year 2006.


Chart-2.1

Shares of different countries in Life Insurance

Shares of different countries in Life Insurance

US
452.8 517 Japan
UK
France
80.1 Italy
38.8 Germany
China
39.5
Taiwan
90.2 375.9 India
91.7 154 Others
194

Source: The Economic Times, dated – 20th July, 2006.


Table-2.2

Market share of LIC and Private Players

Market Players Market share in
percentage
Private players 28.44
LIC 71.56
Total 100

Interpretation:

LIC market share continued to decline in the period up to June 2007, it declined to
71.56% from 78.23% in the same period last year. On the other hand the market share of
the private players is continuously growing up; it increased to 28.44% from 21.77% in
terms of insurance premium.


Chart-2.2

Market share of LIC and Private Players

Market share of LIC and Private Players up to
June 2007

28.44%

Private Players
LIC

71.56%


Table-2.4.3
Market Share among Private players

Private players Market share in Market share
percentage change in
percentage
ICICI Prudential 29 4

Bajaj Allianz 21 1

SBI Life 10 0
HDFC Standard 9 1
Reliance Life 9 0
Birla Sunlife 5 -1
Kotak Mahindra 3 0
Old Mutual

Met Life 3 1
Aviva 3 0
Tata AIG 3 1
Max New York 2 -4
ING Vysya 2 -1
Bharti Axa Life 1 0

Sahara Life 0 0

Shriram Life 0 -1

Private total 100

Interpretation:

ICICI PRUDENTIAL BECOMES THE MARKET LEADER AMONG PRIVATE
PLAYERS:

ICICI Prudential strengthens its position at the top of the heap by increasing its market
share by 4% in the month of Jan 2008, followed by Bajaj Allianze with 21% market
share. These two private players contribute 50% of the total insurance market among the
private players.


Chart-2.3

Market Share among Private players

Market share among private players ICICI Prudential
Bajaj Allianz
5%
SBI Life
9% 3% HDFC Standard
9%
3% Reliance Life
3% Birla Sunlife
10% 2% Kotak Mahindra
3%
Met Life
5% Aviva
2%
Tata AIG
21% 1% Max New York
0% ING Vysya
29% Bharti Axa Life
0%
Sahara Life
Shriram Life


Table-2.4
Sales Growth among Private players

Private players Year to year growth
in sales in
percentage
ICICI Prudential 116

Bajaj Allianz 105

SBI Life 138

HDFC Standard 88
Reliance Life 335

Birla Sunlife 152
Kotak Mahindra 121
Old Mutual
Met Life 125

Aviva 60
Tata AIG 100
Max New York 40

ING Vysya 74
Bharti Axa Life 362

Sahara Life 238

Shriram Life 91

Private total 119

Interpretation:

Private sector sales continued to be robust at 119% year to year (YoY), up from 118%
YoY last month. The month also saw LIC make up some lost ground by growing faster
than the system at 133% YoY. Among the larger players, Reliance, SBI Life and Birla
Sun Life continued to be the rising stars with the fastest YoY growth rates.


Chart-2.4

Sales Growth among Private players


Table-2.5
Various investment alternatives available to consumers

Let us see what are the various investment alternatives that are available to the people
and among that which are the most preferred one. Now, from the data collected from the
100 respondents which were surveyed through the questionnaire, the following
representation can be made:

Investment Total Rank
Alternatives score
Bank Deposits 6.75 I

Insurance 6.46 II

Post office 5.57 III

Gold & Silver 5.33 IV
Real Estate 5.07 V

Mutual fund 4.83 VI

Equity/Shares 3.84 VII
Public Provident 3.78 VIII
Fund(PPF)
Bond & Debentures 1.74 IX

Interpretation:

From the above table-2.5 it can be seen that ranks for theses investment alternatives
where analyzed by weighted average method. From this analyze we found Bank
Deposits is the most preferred investment alternative among the people with the
average of 6.75, secondly Insurance with the average of 6.46, followed by other
investment alternatives like Post Office (5.57), Gold and Silver (5.33), Real Estate
(5.07), Mutual Fund (4.83), Equity (3.84), PPF (3.78) and least preferred alternative
is that Bond and Debenture (1.74).we understood from this analyze that people prefer
the safe and secure investment alternatives like bank deposits, insurance, real estates,


than risky investment alternatives like bonds, equities etc.. The reason that can be
attributed for the liking of people towards bank deposit is that people expect safety
for their money they deposit even though there is less appreciation on their deposit.
Secondly insurance, may be because that insurance provides both life cover as well as
security to the holder of the policy and also to the family members of the insurance
holders. Now a days insurance is also providing option to invest in the markets
through plans like ULIP, which gives the holder both the life cover as well as an
opportunity to earn income at the market rate. Then recently real estate is the major
investment alternative among the people particularly among Erode, this is mainly due
to the increase in land value and also good long term investment preference. Gold and
silver also good investment alternative among people due to the frequent appreciation
in the values of gold, next is that mutual fund which is also the preferable investment
alternative due to low risk on their investment, and other alternatives which are not
much preferred were equities, bonds etc. mainly due to the risk involved in it.


Chart-2.5
Various investment alternatives available to consumers

Investment Alternative Preffered by people Bank Deposits

Insurance
7 6.75
6.46
Post office
6 5.575.33
5.07 Gold & Silver
5 4.83
Total scores

4 3.84
3.78 Real Estate

3 Mutual fund
2 1.74
Equity/Shares
1
Public Provident
0 Fund(PPF)
Investment Alternatives Bond &
Debentures


Segmentation of the respondents on the basis of certain important criteria:
Now, let us turn our attention towards the respondent who were covered under this study.
These respondents can be categorized on the basis of certain important criteria like age
group, annual income, life insurance policy holders and awareness of ICICI Prudential
Life Insurance in the following way

Table-2.6
Age Group

Age Group No of Percentage
Respondent
Below 30 Yrs 50 50
31-40 Yrs 32 32
41-50 Yrs 16 16
51-60 2 2
Above 60 Yrs 0 0
Total 100 100

Interpretation:

From this table-2.6 we can see that 50% of the respondent belonged to the age group of
below 30 years, followed by 32% who belonged to the age group between 31-40 years,
then 16% of respondents belong to 41-50 years and only 2% from the respondents belong
to 51-60 years but there is no respondent from the age group above 60.


Chart-2.6
Age Group

Age Group
50
50
45
40
35 32
Respondents

30
25
20 16
15
10
5 2 0
0
Below 31-40 41-50 51-60 Above
30 Yrs Yrs Yrs Yrs 60 Yrs
Age Group


Table-2.7
Annual Income Level

Annual Income Level No of Percentage
Respondent
Below 1 Lakh 33 33
1.01-3 Lakh 60 60
3.01-5 Lakh 4 4
Above 5 Lakh 3 3

Total 100 100

Interpretations:

From the above table-2.7 we can see that 33% of the respondents belonged to a
group which has an annual income of below 1 lakh, followed by highly 60% who
belonged to the group of annual income between 1-3 lakh, then 4% who have an annual
income between 3-5 lakh and 3% of respondent who have an annual income above 5
lakh.


Chart-2.7
Annual Income Level

Annual Income Level

60
60

50
Respondents

40
33
30

20

10 4 3
0
Below 1 1.01-3 3.01-5 Above 5
Lakh Lakh Lakh Lakh
Annual income


Table-2.8
Hold Life Insurance Policy

Hold life insurance No of Percentage
policy Respondent

Yes 76 76

No 24 24
Total 100 100

Interpretation:

Among the 100 respondents that were taken as a sample size, 76 of them had life
insurance policy that was either taken by him/her self or it was taken by their parents on
their name, while 24 of them did not have any kind of Life insurance policy from any
company.


Table-2.8


24%

Yes
No

76%


Table-2.4.9
Awareness about Joint venture between ICICI and Prudential

Awareness about No of Percentage
ICICI Prudential Respondent

Yes 47 47
No 53 53

Total 100 100

Interpretation:

Now coming to the point of awareness among the people about ICICI Prudential Life
Insurance, the response was very disappointing from the point of view of the
company. Out of 100 respondents 53 respondents did not have the knowledge about
the joint venture between ICICI bank with Prudential Plc of UK to form a first private
sector insurance company in India called ICICI Prudential Life Insurance in
December 2000, while the rest 47 had knowledge of the joint venture of Prudential by
ICICI.


Table-2.9
Awareness about Joint venture between ICICI and Prudential

Awarness-ICICI Prudential

47%
Yes
53% No


2.10 Important criteria before taking an life insurance
On the basics of insurance policy:
Now, let us see what criteria people consider most important before taking a life
insurance policy (the criteria for the study have been mentioned before). Here, the
highly important criterion as perceived by the people is rated as 5, if people perceived
that is only important it is rated 4, if people perceived that it can be only neutrally
important is rated as 3, then the least important criterion is being rated as 2 and if
perceived that it is not important it is rated as 1(as there are 8 criteria that have been
suggested under the research study). Here the number of respondent is only 76,
because those 26 people who do not have any life insurance policy have been
excluded from the purview of the study.

Table-2.11

Premium

Rating No of Percentage
Respondent

5 39 51.4
4 31 40.8
3 3 3.9
2 3 3.9
1 _ _

Total Insurance 76 100
holders
Total non users 24
Total 100


Chart-2.11

Premium

Prem ium

40 39
35
31
Respondents

30
25
20
15
10
5 3 3
0
0
5 4 3 2 1
Rating

Interpretation:

Now if we consider one of the criteria we can see that 51.4% of the respondent has rated
premium as the highly important thing that they consider before taking any insurance
policy from any company, and no body has rated it as the not important criterion. So, it
can be clearly interpreted that premium that the policy holder has to pay to continue
his/her policy plays a very important role before selecting the terms and conditions of the
policy and also the company from which the policy is to be taken.


Table-2.12
Charges

Respondent
5 17 22.4
4 46 60.5
3 12 15.8
2 1 1.3
1 _ _

holders
Total non users 24
Total 100

Interpretation:
Now if we consider the charges the customer has to pay to the insurance company like
Fund Management charges, administration charges etc. most of the people nearly 61%
respondent consider it as an important criterion which can dictate the terms before
deciding on whether to take the policy or not. But a few people (only 22.4% of the total
respondents), consider it to be the highly important criterion before taking the decision on
life insurance policy.


Chart-2.12

Charges

Charges

50 46
Respondents

40

30

20 17
12
10
1 0
0
5 4 3 2 1
Rating


Table-2.13

Policy Term

Respondent
5 29 38.1
4 36 47.4
3 10 13.2
2 1 1.3
1 _ _

holders
Total non users 24
Total 100

Interpretation:

The tenure of the policy i.e. the policy term depends on the policy holder but sometimes
the insurer can also influence the policy term by giving some additional benefits on
policies taken for a longer period of time or vice versa. In the study that was conducted
by us, we found out that nearly 48% of the respondents think that policy term offered by
the company is the important thing that one should consider before taking any life
insurance policy while 38.1% of the respondents think that it is the highly important thing
that one should consider before taking any life insurance policy.


Chart-2.13

Policy Term

Policy Term

40 36
35
30 29
Respondents

25
20
15
10
10
5 1 0
0
5 4 3 2 1
Rating


Table-2.14

Rider Benefits

Respondent
5 18 23.7
4 32 42.1
3 21 27.6
2 5 6.6
1 _ _

holders
Total non users 24
Total 100

Interpretation:

Rider benefits are the additional benefits that the insurer company provides to its
customers for attracting them. Things like accidental benefit, critical illness benefit, and
permanent disablement benefit are provided as a rider with the original policy with a
payment of some additional premium from the point of view of the customers. According
to the study nearly 42% of the respondents think that it is an important criterion before
selecting an insurance policy. On the other hand 27.8% and 23.7% of the respondent feel
it neutrally and the most important criterion, which indicates that people are not much
interested in additional benefits.


Chart-2.14

Rider Benefits

Rider Benefits

35 32
30
Respondents

25
21
20 18
15
10
5
5
0
0
5 4 3 2 1
Rating


Table-2.15

Bonus and Interest Paid

Respondent
5 40 52.6
4 24 31.6
3 8 10.6
2 2 2.6
1 2 2.6

holders
Total non users 24
Total 100

Interpretation:

Bonus and interest are paid by the companies to the policy holder for the policies which
are with profit policy i.e. if a person takes a with profit policy, he/she also becomes liable
to get a certain percentage of the profit that the company makes in a certain financial
year. 53% of the respondents consider it as the highly important criterion before taking a
life insurance policy and only 2.6% of respondents considered it to not important.


Table-2.15

Bonus and Interest Paid

Bonus & Interest
40
40
35
Respondents

30
25 24
20
15
10 8
5 2 2
0
5 4 3 2 1
Rating


Table-2.16

Services (Pre and Post Sales)

Respondent
5 26 34.3
4 35 46.0
3 11 14.5
2 2 2.6
1 2 2.6

holders
Total non users 24
Total 100

Interpretation:

While conducting the study we have met many respondents who think that many of the
companies provide them satisfactory services only till the policy is being taken by the
respondent, but after that if there is any requirement from the point of view of the
customer, the company does not pay the same attention to them as they had paid earlier.
So, nearly 34% of the respondents feel that services (both pre and post sales) provided by
the company is highly important to consider before undertaking any kind of life insurance
policy.


Chart-2.16

Services (Pre and Post Sales)

Services
35
35
30
26
25
Respondents

20
15
11
10
5 2 2
0
5 4 3 2 1
Rating


Table-2.17

Accessibility
Respondent
5 21 27.6
4 47 61.8
3 6 8.0
2 2 2.6
1 _ _

holders
Total non users 24
Total 100

Interpretation:

The term accessibility here refers to the easy availability of the facilities that the company
provides to its customers. The facilities may be regarding information about the company
and the various products offered by them, it can be made available through internet and
other media. According to the study nearly 62% of the respondents think it is highly
important, while 2.6% of them feel that it is the least important and no respondent
considers that it is not important that one may consider before taking any life insurance
policy.


Chart-2.17

Accessibility

Accessibility

50 47
45
40
35
Respondents

30
25 21
20
15
10 6
5 2
0
0
5 4 3 2 1
Rating


Table-2.18

Company Image
Respondent
5 41 54
4 24 31.6
3 10 13.1
2 1 1.3
1 _ _

holders
Total non users 24
Total 100

Interpretation:

Company image also plays an very important role in influencing the decision of a
prospective customer while taking the final decision. From the study it has been found
out that nearly 54% and 32% of the people feel that it is the highly and most important
thing, which has higher influence than any other criterion that influences one’s decision
regarding taking of life insurance policy, while for 1.3% of people it does not provide any
significant importance in their decision making.


Chart-2.18

Company Image

Com pany Im age

45
41
40
35
Respondents

30
25 24
20
15
10
10
5 1 0
0
5 4 3 2 1
Rating

So, to conclude from the above chart-2.18, it can be said that the company image that
the policy holder has to pay for taking any life insurance policy, plays a highly
important role in influencing their decision, followed by the factors like premium,
bonus and interest paid by the company, policy term and so on. So, those companies
who are having brand image or name as well as providing all other complementary
services, have a better chance of succeeding in the life insurance sector in comparison
to other companies who are in the same field.


To further analyze the perception of the respondents about what they think as the
important criteria before taking an insurance policy, I have taken two independent
parameters, namely:
a) Age of the People.
b) Annual Income of the People.

After taking these two independent parameters, the analysis is being made to see which
age group people think what criterion is important or what is the difference in perception
among the people who have annual income which are significantly different from each
other. The number of respondents taken here is only 76 as those people who are not
having any life insurance policy have been excluded from the purview of the study and
these 76 respondents were allowed to rate the criteria according to their importance.
(Rating 5 represents highly important,4 represents only important,3 represents neutrally
important,2 represents least important and 1 represents not important).

2.19 Criteria before taking a life insurance policy
On the basics of Age group:
For conducting the study the ages of respondents are divided into five categories,
those are as follows:
a) Less than 30 years.
b) Between 31- 40 years.
c) Between 41 – 50 years.
d) Between 51 - 60 years.
e) More than 60 years.


Table-2.20
Age Group – Premium

Age group 5 4 3 2 1 Total
Respondent
Below 30 20 11 2 1 _ 34
Yrs (58.8%) (32.4) (5.9) (2.9) (100%)
31-40 Yrs 14 10 1 1 _ 26
(53.8%) (38.6%) (3.8%) (3.8%) (100%)
41-50 Yrs 7 7 _ 1 _ 15
(46.7%) (46.7%) (6.6%) (100%)
51-60 Yrs _ 1 _ _ _ 1
(100%) (100%)
Above 60 _ _ _ _ _ _
Yrs
Total 41 29 3 3 _ 76
Respondent (54%) (38.2) (3.9) (3.0) (100%)

Interpretation:
Now, from the above table-2.20 we can see that nearly 59% of the people who belong to
the age group of less than 30 consider premium as the highly important criterion in
comparison to only 54% of the people who belong to an age group of 30-40. So, people
who have started their professional life consider more about the money that has to be
spent on the insurance policy in comparison to the people who are working for a
relatively longer period of time. Again, if we consider those people 41-50 years who have
come to the important stage of their working life, we can see that these people also thing
that the expense regarding the premium to be paid is the highly important criteria for
them because they likely to spend or save their money on medical, education etc..


Chart-2.20
Age Group – Premium

Age group-Premium

Above 60 Yrs 0
5
51-60 Yrs 00
1
Age Group

4
41-50 Yrs 7 7 00
1 3
2
31-40 Yrs 14 10 110
1
Below 30 Yrs 20 11 210

0 10 20 30 40
Respondents


Table-2.21

Age Group – Charges

Respondent
Below 30 5 22 7 _ _ 34
Yrs (14.8%) (64.7%) (20.5%) (100%)
31-40 Yrs 4 18 3 1 _ 26
(15.4%) (69.3%) (11.5%) (3.8%) (100%)
41-50 Yrs 8 5 2 _ _ 15
(53.4%) (33.3%) (13.3%) (100%)
51-60 Yrs _ 1 _ _ _ 1
(100%) (100%)
Above 60 _ _ _ _ _ _
Yrs
Total 17 46 12 1 _ 76
Respondent (22.4%) (60.5%) (15.8%) (1.3%) (100%)

Interpretation:

Now, if we consider the different charges (like Fund management charges, administration
charges etc.) that the companies take from their policy holders, we can see that people
who are having age less than 30 years and those who belong to the group of 30-40 years
think in the same way in this matter. Nearly 15% of both the groups consider these
charges are highly important, but not as much as they consider the cost relating to the
premium they have to pay to the company.


Chart-2.21

Age Group – Charges

.

Age group-Charge

Above 60 Yrs 0
5
51-60 Yrs 00
1
4
Age Group

41-50 Yrs 8 5 20 3
2
31-40 Yrs 4 18 3 10
1
Below 30 Yrs 5 22 7 0

0 10 20 30 40
Respondents


Table-2.22
Age Group – Policy Term

Respondent
Below 30 10 14 9 1 _ 34
Yrs (29.4%) (41.2%) (26.5) (2.9%) (100%)

31-40 Yrs 10 15 1 _ _ 26
(38.5%) (57.7%) (3.8) (100%)
41-50 Yrs 8 7 _ _ _ 15
(53.3%) (46.7%) (100%)
51-60 Yrs 1 _ _ _ _ 1
(100%) (100%)
Above 60 _ _ _ _ _ _
Yrs
Total 29 36 10 1 _ 1
Respondent (38.2%) (47.4%) (13.1%) (1.3%) (100%)

Interpretation:
The policy term mainly depends on the wishes of the policy holder, so here we can see
that only 29% and 41% of the people whose age is below 30 years, think this is highly
important criterion, but people who a little bit more experienced know that insurer
companies sometime provide extra benefits for longer policies in comparison to policies
which have a shorter span of life, that’s why nearly 39% and 58% of people belonging to
the age group of 31-40 years think that it is a highly important criterion which affects the
decision regarding insurance.


Chart-2.22
Age Group – Policy Term

Age group-Policy Term

Above 60 Yrs 0
5
51-60 Yrs 10
4
Age Group

41-50 Yrs 8 7 0 3
2
31-40 Yrs 10 15 10
1
Below 30 Yrs 10 14 9 10

0 10 20 30 40
Respondents


Table-2.23
Age Group – Rider Benefits
Respondent
Below 30 6 15 8 5 _ 34
Yrs (17.6) (44.2%) (23.5%) (14.7%) (100%)
31-40 Yrs 6 10 10 _ _ 26
(23%) (38.5%) (38.5%) (100%)
41-50 Yrs 5 7 3 _ _ 15
(33.3%) (46.7%) (20%) (100%)
51-60 Yrs 1 _ _ _ _ 1
(100%) (100%)
Above 60 _ _ _ _ _ _
Yrs
Total 18 32 21 5 _ 76
Respondent (23.7%) (42.1%) (27.6%) (6.6%) (100%)

Interpretation:

Mostly all the respondents of different age group are not interested in rider benefits,
nearly 42% of the age group below 30, 31-40 and 41-50 years think that it is
important ,where as only 23% of all age group think that it is highly important. So,
most of them think that rider benefits are not so important and it does not influence
their decision in a broad way.

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