Project ON CONSUMER BEHAVIOUR AND INVESTMENT PATTERN IN INSURANCE SECTOR WITH REFERENCE TO HDFC S

ON

CONSUMER BEHAVIOUR AND INVESTMENT PATTERN IN INSURANCE SECTOR WITH REFERENCE TO HDFC STANDARD LIFE IN PARTIAL FULFILLMENT FOR THE REQUIRMENT OF THE AWARD OF THE DEGREE OF MASTER OF BUSINESS ADMINISTRATION (2007-2009)

SUBMITTED TO THE DIRECTOR OF DISTANCE EDUCATION ANNAMALAI UNIVERSITY GUIDED BY:

SUBMITTED BY:

DEAN OF NIS ACADEMY

AMIT BHALLA

M.B.A. 2ND YEAR CHANDIGARH

ENROLL.NO. - 4740700529

2

STUDENT’S DECLARATION I hereby declare that the project report conducted on ‘CONSUMER PATTREN

BEHAVIOUR IN

AND

INSURANCE

INVESTMENT

SECTOR

WITH

REFERENCE TO HDFC STANDARD LIFE’ is submitted in the partial fulfillment of the requirements for the award

of

the

MASTER

OF

BUSINESS

ADMINISTRATION IN APPLIED MANAGEMENT.

The project was undertaken as a part of the course of M.B.A.

in

Applied

Management

Programme

in

NIS

ACADEMY under ANNAMALAI UNIVERSITY.

This is my original work and the same has not been submitted

for

the

award

of

any

other

Degree/Diploma/Fellowship or other similar titles or prizes.

Place: Chandigarh Date: 30-03-09 Signature: Amit Bhalla

3

4

ACKNOWLEDGEMENT I would like to avail this opportunity to express my deep sense of gratitude to all those who have helped and encouraged me towards the successful completion of this project.

I am very grateful to Mr.Harpreet Singh Bhatia for his valuable suggestions, guidance and solving the problems throughout the project. Also, without his help, I would not have got a chance to undertake this work of study.

I would also like to thanks the following people who shared their precious knowledge and experience with me

and

provided

me

necessary

guidance

and

help

whenever required:

DR. PRIYANKA ROY MR. RAJESH

AMIT BHALLA

5

6

CERTIFICATE

This is to certify that the project report is an original work Of Mr. Amit Bhalla and has not been submitted earlier to any other University or Institute.

Date: 15 March’2009

Signature & seal Mr.Harpreet Singh Bhatia

SYSTEMA-SHYAM TELESERVICES Ltd. New Delhi

7

8

9

SYNOPSIS CONSUMER BEHAVIOUR AND INVESTMENT PATTREN IN INSURANCE SECTOR WITH REFERENCE TO HDFC STANDARD LIFE INTRODUCTION: HDFC

Standard

insurance

Life

company

in

insurance the

is

world.

the It

is

oldest the

life

largest

insurer in the UK and is the 28 th largest company in the world. In India, the company is marketing life insurance products and unit linked investment plans.

From my research at HDFC SLIC, I found that the company has a lot of competition from other private insurers like ICICI, Aviva, Birla Sun Life and Tata AIG. It also faces competition from LIC. To

compete

cheaper

and

effectively more

HDFC

reasonable

SLIC

could

products

with

launch small

premiums and short policy terms (the number of year’s premium is to be paid). The ideal premium would be between Rs. 5000 – Rs. 25000 and an ideal policy term

10

would be 10 – 20 years. Family responsibilities and high returns are the two main reasons people invest in insurance. Optimum returns of 16 – 20 % must be provided

to

consumers

to

keep

them

interested

in

between

the

purchasing insurance.

WHAT IS LIFE INSURANCE? Life

insurance

is

a

form

of

contract

insurance company and a person who gets his life assured, for the payment of a sum of money on the unfortunate happening of an event. The payment is made to the insurer on the date of maturity or at a specific

date,

unfortunate

at

earlier

different death.

period Under

intervals

the

terms

or of

at the

contract a person who gets his life assured has to pay the

premium

insurance investment

is

periodically universally

which

to

the

insurance.

acknowledged

eliminates

risk

and

to

be

Life an

substituting

certainty for uncertainty and comes to the timely aid of the family in unfortunate event of death.

PROJECT OBJECTIVE: The insurance industry has never been in such lime light as it is now. It is witnessing an unprecedented boom. The massive upheaval in insurance sector has 11

opened gates for private insurance as well. The Indian market

of

life

insurance

is

flooded

with

private

companies vying with each other to create a niche for themselves. Thus project undertaken is a market survey pertaining to mind set and inclination towards the life insurance.

PROBLEMS: So

though

the

study

aims

to

achieve

the

above

mentioned Objective in full earnest and accuracy, it may be hampered due to certain problems. Some of the problems are as follows: • To cover the various section for the society.

• Respondents may not be at home and may have to re-contacted or replaced by others.

• Getting accurate response from the respondents due to their inherent problem is difficult.

• Limited response from client.

There is a time limitation it is not possible to study whole thing I covered some special aspect as well as some topics METHODOLOGY:

12

Marketing research is a systematic and objective study of problems pertaining to the marketing of goods and services.

Market

research

specifies

the

information

required to address these issues; designs the method of collecting information; manages and implements the data

collection

process;

analysis

the

results

and

communicates the findings and their implications. For the survey a sample size of 100 was taken.

The questionnaire was designed in such manner that it is self explanatory, and the data thus collected has been

very

comprehensive

one.

Then

a

task

of

tabulating the whole data, editing the whole data and finally analyzing the data was done to come out with certain conclusion. The questionnaire consisted of 12 questions regarding the awareness of insurance and private insurance companies.

The criteria for a sample were: 

Age : 25-60 years



Sex



Source

: Male/ female of

income

:

Salaried

Businessmen , Self employed 

Income Group

: Middle income group

CONCLUSION: 13

class,

Over the past four years, around 40 companies have expressed interest in entering the sector and many foreign

and

anticipatory

Indian

companies

alliances.

The

threat

have of

arranged

new

players

taking over the market has been overplayed. As is witnessed in other countries where liberalization took place

in

recent

nationalized

year

players

we

can

will

safely

continue

conclude to

hold

that

strong

market share positions, but there be enough business for new entrants to be profitable.

Opening

up

products,

the

better

sector

will

packaging

and

certainly

mean

improved

new

customer

service. Both new and existing players will have to explore

new

distribution

and

marketing

channels.

Potential buyers for most of this insurance lie in the middle class. New insurers must segment the market carefully to arrive at appropriate products and pricing.

Recognizing the potential, in the past three years, the nationalized

insurers

have

already

begun

to

target

niches like pensions, women or children.

There should be efforts made by different Insurance Companies

to

increase

awareness

among

general

public. This can be done by doing advertising through various Medias.

14

INTRODUCTION OF HDFC STANDARD LIFE

15

INTRODUCTION There are only two broad classifications of insurance companies: 

Life insurance



Non-life insurance

WHAT IS LIFE INSURANCE? Life insurance is a form of contract between the insurance company and a person who gets his life assured, for the payment of a sum of money on the unfortunate happening of an event. The payment is made to the insurer on the date of maturity or at a specific

date,

at

different

period

intervals

or

at

unfortunate earlier death.

Under the terms of the contract a person who gets his life assured has to pay the premium periodically to the insurance. Life insurance is universally acknowledged to

be

an

investment

which

eliminates

risk

and

substituting certainty for uncertainty and comes to the timely aid of the family in unfortunate event of death.

16

WHY LIFE INSURANCE? Life insurance has come a long way from the earlier days

when

it

was

originally

conceived

as

a

risk

covering medium for short periods of time, covering temporary risk situations. As life insurance become more established it was realized what a useful tool it was for a number of situations.

These are: 1.

Temporary needs

2.

Regular savings

3.

Investment

4.

Retirement

1. Temporary Needs: The

original

purpose

of

life

insurance

remains

an

important element, namely providing for replacement of income on death etc.

2.

Regular savings:

Providing for one’s family and oneself as a medium to long

term

exercise(through 17

a

series

of

a

regular

payment of a premium).This has become more relevant in recent times as people seek financial independence for their family.

3.

Put

Investment: simply

safeguarding regular

the

building

from

the

saving

investments

ravages

products

where

the

up

are

of of

savings

while

inflation.

Unlike

traditionally

individual

makes

lump a

sum

one

off

payment.

4.

Retirement:

Provision

for

latter

years

becomes

increasingly

necessary, especially in a changing culture and social environment. One can buy a suitable insurance policy which will provide periodical payment in one’s old age. No one likes to think about dying especially when they

are

young

but

everyday

people

die

in

car

accidents, of illness like cancer, aids, fire or other accidents. If something like this happens to you what would happen to your family? Would they have enough money to pay for? : 

Your funeral cost



Debts you owe like credit bills car payments mortgage on your home.



Child care 18



Your children’s education

The most important reason to buy life insurance policy is to protect your family by making sure that they have enough money if something happens to you.

One type of insurance called “Permanent insurance” can also help you to save money for retirement or get collateral for a loan.

HDFC STANDARD LIFE THE PARTNERSHIP: HDFC and Standard Life first came together for a possible

joint

venture,

to

enter

the

life

insurance

market, in January 1995. It was clear from the outset that both companies shared similar values and beliefs and a strong relationship quickly formed. In October 1995 the companies signed a three year joint venture agreement.

Around this time Standard Life purchased a 5% stake in HDFC, further strengthen the relationship.

The next three year were filled with uncertainty, due to

changes

in

government

19

and

ongoing

delays

in

getting

the

IRDA

Development

(Insurance

authority)

Act

Regulatory

passed

in

and

parliament.

Despite this both remained firmly committed to the venture.

In

October

renewed Around

1998,

and this

the

joint

additional time

Infrastructure

venture

resource

Standard

Development

Life

agreement made

available.

purchased

Finance

was

2%

Company

of Ltd.

(IDFC).

Standard Life also started to use the services of HDFC Treasury

department

to

advise

them

upon

their

investments in India. Towards the end of 1999, the opening of the market looked very promising and both companies

agreed

the

time

was

right

to

move

the

operation to the next level. Therefore, in January 2000 an expert team from HDFC to form the core project team, based in Mumbai.

Around this time Standard Life purchased a further 5% stake in HDFC and a 5% stake in HDFC Bank.

In

a

further

participate

development in

the

Asset

Standard

Life

Management

agreed

to

Company

promoted by HDFC to enter the Mutual Fund market.

The Mutual Fund was launched on 20th July 2000.

20

INCORPORATION: Incorporation

of

HDFC

Standard

Life

Insurance

Company Limited: The company was incorporated on 14th August 2000 under

the

name

of

HDFC

Standard

Life

Insurance

Company Ltd. Our ambition from as far as October 1995 was to be the first private company to re-enter the life insurance market in India.

On

the

23rd

of

October

2000,

this

ambition

was

realized when HDFC Standard Life was the only life company to be granted a certificate of registration.

HDFC are the main shareholders in HDFC Standard Life, with 81.4%, while Standard Life owns 18.6%.

Given Standard Life’s existing investment in the HDFC Group, this is the maximum investment allowed under current regulations.HDFC and Standard Life have a long and close relationship built upon shared values and trust. The ambition of HDFC Standard Life is to mirror the success of the parent companies and be the yardstick by which all other insurance company’s in India are measured.

21

MISSION: We aim to be top new life insurance company in the market.

This does not just mean being the largest or the most productive

company

in

the

market,

rather

it

is

a

combination of several things like Customer service of the highest order  Value of money for customer  Professionalism in carrying out business  Innovative products to cater to different needs of different customer  Use of technology to improve service standards  Increasing market share VALUES: Security: Providing long term financial security to our policy holders will be our constant endeavor. We will be

do

this

by

offering

life

insurance

and

pension

products.

Trust:

We appreciate the trust placed by our policy

holders in us. Hence, we will aim to manage their investments very carefully and live up to this trust.

22

Innovation: Recognizing the different needs of our customers,

we

will

be

offering

a

range

innovative

product to meet these needs.

Our mission is to the best new life insurance company in India and these are the values that will guide us in this.

BELOW ARE FEW OF THE PLANS THAT ARE OFFERED BY HDFC STANDARDS LIFE INSURANCE INSURANCE PLANS AVAILABLE

Individual Products: We at HDFC Standard Life realize that not everyone has the same kind of needs. Keeping this in mind, we have a varied range of Products that you can choose from to suit all your needs. These will help secure your future as well as the future of your family.

Protection Plans You can protect your family against the loss of your income or the burden of a loan in the event of your unfortunate

demise,

disability

or

sickness.

These

plans offer valuable peace of mind at a small price.

Our Protection range includes our Term Assurance

23

Plan & Loan Cover Term Assurance Plan.

Investment Plans Our Single Premium Whole Of Life plan

is well

suited to meet your long term investment needs. We provide you with attractive long term returns through regular bonuses.

Pension Plans Our Pension Plans help you secure your financial independence even after retirement.

Our

Pension

range

includes

our

Personal

Pension

Plan, Unit Linked Pension, Unit Linked Pension Plus Savings Plans Our Savings Plans offer you flexible options to build savings for your future needs such as buying a dream home

or

fulfilling

your

children

immediate

and

future needs.

Our Savings range includes Endowment Assurance Plan,

Unit

Linked

Endowment,

Unit

Linked

Endowment Plus, Unit Linked Endowment Plus II , Back,

Children’s,

Unit

Linked

24

Young

Star,

Unit

Linked Young Star Plus, Unit Linked Young Star Plus II.

Group Products One-stop shop for employee-benefit solutions HDFC Standard Life has the most comprehensive list of products

for

progressive

employers

who

wish

to

provide the best and most innovative employee benefit solutions

to

their

employees.

We

offer

different

products for different needs of employers ranging from term insurance plans for pure protection to voluntary plans such as superannuation and leave encashment.

We now offer the following group products to our esteemed corporate clients: Group Group Group An

Term Insurance Variable Term Insurance Unit-Linked Plan investment solution that

provides

funding

vehicle to manage corpuses with Gratuity, Defined Benefit or Defined Contribution Superannuation or Leave Encashment schemes of your company Also suitable for other employee benefit schemes such

as

salary

saving

management schemes 25

schemes

and

wealth

SOCIAL PRODUCT Development Insurance Plan Development Insurance plan is an insurance plan which provides life cover to members of a Development Agency for a term of one year. On the death of any member of the group insured during the year of cover, a lump sum is paid to those member beneficiaries to help meet some of the immediate financial needs following their loss.

Eligibility Members of the development agency and their spouses with: - Minimum age at the start of the policy 18 years last birthday - Maximum age at the start of policy 50 years last birthday Employees of the Development Agency are not eligible to join the group. The group to be covered is only eligible if it contains more than 500 members.

26

Premium Payments The premium to be paid will be quoted per member in the group and will be the same for all members of the group.

The

premium

can

only

be

paid

by

the

Development

Agency as a single lump sum that includes all premiums for the group to be covered. Cover will not start until the premium and all the member information in our specified format has been received.

The premium rate is Rs. 25 per Rs. 10,000 of lump sum, per member.

Benefits On the death of each member covered by the policy during the year of cover a lump sum equal to the sum assured will be paid to their beneficiaries or legal heirs.

Where

the

death

is

as

a

result

of

an

accident,

an

additional lump sum will be paid equal to half the sum assured. There are no benefits paid at the end of the year of cover and there is no surrender value available at any time.

The role of the Development Agency Due to the nature of the groups covered, HDFC Standard Life will be passing certain administrative tasks onto

27

the Development Agency. By passing on these tasks the premium

charged

can

be

lower.

These

tasks

would

include: Submission of member data in a specified computer format Collection of premiums from group members Recording changes in the details of group members Disbursement of claim payments and the mortality rebate (if any) to group members These tasks would be in addition to the usual duties of a policyholder such as: Payment of premiums Reporting of claims Keeping policy holder information up to date

Training and support will be available to give guidance on

how

to

complete

the

tasks

appropriately.

Since these additional tasks will impose a burden on the Development

Agency,

the

Development

Agency

charge a Rs. 10 administration fee to their members.

28

may

Prohibition of rebates Section 41 of the Insurance Act, 1938 states No person shall allow or offer to allow, either directly or indirectly, as an inducement to any person to take out or renew or continue an insurance in respect of any kind of risk relating to lives or property in India, any rebate of the whole or part of the commission payable or any rebate of the premium shown on the policy, nor shall any person taking out or renewing or continuing a policy accept any rebate, except such rebate as may be allowed in accordance with the published prospectus or tables of the insurer If any person fails

to

comply

with

sub

regulation

(previous point) above, he shall be liable to payment of a fine which may extend to rupees five hundred

Tax Benefits 29

INCOME

TAX GROSS ANNUAL HOW

SECTION

SALARY

MUCH HDFC

STANDARD

TAX CAN YOU LIFE PLANS SAVE?

Sec. 80C

Across All

Upto Rs. 33,990

All the life insurance

income Slabs

saved on

plans.

investment of Rs. 1,00,000.

Sec. 80 CCC

Across all

Upto Rs. 33,990

All the pension

income slabs.

saved on

plans.

Investment of Rs.1,00,000.

Sec. 80 D*

Across all

Upto Rs. 3,399

All the health

income slabs

saved on

insurance riders

Investment of

available with the

Rs. 10,000.

conventional plans.

TOTAL SAVINGS POSSIBLE **

Sec. 10 (10)D

Rs37,389 Rs. 33,990 under Sec. 80C and under Sec. 80 CCC , Rs.3,399 under Sec. 80 D, calculated for a male with gross annual income exceeding Rs. 10,00,000.

Under Sec. 10(10D), the benefits you receive are completely tax-free, subject to the conditions laid down therein.

S.W.O.T ANALYSIS OF HDFC

30

STRENGTHS

WEAKNESSES

• Strong tie up

• Low Customer awareness

• Brand Equity

• Less promotion

• Strong Network • Huge Customer Database • Strong Financial Base

OPPORTUNITIES

THREATS

• Large uninsured

• Government policies • Cut throat competition

population • Network Building • Targeting

the

• Low customer awareness rural

segment

31

MARKETING MIX POLICIES Different companies can choose to position themselves differently and hence the Marketing Mix is different.

However, there are certain common characteristics that one

can

cull

out

from

the

possible

strategies

that

companies adopt.

PRODUCT: The development of flexible products to suit individual requirements

is what will differentiate the winners

from the also-rans. The key to success is in providing insurance

solutions,

not

standardized

insurance

products. The concept of riders/optional benefits has already been a huge innovation brought about by the new

players,

products

for

which

has

individual

led

needs.

to

customization

However,

of

companies

may differentiate themselves on the basis of product segments that they choose to focus on and excel in.

PLACE: Different

companies

may

however

choose

different

channels and different geographies to focus on. The channel

options

are

-

tied

agency

force,

corporate

agents and brokers and this is an area where different 32

companies

will

make

different

choices.

Many

companies like HDFC Standard Life are focusing on all channels whereas companies like Max New York Life are focusing on the tied agency force only. Customer interface will be a key challenge for life insurance companies and includes every that interaction that the customer has with the company, such as sales, new business

underwriting,

policy

servicing,

premium

payments, claim processing and so on. Technology can play a crucial role in delivering the highest standards of service set by the company and it will be imperative for any serious player to excel in all of these.

PRICE: Price is a relevant differentiator only in two segments - pure term insurance and in pure annuities. Here too, service delivery and financial strength will need to be present at a minimum acceptable level for price to be a relevant products,

differentiator. long-term

In

case

returns

of

savings

generated

oriented

are

more

relevant than just the price of the product. A focus on generating good investment performance and keeping a tight control on costs help in generating good longterm maturity value for customers. Norms have been laid down on all of these by IRDA and adhering to

33

these

while

delivering

good

returns

will

be

a

challenge.

PROMOTION AND ADVERTISING: The level of demand is latent and will have to be activated

considerably.

developed.

Greater

The

awareness

market of

needs

insurance

to

be

and

the

need to have it as a protection tool rather than as a tax planning measure needs to be appreciated by the Indian people.

Various

advertising,

communication

direct

marketing

tools and

including

road

shows

contribute to all this and different companies take different approaches on these.

PROCESS: Cashless settlement: One of the most defining and customer-friendly changes that we’ve seen in recent years relates to the way claims settlements are made.

The

advent

regime

has

of

the

third-party

facilitated

the

administrator

transition

to

the

(TPA) hugely

convenient era of cashless settlement of health and auto insurance claims. TPAs are entities who process claims on behalf of insurers: the IRDA licenses them after

it

is

satisfied

that

34

they

have

the

financial

strength, the trained manpower, the infrastructure and the skills to undertake this activity.

Likewise, with auto insurance, the TPA ties up with garages and authorized service centers for cashless settlement of auto insurance claims.

Lower premiums: The spirit of competition and the broadening

of

the

risk

experience

of

insurance

companies have contributed to a fall in premiums over the years. That’s because, other things being equal, an insurer who covers the lives just of 10 people bears a higher risk than an insurer who covers the lives of, say, 100 people. Further, a broader base will provide greater

efficiencies

management mortality

and

on

costs

claims.

experience,

A

such broad

therefore,

as

distribution,

basing

gives

of

the

insurers

the

elbowroom to compete by lowering premiums, and that trend is expected to continue.

Premium payment flexibility: Insurers have imparted certain flexibility to premium payment options in order to address this concern. For instance, one now have the option to pay your premiums upfront, which is then carried forward for the tenure of the policy. The yearly premiums are drawn from the initial corpus. Insurers

35

have also introduced the concept of ‘automatic cover maintenance’

to

protect

your

policy

from

lapsing

owing to your omission to pay your premium on time.

Under

this,

in

the

event

of

your

not

paying

the

premium, the insurer dips into your investment account to the extent of the premium. Of course, this comes with an in-built drawback: your investment portion diminishes year on year to the extent of the amount paid to cover your risk.

Physical Evidence: This can play a significant role for marketing in the Indian scenario. Since Internet users are comparatively lesser than countries such as US, the offline mode will be preferred in India. Although the distribution model is largely agent-based, wherever the customer is in contact

with

the

company,

this

factor

can

play

a

significant role in luring the customer.

People: The most important factor that materializes sales and maintains customer relationships on a long-term basis is this factor. No matter what distribution strategy a company adopts, customer relationship has to be taken

36

care of in order to maintain the customer base on a long-term basis.

GROUP COMPANIES HDFC LIMITED: HDFC

was

incorporated

in

1977

with

the

primary

objective of meeting a social need – that of promoting home

ownership

households

for

promoted

with

million.

HDFC

by

providing

their an

long-term

housing

initial is

a

share

needs. capital

finance HDFC of

professionally

to was

Rs.100 managed

organization with a board of directors consisting of eminent persons who represent various fields including finance, taxation, construction and urban policy and development.

HDFC BANK LIMITED: The Housing Development Finance Corporation Limited (HDFC)

was

amongst

the

first

to

receive

an

‘in-

principle’ approval from the Reserve Bank of India (RBI) to set up a bank in the private sector, as part of the RBI’s liberalization of the Indian Banking Industry in 1994. The bank was incorporated in August 1994 in 37

the name of ‘HDFC Bank Limited’, with its registered office in Mumbai, India.

Bank’s

aim

is

across

distinct

to

build

sound

businesses

so

customer as

to

franchises

build

sound

customer franchises across distinct businesses so as to be the preferred provider of banking services in the segments that the bank operates in and to achieve healthy growth in profitability, consistent with the bank’s risk appetite.

HDFC ASSET MANAGEMENT COMPANY LIMITED: A mutual fund is a common pool of money in to which investors

with

common

investment

objective

place

their contributions that are to be in accordance with the stated investment objective of the scheme. The investment manager would invest the money collected from

the

investor

in

to

assets

that

are

defined

/

permitted by the stated objective of the scheme.

For example, an equity fund would invest equity and equity

related

instruments

and

a

debt

fund

would

invest in bonds, debentures, gilts etc. The mission is to provide customers with the most useful investment guidance and investment-related services available in the country. It is a one-stop solution for all investment 38

needs, one that will help you get the most out of your money.

HDFC SECURITIES LIMITED: HDFC sec is a brand brought by HDFC Securities Ltd, which has been promoted by the HDFC Bank & HDFC with the objective of providing the diverse customer base

of

the

HDFC

Group

and

other

investors

a

capability to transact in the Stock Exchanges & other financial market transactions. HDFC sec, will equip with the necessary tools to allocate, select and manage investments

wisely,

and

also

support

it

with

the

highest standards of service, convenience and hasslefree trading tools.

HDFC REALITY LIMITED: HDFC realty.com is a real estate site that aims to bring

credibility

and

trust

to

property

dealers.

At

HDFC realty.com one can meet Customer Relationship Manager for any assistance one may require at various stages of property dealing.

39

HDFC CHUBB GENERAL INSURANCE COMPANY LIMITED: It’s a partnership that leverages the strengths of two financial powerhouses-combining the trust and local experiences

of

HDFC,

with

the

one

years’

proven

expertise of Chubb. Individually, you can count on specialized products

that

cover

not

only

you

and

your

family

(Personal Accident, Travel and Health Insurance) but also your possessions (Motor and Home Insurance).

For

businesses,

there’s

a

range

of

innovative

Commercial and Specialty Insurance offerings that can be

custom

designed

to

peace

of

mind

to

employees and superior value to your organization.

40

your

INSURANCE SECTOR IN INDIA

41

THE INSURANCE INDUSTRY IN INDIA AN OVERVIEW

With the largest number of life insurance policies in force in the world, Insurance happens to be a mega opportunity in India. It’s a business growing at the rate of 15-20 per cent annually and presently is of the order of Rs 1560.41 billion (for the financial year 2006 – 2007). Together with banking services, it adds about 7% to the country’s Gross Domestic Product (GDP). The gross premium collection is nearly 2% of GDP and funds available with LIC for investments are 8% of the GDP. Even so nearly 65% of the Indian population is without life insurance cover while health insurance and nonlife

insurance

standards.

A

continues large

part

to

be

of

our

below

international

population

is

also

subject to weak social security and pension systems with hardly any old age income security. This in itself is an indicator that growth potential for the insurance sector in India is immense.

A

well-developed

and

evolved

insurance

sector

is

needed for economic development as it provides long term

funds

for

infrastructure

42

development

and

strengthens the risk taking ability of individuals. It is estimated that over the next ten years India would require investments of the order of one trillion US dollars.

The

Insurance

sector,

to

some

extent,

can

enable investments in infrastructure development to sustain the economic growth of the country. (Source: www.indiacore.com) HISTORICAL PERSPECTIVE The history of life insurance in India dates back to 1818 when it was conceived as a means to provide for English Widows. Interestingly in those days a higher premium was charged for Indian lives than the non Indian lives, as Indian lives were considered more risky to cover. The Bombay Mutual Life Insurance Society started its business in 1870. It was the first company to charge the same premium for both Indian and non-Indian lives.

The Oriental Assurance Company was established in 1880. The General insurance business in India, on the other hand, can trace its roots to Triton Insurance Company Limited, the first general insurance company established in the year 1850 in Calcutta by the British.

Till

the

end

of

the

nineteenth

century

insurance

business was almost entirely in the hands of overseas companies.

43

Insurance regulation formally began in India with the passing of the Life Insurance Companies Act of 1912 and the Provident Fund Act of 1912. Several frauds during the 1920's and 1930's sullied insurance business in India. By 1938 there were 176 insurance companies.

The

first

comprehensive

legislation

was

introduced

with the Insurance Act of 1938 that provided strict State

Control

insurance

over

business

independence.

the

insurance

grew

Indian

at

a

business.

faster

companies

The

pace

after

strengthened

their

hold on this business but despite the growth that was witnessed, insurance remained an urban phenomenon.

The Government of India in 1956, brought together over 240 private life insurers and provident societies under one nationalized monopoly corporation and Life Insurance Corporation (LIC) was born. Nationalization was justified on the grounds that it would create the much needed funds for rapid industrialization. This was in conformity with the Government's chosen path of State led planning and development.

The non-life insurance business continued to thrive with the private sector till 1972. Their operations were restricted

to organized

trade and

industry

in large

cities. The general insurance industry was nationalized in

1972.

With

this,

nearly 44

107

insurers

were

amalgamated National

and

grouped

into

four

Insurance

Company,

New

Oriental

Insurance

Company

Company,

companies-

India

Assurance and

United

India Insurance Company. These were subsidiaries of the General Insurance Company (GIC).

KEY MILESTONES 1912: enacted

The as

Indian the

Life

first

Assurance

statute

to

Companies

regulate

the

Act life

insurance business.

1928: The Indian Insurance Companies Act enacted to enable

the

information

government about

both

to

life

collect

and

statistical

non-life

insurance

businesses.

1938: Earlier legislation consolidated and amended by the Insurance Act with the objective of protecting the interests of the insuring public.

1956:

245

Indian

provident societies

and

foreign

were

insurers

taken over

by

along

with

the central

government and nationalized. LIC was formed by an Act

of

Parliament-

LIC

Act

45

1956-

with

a

capital

contribution of Rs. 5 crore from the Government of India.

INDUSTRY REFORMS

Reforms in the Insurance sector were initiated with the passage of the IRDA Bill in Parliament in December 1999. The IRDA since its incorporation as a statutory body

in

April

2000

has

fastidiously

stuck

to

its

schedule of framing regulations and registering the private sector insurance companies. Since being set up as an independent statutory body the IRDA has put in a framework of globally compatible regulations.

The other decision taken simultaneously to provide the supporting

systems

to

the

insurance

sector

and

in

particular the life insurance companies was the launch of the IRDA online service for issue and renewal of licenses to agents. The approval of institutions for imparting training to agents has also ensured that the insurance companies would have a trained workforce of insurance agents in place to sell their products.

46

PRESENT SCENARIO - LIFE INSURANCE INDUSTRY IN INDIA The

life

insurance

impressive 1560.41

47.38%,

billion

industry with

during

in

India

premium

the

fiscal

grew

income year

by at

an Rs.

2006-2007.

Though the total volume of LIC's business increased in the

last

fiscal

year

(2006-2007)

compared

to

the

previous one, its market share came down from 85.75% to 81.91%.

The 17 private insurers increased their market share from about 15% to about 19% in a year's time. The figures for the first two months of the fiscal year 2007-08 also speak of the growing share of the private insurers. The share of LIC for this period has further come down to 75 percent, while the private players have grabbed over 24 percent.

With the opening up of the insurance industry in India many foreign players have entered the market. The restriction on these companies is that they are not allowed to have more than a 26% stake in a company’s ownership.

47

Since the opening up of the insurance sector in 1999, foreign investments of Rs. 8.7 billion have poured into the

Indian

market

and

19

private

life

insurance

companies have been granted licenses.

Innovative products, smart marketing, and aggressive distribution have enabled fledgling private insurance companies

to sign up Indian customers

faster

than

anyone expected. Indians, who had always seen life insurance as a tax saving device, are now suddenly turning to the private sector and snapping up the new innovative products on offer. Some of these products include

investment

plans

with

insurance

and

good

returns (unit linked plans), multi – purpose insurance plans,

pension

plans,

child

plans.

48

plans

and

money

back

49

COMPANIES

INDIAN PROMOTER

FOREIGN PROMOTER

ICICI

Prudential PLC, UK

HDFC

Standard Life, UK

Aditya Birla Group

Sunlife Financial, Canada

Kotak Mahindra Finance

Old Mutual Plc, South Africa

Max India

New York Life, USA

TATA Group

American International Group,USA

Vyasa Bank

ING Group, Nether Land

Bajaj Auto

Allianz AG

Reliance Group

None

Dabur India

AVIVA PLC

State Bank of India

Cardiff, France

J & K Bank, Pallonji & Co.

Metropolitan Life Insurance

Sahara

None

LIC

None

50

MAX NEW YORK LIFE INSURANCE Max New York Life Insurance Company Limited is a joint venture that brings together two large forces Max

India

Limited,

a

multi-business

corporate,

together with New York Life International, a global expert

in

life

insurance.

The

very

nature

of

our

business makes us highly customer-sensitized at Max New York Life. They believe in building relationships with the people we serve, so that our customers enjoy the highest quality of service in life insurance.

This fact comes alive from our defining qualities, all of which are outlined below. They are experts in life insurance: New York Life has over 160 years of experience in the life insurance business. It is a Fortune 100 company that has been trusted by millions worldwide, across generations.

Their

existence

financial

is

strength,

rooted integrity

in and

our

commitment

responsibility.

to We

have increased our capitalization requirement to Rs. 527 crore from the initial Rs.100 crore that has been

51

stipulated

by

the

Insurance

Regulatory

and

Development Authority (IRDA).

Our investments are confined only to debt instruments and we meet both Indian and US reporting norms. Max New

York

Life

also

deposits

one

per

cent

of

the

premium income with the RBI, towards Contingency Funds.

They have the best Agent Advisors in the business.

Backed by the best training and infrastructure, our expert Agent Advisor will spend time evaluating your needs rather than just selling. They are professionals who

will

thoroughly

understand

your

needs

before

recommending the policy tailored to meet them.

They offer the best products with Flexibility as our cornerstone, so you can buy just what you need. With our various Products and Riders, you have more than 400 product combinations to choose from.

Transparency business.

This

is

the is

bedrock

why

they

of

the

customize

way a

we

do

Personal

Insurance Plan, which gives you a broad overview of the details of your policy along with a year-on-year summary, even before you buy. And with the policy review period option you even have the unconditional 52

right to return the policy, if you so wish, within 15 days of receiving it.

They offer you multiple bonus options, which includes options such as annual bonus, bonus accumulated and paid

on

maturity,

bonus

used

to

offset

premiums,

bonus utilized to buy Paid up additions and bonus used to buy one-year term insurance. So, you can decide how you want to use your bonus payments.

They have a national presence with a network of 57 offices in 37 cities across India. They are always there when you need us. Their Customer Helpline and Their branch office network will ensure that you can get in touch with them whenever you want.

ICICI Prudential Life Insurance Company ICICI Prudential Life Insurance Company is a joint venture

between

ICICI

Bank,

a

premier

financial

powerhouse and Prudential plc, a leading international financial services group headquartered in the United Kingdom.

ICICI

Prudential

was

amongst

the

first

private sector insurance companies to begin operations

53

in

December

2000

after

receiving

approval

from

Insurance Regulatory Development Authority (IRDA).

ICICI

Prudential's

equity

base

stands

at

Rs.

11.85

billion with ICICI Bank and Prudential plc holding 74% and 26% stake respectively. In the financial year ended March 31, 2005, the company garnered Rs 1584 crore of new business premium for a total sum assured of Rs 13,780 crore and wrote nearly 615,000 policies.

The company has a network of about 56,000 advisors; as well as 7 banc assurance and 150 corporate agent tie-ups. For the past four years, ICICI Prudential has retained its position as the No. 1 private life insurer in the country, with a wide range of flexible products that meet the needs of the Indian customer at every step in life.

Tata AIG Life Insurance Company Tata

AIG

Life

Insurance

Company

Ltd.

"Tata

AIG

Life" offers a broad array of life insurance products to individuals, associations and businesses of all sizes, with a wide variety of additional coverage to ensure their customers can find an insurance product to meet their needs.

54

Tata AIG is a joint venture of the Tata Group and American International Group, Inc. (AIG).

THE TATA GROUP The Tata Group (www.tata.com) is one of India's bestknown industrial groups with an estimated turnover of around

US

$14.25

India's

GDP).

billion

With

(approximately

more

than

220,000

2.6%

of

employees

across 91 major companies, it is also India's largest employer

in

the

pioneered

several

private firsts

sector. in

The

Indian

Tata

Group

industry

firsts,

including: India's first private sector steel mill, first private sector power utility, first luxury hotel chain and

first

international

airline,

amongst

others.

Recently, the Tata Group's pioneering spirit has been showcased

by

companies

such

as

Tata

Consultancy

Services (TCS), Asia's largest software and Services Company, and Tata Motors, the first car maker in a developing country to design and produce a car from the ground up.

AIG American

International

Group,

Inc.

is

the

world's

leading international insurance and financial services organization,

with

operations

55

in

more

than

130

countries serve

and jurisdictions.

commercial,

customers

through

AIG member

institutional the

most

companies

and

individual

extensive

worldwide

property-casualty and life insurance networks of any insurer. In the United States, AIG companies are the largest

underwriters

of

commercial

and

industrial

insurance and AIG American General is a top-ranked insurer.

AIG's

retirement

services,

management. include

global

AIG's

aircraft

businesses

also

include

financial

services,

and

financial

services

businesses

leasing,

financial

products,

asset trading

and market making. American General Finance leads AIG s growing global consumer finance business in the United States. AIG also has one of the largest U.S. retirement savings businesses through AIG SunAmerica and AIG VALIC, and is a leader in asset management for

the

individual

specialized equities,

and

investment

fixed

income,

institutional management alternative

markets,

with

capabilities investments

in and

real estate. AIG's common stock is listed in the New York Stock Exchange and ArcaEx, as well as the stock exchanges in London, Paris, Switzerland and Tokyo.

Life Insurance of India Life Insurance in its modern form came to India from England in the year 1818. Oriental Life Insurance

56

Company started by Europeans in Calcutta was the first life insurance company on Indian Soil. Bombay Mutual Life Assurance Society heralded the birth of first Indian life insurance company in the year 1870, and covered Indian lives at normal rates. Starting as Indian enterprise with highly patriotic motives, insurance companies came into existence to carry the message of insurance and social security through insurance to various sectors of society. Bharat Insurance Company (1896) was also one of such companies inspired by nationalism. In the year 1912, the Life Insurance Companies Act, and the Provident Fund Act were passed. The Life Insurance Companies Act, 1912 made it necessary that the premium rate tables and periodical valuations of companies should be certified by an actuary. But the Act discriminated between foreign and Indian companies on many accounts, putting the Indian companies at a disadvantage.

The first two decades of the twentieth century saw lot of growth in insurance business. From 44 companies with total business-in-force as Rs.22.44 crore, it rose to

176

Rs.298

companies crore

insurance

in

with

1938.

companies

total

business-in-force

as

During

the

of

many

financially

mushrooming

unsound

concerns were also floated which failed miserably. The 57

Insurance Act 1938 was the first legislation governing not only life insurance but also non-life insurance to provide strict state control over insurance business.

The

demand

industry

for

was

nationalization

made

repeatedly

of in

life

the

insurance

past

but

it

gathered momentum in 1944 when a bill to amend the Life

Insurance

Act

1938

was

introduced

in

the

Legislative Assembly. However, it was much later on the 19th of January, 1956, that life insurance in India was

nationalized.

About

154

Indian

insurance

companies, 16 non-Indian companies and 75 provident were operating in India at the time of nationalization.

Nationalization

was

accomplished

in

two

stages;

initially the management of the companies was taken over

by

means

of

an

Ordinance,

and

later,

the

ownership too by means of a comprehensive bill. The Parliament

of

India

passed

the

Life

Insurance

Corporation Act on the 19th of June 1956, and the Life Insurance

Corporation

of

India

was

created

on

1st

September, 1956, with the objective of spreading life insurance much more widely and in particular to the rural areas with a view to reach all insurable persons in

the

country,

providing

them

adequate

financial

cover at a reasonable cost.

LIC had 5 zonal offices, 33 divisional offices and 212 branch offices, apart from its corporate office in the 58

year 1956. Since life insurance contracts are long term contracts and during the currency of the policy it requires a variety of services need was felt in the later years to expand the operations and place a branch office at each district headquarter. Re-organization of LIC

took

place

and

large

numbers

of

new

branch

offices were opened. As a result of re-organization servicing functions were transferred to the branches, and branches were made accounting units. It worked wonders with the performance of the corporation. It may be seen that from about 200.00 crores of New Business

in

1957

the

corporation

crossed

1000.00

crores only in the year 1969-70, and it took another 10 years for LIC to cross 2000.00 crore mark of new business. But with re-organization happening in the early eighties, by 1985-86 LIC had already crossed 7000.00 crore Sum Assured on new policies.

Today

LIC

functions

with

2048

fully

computerized

branch offices, 100 divisional offices, 7 zonal offices and the Corporate office. LIC’s Wide Area Network covers

100

divisional

offices

and

connects

all

the

branches through a Metro Area Network. LIC has tied up with some Banks and Service providers to offer online

premium

collection

facility

in

selected

cities.

LIC’s ECS and ATM premium payment facility is an addition to customer convenience. Apart from on-line 59

Kiosks

and

IVRS,

commissioned

at

Info

Mumbai,

Centers

have

Ahmedabad,

been

Bangalore,

Chennai, Hyderabad, Kolkata, New Delhi, Pune and many other cities. With a vision of providing easy access

to

its

policyholders,

LIC

has

launched

its

SATELLITE SAMPARK offices. The satellite offices are smaller, leaner and closer to the customer. The digitalized facilitate

records anywhere

of

the

satellite

servicing

and

offices many

will other

conveniences in the future.

LIC continues to be the dominant life insurer even in the liberalized scenario of Indian insurance and is moving fast on a new growth trajectory surpassing its own

past

records.

LIC

has

issued

over

one

crore

policies during the current year. It has crossed the milestone of issuing 1,01,32,955 new policies by 15th Oct, 2005, posting a healthy growth rate of 16.67% over the corresponding period of the previous year.

From then to now, LIC has crossed many milestones and

has

set

unprecedented

performance

records

in

various aspects of life insurance business. The same motives

which

inspired

our

forefathers

to

bring

insurance into existence in this country inspire us at LIC to take this message of protection to light the

60

lamps of security in as many homes as possible and to help the people in providing security to their families.

Birla Sun Life Insurance Birla Sun Life Insurance pioneered the unique Unit Linked Life Insurance Solutions in India. Within 4 years of its launch, BSLI has cemented its position as a

leading

player

in

the

Private

Life

Insurance

Industry .There has been focus on Investment Linked Insurance Products, supported with protection products to maintain leadership in product innovation. Multi Distribution Channels- Direct Sales Force, Alternate Channels and Group offering convenient channels of purchase

to

customers.Web-enabled

superior

customer

services.First

IT to

systems have

for

issued

policies over the Internet.Corporate governance and a high degree of transparency in all business practices and procedures.First to have an operational Business Continuity Plan.

ING Vysya Life Insurance ING Vysya Life Insurance Company Private Limited (the

Company)

entered

the

private

life

insurance

industry in India in September 2001, and in a short span of 4 years has established itself as a distinctive

61

life insurance brand with an innovative, attractive and customer friendly product portfolio and a professional advisor sales force.

It has a dedicated and committed advisor sales force of over 11,000 people, working from 80 branches located in 70 major cities across the country and over 2,600 employees.

It

also

distributes

products

in

close

cooperation with the ING Vysya Bank network. The Company has a customer base of over 3,00,000 & is headquartered at Bangalore. In 2005, ING Vysya Life earned a total income in excess of Rs. 400 crore and also has a share capital of Rs. 440 crore.

The Company aims to make customers look at life insurance afresh, not just as a tax saving device but as a means to add protection to life. The one thing we hold in highest esteem is 'life' itself. They believe in enhancing

the

very

quality

safeguarding

an

values

therefore

are

Entrepreneurial,

of

individual's

life,

security.

defined

Trustworthy,

in

as

addition Their

to

core

Professional,

Approachable

and

Caring.

The Company’s portfolio offers products that cater to every financial requirement, at any life stage. They believe

in

continuously

developing

62

customer-driven

products and services and value being accessible and responsive to the needs of their customers.

In fact, the company has developed the Life Maker TM .

A simple method which can be used to choose a plan most

suitable

to

a

specific

customer

based

on

his

needs, requirements and current life stage. This tool helps you build a complete financial plan for life, whether

the

requirements

is

Protection, Savings

or

Investment, Retirement.

Om Kotak Mahindra Life Insurance

Kotak Mahindra Old Mutual Life Insurance Ltd. is a joint

venture

between

Kotak

Mahindra

Bank

Ltd.

(KMBL), and Old Mutual plc. At Kotak Life Insurance, They aim to help customers take important financial decisions at every stage in life by offering them a wide range of innovative life insurance products, to make them financially independent.

Bajaj Allianz Life Insurance Bajaj Allianz Life Insurance Co. Ltd. is a joint venture between two leading conglomerates- Allianz AG, one of the world's largest insurance companies, and Bajaj 63

Auto, one of the biggest 2 and 3 wheeler manufacturers in the world. Bajaj has a Guinness’s record of selling highest number of two wheelers in the world. One very interesting thing about this company is that it is very high

advertisement

spending

company

and

the

advertisements of Allianz can be seen on top of cars participating in formula I racing championship around the globe. This high advertising spending and a very aggressive

selling

and

marketing

is

bearing

good

results for the company.

Aviva Life Insurance Aviva is the world's 6th largest insurance group, the biggest in the UK, and a leading provider of life, health and pensions products to markets across Europe.

Its

main

activities

are

long-term

savings,

fund

management and general insurance, with a premium income of USD60 billion and USD524 billion in assets under management. The group has 60,000 employees and 30 million customers worldwide.

In

Hong

Kong,

They

provide

innovative

financial

solutions to meet the increasing needs for protection, savings,

investment

bancassurance

and

retirement

partnership,

through

Independent

our

Financial

Adviser (IFA) and International Financial Solutions

64

(IFS) channels. With Their expertise and track record, they aim to become a leading long-term savings and wealth management provider.

They strive to bring their customers superior services that meet their financial needs and are backed by their four

corporate

values:

Integrity,

Progressiveness,

Performance and Team Power.

SBI Life Insurance

SBI Life Insurance is a joint venture between the State Bank of India and Cardiff SA of France. SBI Life Insurance is registered with an authorized capital of Rs 500 crore and a paid up capital of Rs 350 crores.

SBI owns 74% of the total capital and Cardiff the remaining 26%.

State

Bank

of

India

enjoys

the

largest

banking

franchise in India. Along with its 7 Associate Banks, SBI Group has the unrivalled strength of over 14,000 branches across the country, the largest in the world.

Cardiff is a wholly owned subsidiary of BNP Paribas, which is The Euro Zone’s leading Bank. BNP is one of the

oldest

foreign

banks

with

a

presence

in

India

dating back to 1860. It has 9 branches in the metros and other major towns in the country.

65

Cardiff is a vibrant insurance company specializing in personal lines such as long-term savings, protection products and creditor insurance. Cardiff has also been a

pioneer

through

in

the

art

commercial

of

selling

banks

in

insurance

France

and

products 29

more

countries.

SBI

Life

Insurance’s

mission

is

to

emerge

as

the

leading company offering a comprehensive range of Life Insurance and pension products at competitive prices, ensuring high standards of customer service and world class operating efficiency. The company plans to make the insurance buying process quick, simple and based on well-informed judgment. In 2004, SBI Life Insurance became the first company amongst private insurance players to cover 30 lakh lives.

The company expects to carve a niche in the Indian insurance market through extensive product innovation and aims to provide the highest standards of customer service through a technological interface. To facilitate this, call centre’s have been already installed and help lines will be installed and customers will have access to their accounts through the Internet or through SBI branches.

The

company

proposes

to

make

available

ready

liquidity to its Life Insurance policies by way of loans 66

at SBI counters. This will make Life Insurance a liquid asset in the financial portfolio of households.

SBI Life Insurance is uniquely placed as a pioneer to usher banc assurance into India. The company hopes to extensively utilize the SBI Group as a platform for cross-selling

insurance

products

along

with

its

numerous banking product packages such as housing loans, personal loans and credit cards. SBI’s access to over 100 million accounts provides a vibrant base to build

insurance

selling

across

every

region

and

economic strata in the country.

Sahara Life Insurance Company

The Sahara Pariwar’s latest foray is in the field of Life Insurance. The Pariwar’s life insurance company – Sahara India Life Insurance Company Ltd. - has been granted license by the insurance regulator – the IRDA on 6th February 2004. With this approval Sahara India Life Insurance Company Ltd. becomes the first wholly and

purely

collaboration

Indian to

company,

enter

the

without Indian

any

Life

foreign

insurance

market. The launch is with an initial paid up capital of 157

crores.

The

Chairman

67

of

the

company

is

Shri

Subrata Roy Sahara who is also the Chairman of Sahara Pariwar.

68

RESEARCH METHODOLOGY

69

RESEARCH METHODOLOGY

TITLE: To determine customer behavior and investment pattern with

a

focus

on

market

segmentation

for

HDFC

Standard Life Insurance.

• TITLE JUSTIFICATION: The above title is self explanatory. The study deals mainly with studying the buying

pattern in the

insurance industry with a special focus on Standard Life

HDFC

Insurance. The various segments of

the markets divided in terms of Insurance Needs, Age groups , Satisfaction levels etc will also studied.

OBJECTIVE Objective One •

To

determine

reasons

behind

opting

for

an

information

of

insurance.

•

To

provide

the

company

with

customer's Insurance policy if they have any and reasons for opting for that particular policies.

70

 To know the most preferred policy.

Objective Two •

To determine customers perception towards private insurance

companies

and

their

expectation

form

private insurance companies.

•

To determine the feedback on services provided by

any other insurance agent.

•

To study the types of benefits provided by insurance

services.

•

To

determine

the

use

of

Internet

for

valuable

information and decision-making process.

SCOPE OF THE STUDY A big boom has been witnessed in Insurance Industry in recent times. A large number of new players have entered the market and are vying to gain market share in this rapidly improving market. The study deals with HDFC Standard Life in focus and the various segments that it caters to. The study then goes on to evaluate and

analyse

the

findings

so

as

to

present

picture of trends in the Insurance sector.

71

a

clear

SIGNIFICANCE OF THE STUDY

SIGNIFICANCE TO THE INDUSTRY : This is a limited study which takes into consideration the

responses

of

100

people.

This

data

can

be

explorated to take in the trends across the industry.

The significance for the industry lies in studying these trends that emerge from the study. It is a rapidly changing

and

evolving

sector.

People

are

only

beginning to wake up to it’s vast possibilities. A study like this can attempt to guide the future of the industry based on current trends.

SIGNIFICANE FOR THE RESEARCHER: To facilitate and provide all the useful information of the study, the company, the insurance industry and also

provide

marketing

ways,methods

of

HDFC

Standard Life insurance.

RESEARCH DESIGN •

NON-PROBABILITY

•

EXPLORATORY

&

EXPERIMENTAL RESEARCH

72

DISCRIPTIVE

The research is primarily both exploratory as well as descriptive in nature. The sources of information are both primary & secondary.

A

well-structured

personal

interviews

questionnaire were

was

conducted

prepared to

collect

and the

customer’s perception and buying behavior, through this questionnaire.

SAMPLING METHODOLOGY Sampling

Technique:

Initially,

a

rough

draft

was

prepared keeping in mind the objective of the research.

A pilot study was done in order to know the accuracy of

the

arrived

Questionnaire. only

after

The

certain

final

Questionnaire

important

changes

was were

done. Thus my sampling came out to be judgmental and convenient

Sampling Unit: The

respondents

who

were

asked

to

fill

out

questionnaires are the sampling units. These comprise of employees of MNCs, Govt. Employees, and Self Employed etc.

73

Sample size: The sample size was restricted to only 100, which comprised of mainly peoples from different sector of Chandigarh due to time constraints.

Sampling Area: The area of the research was CHANDIGARH, INDIA.

LIMITATIONS OF THE RESEARCH

1. The research is confined to a certain parts of Chandigarh and does not necessarily shows a pattern applicable to all of Country.

2.

Some

respondents

were

reluctant

to

divulge

personal information which can affect the validity of all responses.

3. In a rapidly changing industry, analysis on one day or in one segment can change very quickly. The environmental changes are vital to be considered in order to assimilate the findings.

74

FACTS & FINDINGS

75

FACTS/FINDINGS

1.As

the

people

think

that

insurance

is

a

tool

to

protect their family & a tax saving device. They are aware of the fact & realizing its, importance. The company

should

try

to

expand

&

build

up

its

infrastructure because there is a large potential for insurance in India.

2.

Company

should

come

up

with

its

branch

in

Chennai. With the objective and goals to meet the demands & expectations of the public. Because the entrance

of

private

players

will

increase

the

competition and it would be a tough task to secure a good position in market.

3.Since HDFC STANDARD LIFE INSURANCE LTD is leading with several companies’ policies it should be easy for them to penetrate into the market and secure a good

position

if

they

pay

greater

attention

to

the

service part provided to their customer and thereby forming a long and trusted relationship.

4. As seen from the survey that at present 70% of the customer are having insurance policy out of which

76

87.5%

of

the

customer

are

planning

for

new

investments. So it can be a good potential for the company and they should make an attempt to trap these customers.

5.43%

of

the

customer

is

even

ready

to

go

for

insurance if a service provider away from their home is providing it. But intend they should provide good products

and

services.

The

company

should

try

convince these customers and get them in its favor.

77

to

DATA ANALYSIS & INTERPRETATION

78

DATA ANALYSIS & INTERPRETATION  DATA GIVES PREFERENCE INSURANCE COMPANIES

COMPANY’S NAME

OF

NO.OF RESPONDENT

RESPONDENTS

SHARE (%)

L.I.C.

78

78

HDFC

2

2

ICICI PRUDENTIAL

10

10

SBI LIFE

7

7

RELIANCE LIFE INSURANCE

3

3

100

100

TOTAL

79

OF

INTERPRETATION  78% of the people contacted prefer LIC policy to any other and therefore it is ranked no.1 by that percent of respondents.  DATA GIVES BENEFITS OF INSURANCE PERCEIVED BY RESPONDENTS BENEFITS

NO.OF RESPONDENTS

SHARE (%)

Cover Future Uncertainty

55

55

Tax Deductions

20

20

Future Investment

25

25

TOTAL

100

100

80

INTERPRETATION  55% future

of

the

respondents

uncertainty

is

the

insurance policy.

81

believe

that

covering

biggest

benefit

of

an

 Whereas, 20% and 25% of them believe that the other

benefits

are

Tax

deduction

and

future

investments respectively

 DATA PROVIDES FEATURES OF INSURANCE

POLICY

THAT ATTRACTED RESPONDENTS FEATURE

NO.OF RESPONDENTS

SHARE (%)

Money Back Guarantee

15

15

Larger Risk Coverance

37

37

Easy Access to Agents

7

7

Low Premium

30

30

Company’s Reputation

11

11

TOTAL

100

100

82

INTERPRETATION  Majority of the respondent (37%) found larger risk coverance as the most attracted feature of t h e all.

 DATA PROVIDES NUMBER OF INSURANCE POLICY TYPE RESPONDENTS POLICY TYPE

NO. OF RESPONDENTS

SHARE (%)

LIFE POLICY

75

75

NON LIFE POLICY

25

25

BOTH

45

45

83

INTERPRETATION  75% of the respondents have Life Insurance Policy while 45% have both. (The % is calculated out of 280 positive response)  DATA GIVES PEOPLE PERCEPTION ABOUT INSURANCE RESPONSE

NO. OF RESPONDENTS

SHARE (%)

A saving tool

81

81%

A tax saving device

74

74%

A tool to protect your family

100

100%

INTERPRETATION

84

•

81%

of

the

respondents

have

perception

of

Insurance being a saving tool.

•

And 74%

of

the respondents

have perception

of

Insurance being a tax saving device.

•

But 100% of the respondents are with the view that Insurance is a tool to protect your family.

 DATA SHOWS PEOPLES HAVING INSURANCE RESPONSE

NO. OF RESPONDENTS

SHARE (%)

Yes

70

70%

No

30

30%

INTERPRETATION

85

•

Of the sample size of 400 surveyed respondents 70% of the respondents are having Insurance policy.

•

30% of the respondents are either not having any Insurance

policy

at

present

or

their

policy

is

already matured.

•

And at present 100% of the respondents are with the view that Insurance is a tool to protect your family.

 DATA SHOWS BUYING PROCESS OF THE PEOPLE BUYING PROCESS

NO. OF RESPONDENTS

SHARE (%)

Customer approached Insurance company/Agent

45

45%

Company/agent approached customer

55

555

Total

100

100%

86

INTERPRETATION •

44.5% of the respondents approached the Insurance Company / Agent.

•

Whereas, 55.5% of the respondents were approached by the Company /Agent.

87

DATA SHOWS REASONS BEHIND FOR INSURANCE RESPONSE

NO. OF RESPONDENTS

SHARE (%)

Tax saving

80

80%

Saving / Investment

80

80.%

Family protection

100

100%

INTERPRETATION •

80.71% of the Respondents opted for Insurance for tax saving benefits.

•

80.71%

of

the

Respondents

opted

for

saving

/

Investments.

•

But all of them, i.e. 100% of the respondents have opted for insurance for their family protection.

88

 DATA SHOWS SATISFACTION OF RESPONDENTS WITH RESPECT TO POLICY RESPONSE

NO. OF RESPONDENTS

SHARE (%)

Satisfied

60

60%

Not satisfied

40

40%

Not Responded

0

0.0%

100

100%

Total

INTERPRETATION  60% of the respondents are more or less satisfied with their existing policy.  40% of the respondents are not satisfied with their existing policy.

89

 In this case all of those who have taken a policy have responded.

DATA SHOWS SATISFACTION OF +RESPONDENTS WITH RESPECT TO SERVICE AGENT RESPONSE

NO. OF RESPONDENTS

SHARE (%)

Satisfied

45

45%

Not satisfied

55

55%

Not Responded

0

0.0%

100

100%

Total

90

INTERPRETATION  45%

of

the

respondents

are

satisfied

with

their

existing service agent.  55% of the respondents are not satisfied with their existing insurance agent.  All

of

those

who

have

taken

a

policy

have

responded.

 DATA SHOWS NUMBER OF RESPONDENTS PAYING TAX RESPONSE

NO. OF RESPONDENTS

SHARE (%)

100

100%

-

0%

100

100%

Paying tax Not paying tax Total

91

INTERPRETATION Of the sample size of 400 respondents, all the respondents are paying tax

 DATA SHOWS RESPONDENT’S INVESTMENTS FOR TAX SAVING INVESTMENTS

NO. OF RESPONDENTS

SHARE (%)

LIC

51

51%

NSC

33

33%

Bonds

32

32%

PPF

25

25%

PF

21

21%

EPF

11

11%

92

INTERPRETATION •

51% of the respondents save their tax by investing in LIC, which is the highest among all Investment.

This

shows

that

most

people

for

getting

taxes

benefits invest in LIC. •

33.25% of the respondents do their tax saving by investing in NSC.

•

32.25% of the respondents to their tax saving by investing in bonds.

 DATA SHOWS RESPONDENTS PERCEPTION ABOUT BEST FORM OF INVESTMENT FOR SECURING THEIR FUTURE NO. OF RESPONDENTS

SHARE (%)

75

75%

Fixed Assets

93

Bank deposits

11

11%

Jewellery

25

25%

Securities i.e. bonds, MFs

40.

40%

Shares

10

10%

Insurance

70

70%

INTERPRETATION •

75.25% of the respondents as with the view that Fixed Assets is the best form of investment for securing their future.

•

70.5% perception

of that

the

respondents

Insurance

is

the

are best

with form

the of

investment for securing their future, which is one of the highest and this shows that insurance is an important key for securing your future.

94

DATA SHOWS WHAT PEOPLE INTENT TO GAIN FROM THEIR INVESTMENT RESPONSE

NO. OF RESPONDENTS

SHARE (%)

Saving & Returns

100

100%

Security

90

90%

Tax benefits

71.

71.%

INTERPRETATION •

100% of the respondents intent to gain saving and returns from their investment.

•

90% of the respondent’s intent to gain security from their investments.

95

•

Whereas, 71.75% of the respondent’s intent to gain tax benefits from their investments.

 DATA GIVES PEOPLE’S PERCEPTION ON APPROPRIATE AGE FOR BUYING INSURANCE RESPONSE

NO. OF RESPONDENTS

SHARE (%)

After 25 years

29

29%

After 35 years

10

10%

After 45 years

0

0%

Anytime

60

60%

INTERPRETATION  29%

of

the

respondents

insurance should

are

be bought

years.

96

with after

the

view

the age

that

of 25

 10.5% of the respondents are with the view that insurance should be buy after the age of 35 years.  Whereas, 60.5% of the respondents are with the view that buying of insurance do not have any thing to do with age i.e. there is no age limitations. It can be purchased any time according to the need. 

DATA

SHOWS

PEOPLE

OPINION

ABOUT

INDIAN

INSURANCE COMPANIES RESPONSE

NO. OF RESPONDENTS

SHARE (%)

Rigid plans

67

67%

Non user friendly

29

29%

Unsatisfactory services

26

26%

Non Aggressive

35

35%

Satisfactory

24

24%

Good

10

10%

Very good

0

0%

97

INTERPRETATION •

67% of the respondents have the opinion that Indian Insurance Companies have Rigid plans.

•

29.5%

feel

that

Indian

Insurance

companies

are

Non-user friendly.

•

26.5%

feel

that

services

of

Indian

Insurance

companies are Unsatisfactory.

•

35.75% of the respondents are with the view that Indian Insurance companies are Non-aggressive.

•

24%

of

the

services

of

respondents Indian

feel

that

Insurance

products

and

companies

is

Satisfactory.

•

Whereas only 10.25% feel that it is Good enough.

•

And according to the data, no single person has felt that it is very good.

98

 DATA SHOWS WHAT PEOPLE WOULD LOOK FOR IN AN INSURANCE COMPANY RESPONSE

NO. OF RESPONDENT S

SHARE (%)

82

82%

71

71%

Good plans

81

81%

Accessibility

49

49%

A trusted name Friendly service responsiveness

&

INTERPRETATION •

82% customers look for a Trusted name in a company for insurance.

99

•

81.5% customers look for a good plan in a company for insurance.

•

Friendly

service

&

responsiveness

and

Accessibility are also important factors looked by customers in a company.

DATA SHOWS PEOPLE PLANNING FOR NEW INVESTMENTS RESPONSE

NO. OF RESPONDENTS

SHARE (%)

Planning

87

87%

Not planning

13

13%

Total

100

100%

INTERPRETATION

100

•

Only 12.5% of the customers contacted are not planning for new investments presently.

Whereas, 87.5% of the customers are still planning for new

investments

this

can

be

a

great

potential

for

Reliance Life Insurance to take them on their favor

 DATA SHOWS PEOPLE INTERESTED IN GOING FOR INSURANCE IF A SERVICE PROVIDER AWAY FROM THE CITY OFFERS BETTER SERVICE & PRODUCTS RESPONSE

NO. OF RESPONDENTS

SHARE (%)

Yes

43

43%

No

44

44%

Uncertain

13

13%

Total

100

100%

101

INTERPRETATION •

The interested customers i.e. 43% are ready to go for insurance even away from a city if services and products are worthwhile, which again is a good prospect (potential) for Reliance Life Insurance to take them on their favor.

RECOMMENDATIONS •

As the people think that insurance is a tool to protect their family & a tax saving device. They are aware of the fact & realizing its, importance. The company should try to expand & build up its infrastructure because there is a large potential for insurance in India.

•

Company should come up with its branch in Chennai. With the objective and goals to meet the demands & expectations of the public. Because the entrance of private players will increase the competition and it would be a tough task to secure a good position in market.

•

Since HDFC Standard Life Insurance Company Ltd is leading with several companies’ policies it should be easy for them to penetrate into the market and secure a good position if they pay greater attention to the service part provided to their customer and thereby forming a long and trusted relationship.

102

•

As seen from the survey that at present 70% of the customer are having insurance policy out of which 87.5% of the customer are planning for new investments. So it can be a good potential for the company and they should make an attempt to trap these customers.

43% of the customer is even ready to go for insurance if a service provider away from their home is providing it. But intend they should provide good products and services. The company should try to convince these customers and get them in its favor.

CONCLUSION

Our exhaustive research in the field of Life Insurance threw up some interesting trends which can be seen in the above analysis. A general impression that we gathered during Data collection was the immense awareness and knowledge among people about various companies and their insurance products.

People are beginning to look beyond LIC for their insurance needs and are willing to trust private players with their hard earned money.

People in general have been impression by the marketing and advertising

campaigns

of

insurance

103

companies.

A

high

penetration of print, radio and Television ad campaigns over the years is beginning to have its impact now.

Another heartening trend was in terms of people viewing insurance as a tax saving and investment instrument as much as a protective one. A very high number of respondents have opted for insurance for such purposes and it shows how insurance companies have been successful to attract public money in recent times.

The general satisfaction levels among public with regards to policy and agents still requires improvement. But therein lies the opportunity for a relative new comer like HDFC Standard Life Insurance Company Ltd . LIC has never been known for prompt service or customer oriented methods and HDFC Standard Life can build on these factors.

104

105

BIBLIOGRAPHY

1.

BOOKS/MAGAZINES REFFERED:  STUDY

GUIDE-

PRINCILES

&

PRACTICES

OF

GENERALINSURANCE, by AIMA.  Books published by INSURANCE INSTITUTE OF INDIA  LIFE-INSURANCE, by Mc GILL  INSURANCE WATCH.  MONEY OUTLOOK. 2.

WEBSITES REFFERED:

WWW.CIFAINSURANCE.COM WWW.MONEYOUTLOOK.COM WWW.INSURANCE.IND.COM  WWW.HDFCINURANCE.COM 3.

REPORTS/ARTICLES REFFERED: REPORT: ISSUES & CHALLENGES FACING THE INSURANCE INDUSTRY…. Dec2005.

BRIEF PROFILE OF LIC, INDIA…Dec 2006.

REPORT: COPING WITH COMPETITION…Jan2007

106

LIFE

/

ANNEXURES AND QUESTIONNAIRE

107

QUESTIONNAIRE 1.

ARE YOU EMPLOYED? YES

NO

If YES, only then proceed 2.

DO YOU HAVE ANY INSURANCE POLICY? YES

3.

NO

WHICH INSURANCE POLICY DO YOU HAVE? LIFE

4.

NON-LIFE

BOTH

WHICH CO’S INSURANCE POLICY YOU PREFER THE MOST? (RANK THEM) a) LIC

b) ICICIPRUDENTIAL c) SBI LIFE INSURANCE d) ING VYSYA LIFE e) RELIANCE LIFE INSURANCE f) TATA AIG LIFE g) ANY OTHER

________( Specify)

5. FOR HOW MANY YEARS DO YOU HAVE INSURANCE POLICY? (Please Tick) a) <5Yrs

b) 5-10 Yrs

c) 10-15 Yrs d) Any Other______ (Specify)

108

6. WHAT DO YOU THINK ARE THE BENEFITS OF INSURANCE COVER? (RANK THEM) a) COVER FUTURE UNCERTAINITY

b) TAX DEDUCTIONS c) FUTURE INVESTMENT d) ANY OTHER

7.

_________

(Specify)

WHICH FEATURE OF YOUR POLICY ATTRACTED YOU TO BUY IT? (RANK THEM) a) LOW PREMIUM b) LARGER RISK COVERANCE c) MONEY BACK GUARNTEE d) REPUTATION OF COMPANY e) EASY ACCESS TO AGENTS f) ANY OTHER

8.

_________ (Specify)

YOUR MONTHLY INCOME? a)<4k b)4k-8k c)8k-12k d)12k-16k e)Other_____(Specify)

9.

DO YOU REALLY THINK INSURANCE POLICY COVER IN TODAY’S SCENARIO IS NOT ESSENTIAL? _____________________________________________________

10.

WHAT’S YOUR PERCEPTION ABOUT INSURANCE? (RANK THEM) a) A SAVING TOOL b) A TAX SAVING DEVICE

109

c) A TOOL TO PROTECT FUTURE

11.

HOW HAS/WOULD YOU BOUGHT/BUY AN INSURANCE? a) CUSTOMER APPROCHED INSURANCE COs b) INSURANCE COs APPROCHED CUSTOMER

12.

ARE YOU SATISFIED WITH THE POLICY? a) SATISFIED SAVING TOOL b) NOT SATISFIED c) NOT RESPONDING

13.

ARE YOU SATISFIED WITH THE SERVICE AGENT? a) SATISFIED SAVING TOOL b) NOT SATISFIED c) NOT RESPONDING

14

DO YOU PAY TAXES? YES

15.

NO

WHERE HAVE YOU INVESTED FOR TAX SAVING? (RANK THEM) a) LIC b) NSC c) BONDS d) PPF

110

e) PF f) EPF 16.WHICH IS THE BEST FORM OF INVESTMENTS? (RANK THEM) a) FIXED ASSETS b) BANK DEPOSITS c) JEWELLERY d) SECURITIES, i.e. Bonds, MFs e) SHARES f) INSURANCE 17. WHAT DO YOU INTENT TO GAIN FROM INVESTMENTS? a) SAVING & RETURNS b) SECURITY c) TAX BENIFITS 18. WHAT’S THE RIGHT AGE TO BUY INSURANCE? a) AFTER 25 Yrs b) AFTER 35 Yrs c) AFTER 45 Yrs d) ANYTIME

111

19.HOW WOULD YOU RATE INDIAN INSURANCE COs? a) RIGID PLANS b) NON-USER FRIENDLY

DA

c) UNSATISFATORY SREVICES d) NON-AGGRESSIVE e) SATISFACTORY f) GOOD g) VERY GOOD 20. WHAT WOULD YOU LOOK FOR IN AN INSURANCE COs? (RANK THEM) a) A TRUSTED NAME b) FRIENDLY SERVICE & RESPONSIVENESS c) GOOD PLANS d) ACCESSIBILITY

112

21. ARE YOU PLANNING FOR NEW INVESTMENTS? PLANNING

NOT PLANING

22. WOULD YOU GO FOR INSURANCE IF A SERVICE PROVIDER AWAY FROM THE CITY OFFERS BETTER SERVICE & PRODUCTS? a) YES b) NO c) UNCERTAIN

THANK YOU NAME:_________________________ ADDRESS:______________________ ______________________________ OCCUPATION:___________________

113

114

115