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SUMMER TRAINING REPORT
ON
“A CUSTOMER SATISFACTION WITH THE MARKETING
STRATEGIES OF RELIANCE LIFE INSURANCE.”
“Submitted in the Partial Fulfillment for the Requirement of
Bachelor’s of Business Administration (B.B.A) General”
BBA V Semester (Evening) (B)
Batch 2010-2013
Submitted to: Submitted by
Ms. Kanika Jain Arman Taneja
Project Guide Roll No.09924501710
Jagannath International Management School
Kalkaji, New Delhi
1
STUDENT’S UNDERTAKING
I hereby declare that Summer Internship Report is a record of independent
work carried out by me at the end of Fourth Semester, June 2012 to Aug
2012 for the purpose of Partial fulfillment of degree of Bachelor’s in
Business Administration for JIMS, kalkaji.
This report has not been previously submitted for the award of any
university or institution.
Place: New Delhi
Signature
Date:
2
AACKNOWLEDGEMENTCKNOWLEDGEMENT
First of fall I would like to thank the Reliance Life Insurance Comapny for giving me
such a opportunity to do my summer training from such a reputed organization. I am
highly obliged to Mr. RANJAN KUMAR for associating me in this training. He also
helped me a lot on my personal front as far as my studies were concerned, by giving
me tips to improve my performance. My experience with him as his subordinate is
memorable.
With due respect and regards I wish to express my deep sense of gratitude,
indebtedness and sincere phrases of thanks to Ms. Kanika Jain, for her invaluable
mentoring and exuberant guidance. We are highly obliged by the constant support
that I have got from my faculty in the project. Starting from the initial stages to the
end stages I have received continuous feedback with regard to the progress of the
project.
Thank you, once again.
Signature
3
TABLE OF CONTENTS
S.No
1.
2.
3.
TOPIC
ACKNOWLEDGEMENT
PREFACE
EXECUTIVE SUMMARY
Page. No
3
5
6
4.
5.
CHAPTER-1 INTRODUCTION
1.1 Overview Of Industry As A Whole
CHAPTER-2 COMPANY PROFILE
2.1 Problems Of The Organisation
2.2 Competition Information
2.3 S.W.O.T Analysis Of The Organisation
7
32
32
37
6. CHAPTER-3.0 RESEARCH AND METHODOLOGY
3.1 Objectives
3.2 Significance
3.3 Managerial Usefulness Of The Study
3.4 Scope Of Study
3.5 Methodology Adopted
39
40
40
41
42
7. CHAPTER-4.0 LITERATURE REVIEW
Marketing Strategy Of Reliance Life Insurance
43
8. CHAPTER-5.0 ANALYSIS AND INTERPRETATION 58
9. CHAPTER-6.0 FINDINGS 75
10. RECOMMENDATION AND CONCLUSION 76
11.
12.
13.
LEARNINGS
ANNEXTURES
BIBLIOGRAPHY
77
78
82
4
PREFACE
This is true statement that experience has much importance than bookish theory.
Experience will only gain by the students only when they go some management
training. This training which is a part of course helps them to overcome the problems
that they face in modern competitive business in future.
If we talk about market, this training helps the students in developing some marketing
skills in them, through selling policies. For this our students have been known about
customer behaviour, preferences,taste etc.
I was very lucky enough to work as a summer trainee for a period of two months.
The training was interesting, enjoyable, satisfying.. With the help of this training I have
built in myself the skills of good marketer, now I have known the customer behavior with
respect to services. I have learnt both theoretical as well as practical aspect of business
world. So it is necessary for me and even every student of management training
programme to have some training programme for practical knowledge of business world
as well as all round development of students.
5
EXECUTIVE SUMMARY
In today’s corporate and competitive world, I find that insurance sector has the
maximum growth and potential as compared to the other sectors.Specially reliance life
insurance. Insurance has the maximum growth rate of 70-80% while as FMCG sector
has maximum 12-15% of growth rate. This growth potential attracts of reliance life
insurance pushed me to enter in this sector and RELIANCE LIFE INSURANCE has
given me the opportunity to work and get experience in highly competitive and
enhancing sector.
The success story of good market share of different market organizations depends upon
the availability of the product and services near to the customer, which can be
distributed through a distribution channel. In insurance sector, distribution channel
includes only agents or agency holders of the company. If a company like RELIANCE
LIFE INSURANCE, TATA, AIG, MAX etc have adequate agents in the market they can
capture big market as compared to the other companies. Because these companies
have attractive policies to capture the wide range of customers.
Agents are the only way for a company of Insurance sector through which policies and
benefits of the company can be explained to the customer with its communication
abilities. So effective agents is very necessary for selling insurance policies.
6
CHAPTER 1
INTRODUCTION
INSURANCE
Risk and uncertainty are incidental to life. Man may meet an untimely death. He may
suffer from accident, destruction of property, fire perils, floods, earthquake and other
natural calamities. Whenever there is uncertainty, there is risk as well as insecurity. It is
to provide against risk and insecurity that insurance come into being. Insurance does
not avert or eliminate loss arising from uncertain events.
1.1 OVERVIEW OF INDUSTRY AS A WHOLE
History of insurance in India
GENERAL INSURANCE In India, insurance has a deep-rooted history. It finds mention
in the writings of Manu ( Manusmrithi ), Yagnavalkya ( Dharmasastra ) and Kautilya
( Arthasastra ). The writings talk in terms of pooling of resources that could be re-
distributed in times of calamities such as fire, floods, epidemics and famine. This was
probably a pre-cursor to modern day insurance. Ancient Indian history has preserved
the earliest traces of insurance in the form of marine trade loans and carriers’ contracts.
Insurance in India has evolved over time heavily drawing from other countries, England in
particular.
1818 saw the advent of life insurance business in India with the establishment of the
Oriental Life Insurance Company in Calcutta. This Company however failed in 1834. In
1829, the Madras Equitable had begun transacting life insurance business in the
Madras Presidency. 1870 saw the enactment of the British Insurance Act and in the last
three decades of the nineteenth century, the Bombay Mutual (1871), Oriental (1874)
and Empire of India (1897) were started in the Bombay Residency. This era, however,
was dominated by foreign insurance offices which did good business in India, namely
Albert Life Assurance, Royal Insurance, Liverpool and London Globe Insurance and the
Indian offices were up for hard competition from the foreign companies.
7
In 1914, the Government of India started publishing returns of Insurance Companies in
India. The Indian Life Assurance Companies Act, 1912 was the first statutory measure
to regulate life business. In 1928, the Indian Insurance Companies Act was enacted to
enable the Government to collect statistical information about both life and non-life
business transacted in India by Indian and foreign insurers including provident
insurance societies. In 1938, with a view to protecting the interest of the Insurance
public, the earlier legislation was consolidated and amended by the Insurance Act, 1938
with comprehensive provisions for effective control over the activities of insurers.
The Insurance Amendment Act of 1950 abolished Principal Agencies. However, there
were a large number of insurance companies and the level of competition was high.
There were also allegations of unfair trade practices. The Government of India,
therefore, decided to nationalize insurance business.
An Ordinance was issued on 19th January, 1956 nationalising the Life Insurance sector
and Life Insurance Corporation came into existence in the same year. The LIC
absorbed 154 Indian, 16 non-Indian insurers as also 75 provident societies—245 Indian
and foreign insurers in all. The LIC had monopoly till the late 90s when the Insurance
sector was reopened to the private sector.
The history of general insurance dates back to the Industrial Revolution in the west
and the consequent growth of sea-faring trade and commerce in the 17th century. It
came to India as a legacy of British occupation. General Insurance in India has its roots
in the establishment of Triton Insurance Company Ltd., in the year 1850 in Calcutta by
the British. In 1907, the Indian Mercantile Insurance Ltd, was set up. This was the first
company to transact all classes of general insurance business.
1957 saw the formation of the General Insurance Council, a wing of the Insurance
Associaton of India. The General Insurance Council framed a code of conduct for
ensuring fair conduct and sound business practices.
8
In 1968, the Insurance Act was amended to regulate investments and set minimum
solvency margins. The Tariff Advisory Committee was also set up then.
In 1972 with the passing of the General Insurance Business (Nationalisation) Act,
general insurance business was nationalized with effect from 1st January, 1973. 107
insurers were amalgamated and grouped into four companies, namely National
Insurance Company Ltd., the New India Assurance Company Ltd., the Oriental
Insurance Company Ltd and the United India Insurance Company Ltd. The General
Insurance Corporation of India was incorporated as a company in 1971 and it
commence business on January 1sst 1973.
This millennium has seen insurance come a full circle in a journey extending to nearly
200 years. The process of re-opening of the sector had begun in the early 1990s
and the last decade and more has seen it been opened up substantially. In 1993, the
Government set up a committee under the chairmanship of RN Malhotra, former
Governor of RBI, to propose recommendations for reforms in the insurance sector.The
objective was to complement the reforms initiated in the financial sector. The committee
submitted its report in 1994 wherein, among other things, it recommended that the
private sector be permitted to enter the insurance industry. They stated that foreign
companies are allowed to enter by floating Indian companies, preferably a joint venture
with Indian partners.
Following the recommendations of the Malhotra Committee report, in 1999, the
Insurance Regulatory and Development Authority (IRDA) was constituted as an
autonomous body to regulate and develop the insurance industry. The IRDA was
incorporated as a statutory body in April, 2000. The key objectives of the IRDA include
promotion of competition so as to enhance customer satisfaction through increased
consumer choice and lower premiums, while ensuring the financial security of the
insurance market.
9
The IRDA opened up the market in August 2000 with the invitation for application for
registrations. Foreign companies were allowed ownership of up to 26%. The Authority
has the power to frame regulations under Section 114A of the Insurance Act, 1938 and
has from 2000 onwards framed various regulations ranging from registration of
companies for carrying on insurance business to protection of policyholders’ interests.
In December, 2000, the subsidiaries of the General Insurance Corporation of India were
restructured as independent companies and at the same time GIC was converted into a
national re-insurer. Parliament passed a bill de-linking the four subsidiaries from GIC in
July, 2002.
Today there are 14 general insurance companies including the ECGC and Agriculture
Insurance Corporation of India and 14 life insurance companies operating in the
country.
The insurance sector is a colossal one and is growing at a speedy rate of 15-20%.
Together with banking services, insurance services add about 7% to the country’s GDP.
A well-developed and evolved insurance sector is a boon for economic development as
it provides long- term funds for infrastructure development at the same time
strengthening the risk taking ability of the country.
10
Chapter 2
Company Profile
PROFILE OF THE ORGANISATION
Company Profile of Reliance Life Insurance Founders
Few men in history have made as dramatic a contribution to their country’s economic
fortunes as did the founder of reliance, Sh. Dhirubhai H Ambani. Fewer still have left
behind a legacy that is more enduring and timeless.
As with all great pioneers, there is more than one unique way of describing the true
genius of Dhirubhai: The corporate visionary, the unmatched strategist, the pound
patriot, the larder of men, the architect of India’s capital markets, the champion of
shareholder interest.
But the role Dhirubhai cherished most was perhaps that of India’s greatest wealth.
Creator. In one life time, he built, starting form the proverbial scratch, India’s largest
private sector enterprise.
When Dhirubhai embarked on his first business venture, he had a seed capital of barely
US$ 300 (around Rs. 14,000). Over the next three and a half decades, he converted
this fledgling enterprise into a Rs. 60,000 crore colossus- an achievement which earned
Reliance a place on the global Fortune 500 list, the first ever Indian private company to
do so.
Dhirubhai is widely regarded as the father of India’s capital markets. In 1977, when
Reliance textile Industries Limited first went public, the Indian stock market was a place
patronized by a small club of elite investors which dabbled in a handful of stocks.
Undaunted, Dhirubhai managed to convince a large number of first-time retail investors
to participate in the unfolding Reliance story and put their hard-earned money in the
Reliance textile IPO, promising them, in exchange for their trust, substantial return on
their investments. It was to be the start of one of great stories of mutual respect and
reciprocal gain in the Indian markets.
11
Under Dhirubhai’s extraordinary vision and leadership, Reliance scripted one of the
greatest growth stories in corporate history anywhere in the world, and went on to
become India’s largest private sector enterprise.
Through out this amazing journey, Dhirubhai always kept the interest of the ordinary
shareholder uppermost in mind, in the process making millionaires out of many of the
initial investors in the Reliance stock, and creating one of the world’s largest
shareholder families.
CORPORATE OBJECTIVE
At Reliance life Insurance, we strongly believe that as life is different at every stage, life
insurance must offer flexibility and choice to go with that stage. We are fully prepared
and committed to guide you on insurance products and services through our well-
trained advisors, backed by competent marketing and customer services, in the best
possible way.
It is our aim to become one of the top private life insurance companies in India and to
become a cornerstone of RLI integrated financial services business in India.
Corporate Mission
“To set the standard in helping our customers manage their financial future.” BELOW
ARE FEW OF THE PLANS THAT ARE OFFERED BY RELIANCE LIFE INSURANCE
INSURANCE PLANS AVAILABLE
Products (Individual Plans)
Savings (Endowment)
Reliance Endowment Plan
(formerly divya shree)
Reliance special Endowment Plan
(formerly Subha Shree)
Reliance cash Flow Plan
(formerly Dhana Shree)
Reliance child Plan
(formerly Yuva Shree )
Reliance Whole Life Plan
12
Pensions
Reliance golden Years Plan
(formerly Bhagya Shree)
Investments
Reliance market Return Plan
(formerly Kanaka Shree)
Risk / Protection
Reliance term Plan
(formerly Raksha Shree )
Risk (Protection)
Reliance group term assurance policy
(formerly group term assurance policy)
Reliance EDLI Scheme
(formerly EDLI scheme )
Pensions
Reliance group gratuity policy
(formerly group gratuity policy
Reliance group superannuation policy
(Formerly group superannuation policy)
Reliance Money Guarantee Plan
ABOUT THE COMPANY (RELIANCE LIFE INSURANCE)
Reliance Life Insurance
Reliance Life Insurance Company Limited is a part of Reliance Capital Ltd. of the
Reliance - Anil Dhirubhai Ambani Group. Reliance Capital is one of India’s leading
private sector financial services companies, and ranks among the top 3 private sector
financial services and banking companies, in terms of net worth. Reliance Capital has
interests in asset management and mutual funds, stock broking, life and general
insurance, proprietary investments, private equity and other activities in financial
services.
Reliance Capital Limited (RCL) is a Non-Banking Financial Company (NBFC) registered
13
with the Reserve Bank of India under section 45-IA of the Reserve Bank of India Act,
1934.
Reliance Capital sees immense potential in the rapidly growing financial services sector
in India and aims to become a dominant player in this industry and offer fully integrated
financial services.
Reliance Life Insurance is another step forward for Reliance Capital Limited to offer
need based Life Insurance solutions to individuals and Corporates
PRODUCTS
The Key benefits of Reliance Automatic Investment Plan are as follows:
A smart plan which adapts to your changing risk profile with increasing age
Option to lower the average cost of units through systematic transfer of your
funds
Flexibility to switch between funds and plans
Options for additional Insurance cover available through riders
Key Features Reliance Automatic Investment Plan
Two plan options to choose from Ready-made and Tailor-made
Life Stage asset allocation to ensure automatic change in investment patterns,
under the Ready-made Plan option
Freedom to decide your own fund mix based on your risk profile under the Tailor-
made Plan
Regular, limited, single premium paying options
Unmatched flexibility through our ‘Exchange Option’
Liquidity in the form of partial withdrawal
Option to avail of Accidental Death Benefit, Accidental Total, Premium Disability
and Term Insurance riders
How does this Plan work?
As a customer you will have the liberty to choose between the Ready-made and Tailor-
made Plan options. The premium contributions made by you, net of Premium Allocation
Charges and Sum Assured Related Charges are invested in fund/funds of your choice
and units are allocated depending on the price of units for the fund/funds.
14
The Fund Value is the total value of units that you hold in the fund/ funds. The Mortality
Charges and Policy Administration Charges are deducted through cancellation of units,
whereas the Fund Management Charge is priced in the Unit Value.
Reliance Automatic Investment Plan at a glance
Basic Plan Minimum Maximum
Age at Entry 30 days 65 years last birthday
Age at Maturity 18 years last birthday 80 years last birthday
Premium Paying
Term
5 years 30 years
Min Sum
Assured
Regular / Limited Premium: Annualised Premium for 5 years or
Annualised Premium for half of the policy term, whichever higher
Single Premium 125% of the single premium amount
Max Sum
Assured
No Limit
Benefit Illustration
To enable a better understanding on how the plan works, please refer to the below table
for Regular Premium.
Age of the customer 30 35 40 45
Annual Premium Paid 25,000 25,000 25,000 25,000
Policy Term 15 15 15 15
Premium Paying Term 15 15 15 15
Sum Assured 1,87,500 1,87,500 1,87,500 1,87,500
15
Maturity Values:
at 6% investment return
at 10% investment return
4,95,104
6,94,534
4,94,413
6,93,530
4,93,017
6,91,444
4,90,506
6,87,755
Minimum Premium
Yearly Half Yearly Quarterly Monthly
Regular Premium option Rs 10,000 Rs 5,000 Rs 2,500 Rs 1,000
Limited Premium Rs 20,000 Rs 10,000 Rs 5,000 Rs 2,000
Single Premium Rs 25,000
Min Top Up amount Rs 2,500
Tax Benefit
As per current tax rules premiums paid are eligible for tax deduction under Section 80C
of the Income Tax Act, 1961. Provided the premium in any years during the term of the
Policy does not exceed 20% of the Sum Assured, maturity and withdrawals are eligible
for tax benefit under Section 10(10D). Death benefits are tax free under Section 10(10)
D of the Income Tax Act, 1961. Under Section 80C premiums up to Rs 100,000 are
allowed as deduction from your taxable income.
Service tax and education cess will be charged extra as per applicable rates.
Please note that all benefits payable under the policy are subject to tax laws and other
financial enactments as they may exist from time to time. It is recommended that you
consult your tax advisor.
The premium paid in Unit Linked Life Insurance policies are subject to investment
risks associated with capital markets and the NAVs of the units may go up or
16
down based on the performance of fund and factors influencing the capital
market, and the insured is responsible for his/her decisions.
Reliance Life Insurance Company Limited is only the name of the Insurance
Company and Reliance Automatic Investment Plan is only the name of the unit
linked life insurance contract and does not in any way indicate the quality of the
contract, its future prospects or returns.
Tax laws are subject to changes with retrospective effect and consulting a tax
expert for an opinion is recommended.
UNDER THIS PLAN THE INVESTMENT RISK IN THE INVESTMENT PORTFOLIO IS
BORNE BY THE POLICYHOLDER.
Yes, it's a trio the pace setter plan, which promises Life Protection, an opportunity to
gain control over your investments along with protection of downside risk!
For the select few like you, the Reliance Money Guarantee Plan is a Unit Linked product
addressing comprehensive need to strike that perfect balance of Protection and Savings
that you deserve as you grow successfully. The Reliance Money Guarantee Plan is a
Regular Premium Unit Linked Policy which guarantees the entire premium (including
premiums for top- ups) paid by you. This is a plan which helps you reap all the benefits
of a rising market simultaneously protecting you from the downside risk of the market.
Reliance Money Guarantee Plan at a glance
Basic Plan Minimum Maximum
Age at Entry 30 days 55 years last birthday
Age at Maturity 18 years last birthday 80 years last birthday
Policy Term 10 years 30 years
Optional Riders
Term Life Insurance Benefit Rider
Age at Entry 18 years last birthday 59 years last birthday
Age at Maturity 23 years last birthday 64 years last birthday
Policy Term 5 years 30 years
17
Sum Assured 25,000 Up to basic Policy Sum Assured
Accidental Death and Accidental Total and Permanent Disablement Rider
Age at Entry 18 years last birthday 60 years last birthday
Age at Maturity 23 years last birthday 64 years last birthday
Policy Term 5 years 30 years
Sum Assured 25,000 Up to basic policy Sum Assured
subject to a maximum of Rs
50,00,000 on accidental death
and Rs 500,000 per annum on
total permanent disability.
What if I want to discontinue the Policy?
You may surrender your Policy at any time after three years from commencement.
A. Full Surrender Value under Basic Plan : The Surrender Value will be the Fund
Value including Return Shield Fund if selected as on the date of intimation of
surrender under Basic Plan less Surrender Charge as given below. On surrender
of Basic Plan, any attaching Top-Ups will also be surrendered. No partial
Surrender Value is available under Basic Plan.
Year of surrender
Basic Plan
Surrender Charge as % of Fund Value of
including Return Shield Fund if selected
1 to 3
Surrender Value not available2
3
4 5%
5 3%
6+ Nil
18
B. Full Surrender Value or Partial Withdrawal Value under Top-Up: This will be
available on completion of three years from the date of payment of top-ups. The
lock-in period of three years will not be applicable to top-ups paid in the last three
years of the plan. The full Surrender Value or Partial Withdrawal Value is equal to
the Fund Value being surrendered or being withdrawn. There is no Surrender
Charge or Partial Withdrawal Charge.
If a partial surrender is taken from the top-up, the Capital Guarantee on death and
maturity (i.e. the minimum Death Benefit of top-up premium on death at any time
during the Policy Term and the minimum Maturity Benefit of top-up premium paid
provided a period of at least 10 years has elapsed from the date of payment of top-
up) will cease immediately on that Tranche of top-up.
Charges under the plan
Premium Allocation Charges: This is a percentage of the premium appropriated towards
charges from the premium received.
YearPremium Allocation Charge
( as percentage of premium amount)
Year 1 30%
Year 2 7%
Year 3 onwards 5%
For top-up premium the Allocation Charge is 2%.
In case of policies under Exchange Option, the Allocation Charge in year of exchange
will be 15% of the annualised premium of Reliance Money Guarantee plan. During
subsequent years, the Allocation Charges mentioned in the above table will apply.
19
Policy Administration Charges: Rs 40 will be deducted per month per Policy (charged
monthly through cancellation of units).
Fund Management Charges: The Fund Management Charges under each fund are
given below:
Fund Name Annual Rate
Fund D 1.35% p.a.
Fund E 1.38% p.a.
Fund F 1.40 p.a.
Return Shield 1.25% p.a.
Fund DC 1.30% p.a.
The Fund Management Charge on each day is three hundred and sixty fifth of the
Annual Charge and will be deducted from the Assets of the Unit Linked Fund.
Switching Charge: First four switches in any Policy Year are free. There will be a charge
of Rs100 per switch on subsequent switches.
Charge for Return Shield Option: There will not be any charge for the Return Shield
option under following circumstances:
If the option is selected under Basic Plan on commencement of the plan
If the option is selected under top-up at the time of payment of top-up
Under all other circumstances, a fixed charge of Rs 100 is payable every time the
Return Shield option is selected
Mortality Charge: The Mortality Charges is based on your attained age, are determined
using 1/12th of the charges mentioned in the Mortality Charge table below and are
deducted by canceling the units from your fund every month.
Surrender Charge: This charge is levied on the Fund Value at the time of surrender of
the Policy as under:
Year of Surrender of
Basic Plan/top-ups
Surrender Charge as
a percentage of fund value
20
1 to 3 Not allowed
4 5%
5 3%
6 onwards Nil
Service Tax & other applicable charges: These charges are to be levied on the Mortality
Charge and on Rider Premiums. The level of this charge will be as per the rate of
Service Tax along with the other applicable taxes/ charges on risk premium, if any, as
declared by the Government from time to time. The current rate of Service Tax
(including the Education Cess on Service Tax) on risk premium is 12.24%. Currently,
this charge is borne by the Company. However, the Company reserves the right to pass
on this charge as well as other charges/taxes to the Policyholder in future.
Miscellaneous Charge: Fixed Miscellaneous Charge of Rs 2 per Rs 1000 Sum Assured
will be collected on inception of the Policy.
Premium for Rider Benefits: Premium for Rider Benefits will be collected over and
above the premium under Basic Plan.
Recovery of Charges
The one time Miscellaneous Charge on commencement of the Policy and the Allocation
Charges will be deducted from the premium amount before allocation of units.
The Fund Management Charges will be priced in the Unit Price of each Fund.
Mortality and Policy Administration Charges will be collected monthly in advance by
cancelling the units at prevailing Unit Price.
Switching Charge and Return Shield Charge will be collected at the time of transaction
by cancelling the units at prevailing Unit Price.
The Surrender Charge, if applicable, will be deducted from the Fund Value as a
percentage of the Fund Value.
21
Rider premiums will be collected over and above the premiums under Basic Plan and
will not be deducted through cancellation of units.
In the event that units are held in more than one fund, including Return Shield Fund, the
cancellation of units will be effected in the same proportion as the value of units held in
each Fund. In case the Fund Value in any Fund Value goes down to the extent that it is
not sufficient to support the proportionate applicable monthly charges, then the same
shall be deducted from the Fund Value of the other funds proportionately.
Change in rate of charges
The revision in charges as mentioned below will take place only after obtaining specific
approval of the IRDA. A notice of three months will be given to the Policyholders before
any increase in the charges.
If the Policyholder does not agree with the modified charges, he/she shall be allowed to
withdraw the units in the plan at the then prevailing Unit Value after paying it if any and
terminate the Policy.
The Fund Management Charge may be increased up to 2.50% p.a. The Policy
Administration Charge may be increased up to Rs75 per month per Policy. The
Switching Charge, charge for selecting STP option can be increased up to Rs 1000 per
transaction.
The Surrender, Premium Allocation, Mortality, Miscellaneous Charge and premium
rates under riders are guaranteed for the term of the Policy.
How safe is your investment?
Unit Linked Life Insurance products are different from the traditional insurance products
and are subject to the risk factors
1. The Policy has a Capital Guarantee feature whereby all premiums paid are
guaranteed on death and at maturity. The Capital Guarantee is not applicable on
additional and rider premiums. The top-up premiums are guaranteed on death at
any time during the Policy Term provided there is no partial withdrawal. The top-
up premiums are guaranteed on maturity provided the top- ups were made 10
22
years before the maturity date and that there is no partial surrender of that top-up
up to maturity.
2. The premium paid in Unit Linked life insurance policies are subject to investment
risks associated with Capital Markets and NAVs of the units may go up or down
based on the performance of fund and factors influencing the Capital Market and
the Insured/Policyholder is responsible for his/her decisions.
3. The Unit Price is a reflection of the financial and equity/debt market conditions
and can increase or decrease at any time due to this.
4. Benefit payable under the Policy will be made according to the tax laws and other
regulations in force at that time.
5. Fund D, Fund E, Fund F, Fund C and Return Shield Fund are the names of the
funds offered currently with Reliance Money Guarantee Plan, and in any manner
does not indicate the quality of the respective funds, their future prospects or
returns.
6. Please note that Reliance Life Insurance Company Limited is only the name of
the Insurance Company and Reliance Money Guarantee Plan is only the name of
the Unit Linked Life Insurance Policy and does not in anyway indicate the quality
of the Policy or its future prospects or returns.
7. The past performance of other funds of the Company is not necessarily indicative
of the future performance of any of these funds.
8. Fund C, Fund D, Fund E, Fund F & Return Shield Fund do not offer a guaranteed
or assured return.
What if I want to discontinue the Policy?
i. Within three years of the inception of the Policy: The Capital Guarantee under
the Basic Plan and Top-Ups, if any will cease immediately. The Rider Benefits
and Insurance Cover under Basic Plan will cease immediately.
23
However you will continue to participate in the performance of Unit Funds.
The Monthly Administration Charges will be deducted from the Fund Value by
cancellation of units. The Fund Management Charge will be priced in the Unit
Value.
You may revive the Policy by re-commencing the premium payment within a
period of three years from the due date of first unpaid premium but before the
Maturity Date of the Policy.
In the event the Policy is not revived during Revival Period, the Policy shall be
terminated and the Surrender Value, if any, shall be paid at the end of the period
allowed for revival.
Anytime during this period, should the Life Insured die, the Fund Value including
Return Shield Fund under the Basic Plan will be paid. The Fund Value including
Return shield fund under the Top-up Fund if any will also be paid. The Fund
Value will be calculated on the date of intimation of death to the Company.
ii. After paying of at least 3 full years' premiums: The Capital Guarantee under the
Basic Plan and top-ups if any will cease immediately. The Rider Benefits will
cease immediately.
The Insurance Cover under the Basic Plan will continue. You will continue to
participate in the performance of Unit Funds.
The Mortality and Administration Charges will be deducted from the Fund Value
by cancellation of units. The Fund Management Charge will be priced in the Unit
Value.
You may revive the Policy by paying all due premiums in full at any time within a
period of three years from the due date of first unpaid premium but before the
Maturity Date of the Policy.
At the end of the allowed period for revival, if your Policy is not revived, the Policy
shall be terminated by paying the Surrender Value.
However, you may opt to continue the Policy even beyond the Revival Period
(but not beyond the Maturity Date of the Policy). The Mortality and Administration
Charges will be deducted from the Fund Value by canceling the units. The Policy
will continue to participate in the performance of the Unit Funds chosen by you.
24
The Life Cover will continue until the Fund Value under Basic Plan and top-ups if
any, reaches an amount equivalent to one full year's premium plus Surrender
Charge, if any.
When the Fund Value including Fund Value under Return Shield if selected
reaches an amount equal to one full year's premium, the Policy will be terminated
by paying one full year's premium.
In the event of death of the Life Assured during this period (provided the age of
the Life Assured is more than 12 years last birthday as on date of death) the
maximum of (Sum Assured, Fund Value including Return Shield Fund under
Basic Plan) plus the Fund Value including Return Shield Fund under the top-up if
any will be paid. The Fund Value will be calculated on the date of intimation of
death to the Company.
In the event of death of the Life Assured during this period (provided the age of
the Life Assured is less than or equal to 12 years last birthday as on date of
death) the Fund Value including Return Shield Fund under Basic Plan plus the
Fund Value including Return Shield Fund under the top-up if any will be paid.
The Fund Value will be calculated on the date of intimation of death to the
Company.
Grace Period for payment of premiums
There is a grace period of 30 days from the due date for payment of regular
premiums. In case of monthly mode, the grace period is of 15 days. A Policy
lapses if premiums are not paid within the days of grace.
Revival of a discontinued Policy
You may revive a Policy by paying the arrears of premiums and recommencing
the payment of premiums at any time within a period of 3 years from the due date
25
of first unpaid premium but before the Maturity Date of the Policy subject to
satisfactory Medical and Financial Underwriting.
On revival of the Policy, the Capital Guarantee under Basic Plan and top- ups will
be reinstated if it was available at the time of discontinuance of premium
payment under the Policy.
If the Basic Plan is revived, the Term Rider can be revived by paying the arrears
of premiums with interest at the prevailing rate of interest. The current rate of
interest is 9.5% p.a. This will be subject to satisfactory Medical and Financial
Underwriting.
If the Basic Plan is revived, the accidental Death Benefit and Total and
Permanent Disablement Rider can be revived by recommencing the payment of
rider premium subject to satisfactory Medical and Financial Underwriting.
Tax Benefit
As per current tax rules premiums paid are eligible for tax deduction under
Section 80C of the Income Tax Act, 1961. Provided the premium in any years
during the term of the Policy does not exceed 20% of the Sum Assured, maturity
and withdrawals are eligible for tax benefit under Section 10(10D). Death Benefit
are tax free under Section 10(10) D of the Income Tax Act, 1961. Under Section
80C premiums up to Rs 100,000 are allowed as deduction from your taxable
income.
Service Tax and Education Cess will be charged extra as per applicable rates.
Please note that all benefits payable under the Policy are subject to tax laws and
other financial enactments as they may exist from time to time. You are
recommended to consult your Tax Advisor.
General Exclusion
26
If the Life Assured commits suicide within 12 months from the date of
commencement of risk or date of revival of this Policy, whether sane or insane at
that time, we will limit the Death Benefit to the Fund Value and will not pay any
Insured Benefit. The Capital Guarantee will not be available.
Optional Rider Benefits
Accidental Death & Accidental Total and Permanent Disablement Benefit:
This Benefit increases the Life Coverage in case of Accidental Death or
Accidental Total and Permanent Disablement at a very nominal additional cost.
You have the option of taking or removing the rider anytime during the Policy
Term subject to satisfactory Medical and Financial Underwriting provided the
criteria under minimum and maximum age at entry, Policy Term, Premium
Payment Term, Sum Assured are satisfied.
The premium for the rider is payable over and above the premium for the Basic
Plan, and not by the cancellation of units.
Term Life Insurance Benefit: You have the option of taking or removing the Term
Life Insurance Benefit Rider at any time during the term of the Policy subject to
Medical and Financial Underwriting provided the criteria in respect of minimum
and maximum age at entry, Policy Term, Premium Payment Term, Sum. Assured
are satisfied.
The maximum Sum Assured under Term Life Insurance Benefit Rider will be
equal to the Sum Assured under Basic Plan.
Exclusions to Accidental Death & Accidental Total and Permanent Disablement
Benefit Rider
Reliance Life Insurance will not be liable to pay any Accidental Death Benefit
Claim or Total and Permanent Disablement Claim which results directly or
indirectly from any one or more of the following:
An act or attempted act of self injury
Participation in any criminal or illegal acts
Being under the influence of alcohol or drugs
Racing or practicing racing of any kind other than on foot
27
Flying or attempting to fly in, or using or attempting to use, an aerial device of
any description, other than as a fare paying passenger on a recognized airline or
charter service.
Participating in any riot, strike or civil commotion, active military service, naval air
force, police or similar services or
War, invasion, act of foreign enemies, hostilities or war like operations (whether
war be declared or not), civil war, mutiny, military rising, insurrection, rebellion,
military or usurped power or any act of terrorism.
Reliance Cash Flow Plan
While most insurance plans block your money for a certain period of time, Reliance
Cash Flow Plan gives you the double benefit of life insurance along with easy liquidity
through lump sum cash. It provides money periodically when you need it.
It lets you live life to the fullest today and at the same time, helps you stay protected for
tomorrow by giving you the flexibility of receiving a specified percentage of the Sum
Assured at specified intervals.
Key Features
Easy Liquidity - Get periodic cash flows at the end of the fourth year and
thereafter at the end of every three years
Wealth creation through bonus additions
On maturity receive accumulated bonuses along with final lump sum payout
More value for your money by way of High Sum Assured Rebate
Full Sum Assured plus bonuses in case of your unfortunate death. This is over
and above the Survival Benefits already paid
Option to add two riders – Critical Illness Rider and Accidental Death Benefit &
Total and Permanent Disablement Rider
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How does this Plan work?
You pay premium every year for the entire term and get Survival Benefits at periodical
intervals as mentioned below.
On death, your Beneficiary will get the full Sum Assured, plus accumulated bonuses,
over and above the Survival Benefits already paid to you.
Benefits
a) Survival Benefit: Get a percentage of the Sum Assured on the fourth
anniversary and on every third Policy Anniversary till maturity.
b) Maturity Benefit: On maturity you get the remaining percentage of the Sum
Assured plus accumulated bonuses.
c) Life Cover Benefit: In the unfortunate event of loss of life, your Beneficiary will
receive the full Sum Assured plus accumulated bonuses till that date.
d) Rider Benefit: You also have the option to add two additional benefits to
customize the Policy as per your needs:
I. Accidental Death Benefit & Total and Permanent Disablement Rider
II. Critical Illness Ride
Accidental Death Benefit & Total and Permanent Disablement Rider
Accidents are unfortunate and sometimes fatal. You can customise your basic Policy
with an Accidental Death & Total and Permanent Disablement Benefit Rider.
The Accidental Death benefit is payable if death occurs directly as a result of an
accident and is intimated within 90 days of the occurrence.
The Benefit payable is equal to the Rider Sum Assured. The minimum Sum Assured is
Rs 25,000 and the maximum under all Policies taken together is Rs 50,00,000.
The Total and Permanent Disablement Benefit is payable if the Life Assured becomes
totally and permanently disabled directly as a result of an accident.
The Disablement Benefit is equal to the basic Sum Assured paid in ten equal annual
installments Total and Permanent Disablement is defined as the total and irrecoverable
loss of sight of both eyes, or loss by severance of two limbs at or above wrist or ankle,
29
or total and irrecoverable loss of the sight of one eye and loss by severance of one limb
at or above wrist or ankle for a period of at least six months
Inbuilt Waiver of Premium If the Life Assured becomes totally and permanently
disabled, then Reliance Life Insurance will waive all future premiums under the basic
Policy and riders up to a limit of Rs 40,000 p. a.
Accidental Death Benefit &Total and
Permanent Disablement Rider
Age at entry 18 yrs 59 yrs
Age at expiry 25 yrs 64 yrs
Sum assured Rs 25,000
Rs 50,00,000
(Basic Policy Sum
Assured subject to a
maximum of Rs
50,00,000 per life)
Exclusions
The Company will not pay any Accidental Death Claim or Total and Permanent
Disablement Claims which results directly or indirectly from any one or more of the
following:
An act or attempted act of self-injury,
Participation in any criminal or illegal act,
Being under the influence of alcohol or drugs except under direction of a
registered medical practitioner,
Racing or practicing racing of any kind other than on foot, flying or attempting to
fly in, or using or attempting to use, an aerial device of any description, other
than as a fare paying passenger on a recognised airline or charter service,
Participating in any riot, strike or civil commotion, active military, naval, air force,
police or similar service, or
30
War, invasion, act of foreign enemies, hostilities or war like operations (whether
war be declared or not), civil war, mutiny, military rising, insurrection, rebellion,
military or usurped power or any act of terrorism or violence.
Critical Illness
Sudden onset of a major illness causes worries and heavy expenses. Our optional
Critical Conditions Cover helps provide financial relief in such cases. It pays you the
Sum Assured upfront in respect of ten major illnesses.
a. Cancer
b. Coronary Artery Bypass Surgery
c. Heart Attack
d. Stroke
e. Kidney Failure
f. Aorta Surgery
g. Coma
h. Heart Valve Replacement
i. Major Organ Transplant
j. Paralysis
This Benefit can be availed only once against any one of the illnesses and the Company
will not pay the claim if it arises from deliberate self-injury or attempted suicide by the
Life Assured, whether sane or insane. This benefit will only be given, if the diseases are
confirmed by a Consultant Physician.
Critical Illness Rider
Age at entry 18 yrs 59 yrs
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Age at expiry 25 yrs 64 yrs
Sum assured Rs 1,00,000
Rs 10,00,000
(Basic Policy Sum
Assured subject to a
maximum of Rs
10,00,000 per life)
Minimum Policy Term 5
2.1 PROBLEMS OF THE ORGANIZATION
Based on the problem of study the researcher has found out some objectives, which are
consider while preparing the research. They are:
Satisfaction of people from the products and services of insurance companies is quite
high. Around 65% of the people are satisfied from the working of insurance companies
and feel that the problems faced are handled properly and as quickly as possible
2.2 COMPETITION INFORMATION
Major players in the insurance industry in India Life insurers
LIFE INSURANCE CORPORATION OF INDIA (LIC)
Life insurance Corporation of Indian (LIC) was established on 1 September 1956 to
spread the message of life insurance in the country and mobilize people’s savings for
nation-building activities. LIC with its central office in Mumbai and seven zonal offices at
Mumbai, Calcutta, Delhi, Chennai, Hyderabad, Kanpur and Bhopal, operates through
100 divisional offices in important cities and 2,048 branch offices. LIC has 5.59 lakh
active agents spread over the country.
The corporation also transacts business aboard and has offices in Fiji, Mauritius and
United Kingdom. LIC is associated with joint ventures aboard in the field of insurance,
namely, ken-India Assurance Company limited, Nairobi; united oriental assurance
32
company limited, Kuala Lumpur; and life insurance corporation (international), E.C.
Bahrain. It has also entered into an agreement with the sun life (UK) for marketing unite
linked life insurance and pension policies in U.K.
In 1995-96, LIC had a total income form premium and investments of $ 5billion while
GIC recorded a net premium of $ 1.3 Billion. During the last 15 years, LIC’s income
grew at a healthy average of 10 percent as against the industry’s 6.7 percent growth in
the rest of Asia (3.4 percent in Europe, 1.4 percent in the US).
LIC has even provided insurance cover to five million people living below the poetry line,
with 50 percent subsidy in the premium rates. LIC’s claims settlement ratio at 95
percent and GIC’s at 74 percent are higher than that of global average of 40 percent.
Compounded annual growth rate for life insurance business has been 19.22 percent per
annum.
GENERAL INSURERS:
GENERAL INSURANCE CORPORATION OF INDIA (GIC)
The general insurance industry in India was nationalized and a government company
known as general Insurance Corporation of India (GIC) was formed by the central
government in November 1972. With effect from 1 January 1973 the erstwhile 107
Indian and foreign insurer which were operating in the country prior to nationalization,
were grouped into four operating companies, namely, (i) National Insurance Company
limited; (ii) New India assurance company limited; (iii) Oriental Insurance company
limited; and (iv) united India Insurance company limited. (However, with effect form Dec’
2000, these subsidiaries have been de-linked form the parent company and made as
independent insurance companies). All the above four subsidiaries of GIC operate all
over the country competing with one another and underwriting various classes of
general insurance business except for aviation insurance of national airlines and crop
insurance which is handled by the GIC. Besides the domestic market, the industry is
presently operating in 17 countries directly through branches or agencies and in 14
countries through subsidiary and associate companies.
In Addition To Above State Insurers The Following Have Been Permitted To Enter
Into Insurance Business:-
33
The introduction of private players in the industry has added to the colors in the dull
industry. The initiatives taken by the private players are very competitive and have given
immense competition to the on time monopoly of the market LIC. Since the advent of
the private players in the market industry has seen new and innovative steps taken by
the players in the market the industry has seen new and innovative steps taken by the
players in this sector. The new players have improved the service quality of the
insurance. As a result LIC still holds the 75% of the insurance sector but the upcoming
natures of these private players are enough to give more competition to LIC in the near
future. LIC market share has decreased form 95% (2002-03) to 82% (2004-05). LIFE
INSURERS:
HDFC STANDARD LIFE INSURANCE COMPANY LTD.
HDFC standard life insurance company ltd. Is one of India’s leading private life
insurance companies, which offers a range of individual and group insurance solutions?
It is a joint venture between housing development finance corporation limited (HDFC
ltd.), India’s leading housing finance institution and the standard life assurance
company, a leading provider of financial services from the united Kingdom. Their
calmative premium income, including the first year premiums and renewal premiums is
Rs. 672.3 for the financial year, Apr-Nov 2005. they have managed to cover over
11,00,000 individuals out of which over 3,40,000lives have been covered through our
group business tie-ups.
MAX NEW YOURK LIFE INSURANCE CO. LTD.
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. With their various products and riders,
there are more than 400 product combinations to choose form. They have a national
presence with a network of 57 offices in 37 cities across ltd.
ICICI Prudential Life Insurance Company Ltd.
ICICI prudential life insurance company is a joint venture between ICICN bank, a
premier financial powerhouse and prudential plc, a leading international financial
34
services group headquartered in the United Kingdom. ICICI prudential was amongst the
first private sector insurance companies to being operations December 2000 after
receiving approval form insurance regulatory development authority (IRDA). The
company has a network of about 56,000 advisors; as well as 7 banc assurance and 150
corporate agent tie-ups.
Om Kotak Mahindra insurance Co. Ltd.
Kotak Mahindra old mutual life insurance ltd. Is a joint venture between Kotak Mahindra
bank ltd. (KMBL), and old mutual plc.
Birla Sun Life Insurance Company Ltd.
Birla Sun Life Insurance Company is a joint venture between Adity Birla group and Sun
Life financial services of Canada.
GENERAL INSURERS
Royal Sunbdaram Alliance Insurance Company Limited
The joint venture bringing together royal & sun alliance insurance and Sunbdaram
finance limited started its operations form march 2001. The company is head quartered
at Chennai, and has two regional offices, one at Mumbai and another one at New Delhi.
Bajaj Allianz General Insurance Company Limited
Bajaj Allianz general insurance company limited is a joint venture between Bajaj auto
limited and Allianz AG of Germany. Both enjoy a reputation of expertise, stability and
strength. Bajaj Allianz general insurance received the insurance regulatory and
development authority (IRDA) certificate of registration (R3) on May 2nd, 2001 to
conduct general insurance business (including health insurance business in India. The
company has an authorized and paid up capital of Rs. 110 crores. Bajaj auto holds 74%
and the remaining 26% is held by Allianz, AG, Germany.
ICICI Lombard General Insurance Company Limited
ICICI Lombard general insurance company limited is a joint venture between ICICI bank
limited and the US-bass $ 26 billion Fairfax financial holdings limited. ICICI bank is
India’s second largest bank, while Fairfax financial holdings is a diversified financial
35
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 lombarda general insurance
company received regulatory approvals to commence general insurance business in
august 2001.
Cholamandalam General Insurance Company Ltd.
Cholamandalam ms general insurance company limited (Chola-MS) is a joint venture of
the Murugappa group & Mitsui Sumitomo.
Chola-MS commenced operations in October 2002 and has issued more than 1.4 lakh
policies in its first calendar year or operations. The company has a pan-indian presence
with offices I Chennai, Hyderabad, Banglore, Kochi, Coibatore, Mumbai, Pune, Indore,
Ahmedabad, Delhi , Chandigarh, Kolkata and vizag.
TATA AIG General Insurance Company Ltd.
Tata AIG general insurance company ltd. Is a joint venture company, formed form the
tata group and American international group, inc. (AIG). Tata AIG combines the strength
and integrity of the Tata group with AIG’s international expertise and financial strength.
The Tata group holds 74 percent stake in the two insurance ventures while AIG holds
the balance 26 percent stake.
Tata AIG general insurance company, which started its operations in India on January
22, 2001 offers the complete range of insurance for automobile, home personal
accident, travel, energy, marine, property and casualty, as well several specialized
financial lines.
Reliance General Insurance Company Limited.
IFFCO Tokio General Insurance Co. Ltd.
Export Credit guarantee Corporation Ltd.
HDFC-Chubb General Insurance Co. Ltd.
2.3 S.W.O.T ANALYSIS OF THE ORGANIZATION
Business firms undertake SWOT analysis to understand the external and internal
environment. SWOT, which is the acronym for Strength, Weakness, Opportunities and
36
Threats, is also known as WOT-UP Analysi. Through such an analysis strength and
weakness existing within an organization can be matched with the opportunities and
threats operating the environment so that an effective strategy can be formulated. An
effective organization strategy, therefore, is one that is capitalized on the opportunities
and through the use of strengths and neutralizes the threats maximizing the impact of
weakness.
STRENGTH:
- Has sold 5 lakh policies, being maximum in the private sector.
- Brand power.
- Strong assets and infrastructure.
- Market share of 32.5%.
- Number I the private sector.
- ……
WEAKNESS:
- Industry in nascent stage.
- Awareness about private life insurance companies is very less.
- Still not very popular in rural market.
- Very few branches in the country.
- L…. of operational activities.
OPPORTUNITY:
- Liberalization of Indian economy.
- Life Insurance sector opening up.
- Very small percentage of population insured in India One of best products in
the market.
- Global market opportunity.
THREAT:
- Lack of proper technical knowledge among the mass.
- Apprehension towards ICICI Prudential being a private life insurance
company.
37
- LIC: very big player.
- Change in government policy may affect the growth and expansion of the
Insurance sector and the company.
-
CHAPTER 3
RESEARCH AND METHODOLOGY
38
3.1 OBJECTIVES
Setting objective is also a very toughest part of my research, but I have some objectives
which are as follows:
To determine customer-buying behavior with a focus on market segmentation for
Reliance life Insurance.
To get some knowledge about insurance sectors specially reliance life insurance.
To know the behavior of consumers about service sectors.
To highlight the competition exist in insurance sectors.
To make aware of my self and readers about the plans of reliance.
To make awareness about policies of reliance life insurance.
To make awareness about programmes of reliance life insurance.
To enhance the knowledge of financial sectors, financial problems and their
Solutions.
1 To examine the image of insurance companies in the minds of people, which I have
done through surveys and interviews.
2 To show the position of reliance life insurance among its competitors.
3 To show the market segmentation of reliance life insurance.
.
SPECIFIC OBJECTIVES:
To determine reasons behind opting for an insurance.
To provide the company with information of customer’s insurance policy if they have
any and reasons for opting for that particular policies.
To known the most preferred policy.
To determine customer perception towards private insurance companies and their
expectation form private insurance companies.
3.2 SIGNIFICANCE
The first stage involved initial discussion between the various team members and the
company in order to identify the research objectives (Rationale of the research), which is
the most difficult step in the research process. But I have to show the significance of my
39
research. My research have great significance. Because of my this research I have learnt
so many things. Now, it is necessary for me to show significance from two point of views.
My point of view
Reader’s point of view
MY POINT OF VIEW
4 I have done my research from both the sources PRIMARY and SECONDARY
sources.
5 In primary source I had used the sampling which helps me in knowing the point of
people about different insurance companies.
6 In secondary sources I had collected information through internet, magazines which
enhances my knowledge.
7 I have learnt the marketing strategies of my reliance life insurance while doing
training.
3.3 MANAGERIAL USEFULNESS OF THE STUDY
The research is primarily both exploratory as well ad descriptive in nature. I have explore
my ideas in research and also I have given the description of each and every thing in my
research. Whether it is reliance life plans or any other thing. So my research is both
exploratory as well as descriptive. The sources of information are both primary &
secondary.
In Primary sources I have taken responses to different respondents, and I have shown
these responses in the form of pie charts which is very useful for managerial study
because pie chart is easily understandable.
In secondary sources I have used different magazines, articles, books and websites.
I have prepared a well structured questionnaire for people’s preferences about insurance
companies. I have conducted surveys for preparing questionnaire, my sample size is of
400 respondents. And out of this I have collected the responses in different subject matters
related to insurance.
I have also conducted personal interviews which of well structured in nature. In personal
interviews I have taken the views of people about investments, tax saving, and other
matters.
40
3.4 SCOPE OF STUDY
To determine the feedback on services provided by any other insurance
agent. This is done through different surveys , interviews. There are many
insurance companies exist in India as well outside India so there is a need to take
feedback from different respondents about their preference.
To study the types of benefits provided by insurance services . Each and every
company of insurance provided different benefits to consumers. There may be more
or less differentiation among the services provided by different insurance
companies. Some times plans of different insurance companies are seems to be
identical but there are some changes occurs in the plans.
To determine the use of internet for valuable information and decision-making
process. Basically internet is very useful tool for collecting information and
decision making process. In my research I have given many matter from internet. In
every organization managers use internet as a source of information for their
important decisions making. GOOGLE helps in getting information from any place of
the world.
To know the impact of privatization of insurance sector on public. Now
insurance is not confined only on public sector only , there are many private
companies enters in insurance sector. Now public prefer private insurance
companies for insurance and investment purposes. So private companies of
insurance are doing better government companies because of attractive schemes.
3.5 METHODOLOGY ADOPTED
A. Preparation of Questionnaire:
Initially, a rough draft was prepared keeping in mind the objective of the research. A pilot
study was done in order to known the accuracy of the questionnaire. The final
questionnaire was arrived only after certain important changes were done.
B. Sampling Method:
41
Sampling method followed was judgmental sampling. The customer was selected on a
random basis form different parts of Delhi.
c. Sample Size:-
The sample size was restricted to only 400, which comprised of mainly peoples form
different regions of Delhi due to time constraints.
STEPS IN THE MARKET RESEARCH
Identification of the object (problem)
Initial collection of the date from secondary sources.
Identification of sample size and sampling area.
Formulation of the questionnaire.
Collection of the primary date thru field work.
Analysis and interpretation of the collected data.
Preparation of the research report along with observations & recommendations.
Benefits of Insurance Cover Cover Future Uncertanity
Tax Deduc-tions
Future Invest-ment
CHAPTER 4
LITERATURE REVIEW
MARKETING OF INSURANCE IN INDIA
42
Insurance is in a manner of speaking the last frontier in the financial sector the open. It
is also a sector, which leads to benefits across the full spectrum, form the individual who
now have wider choices, to the economy, which see increased savings, to the
infrastructure sector, which can look forward to long term funding being available. In an
under-insured economy, newer channels of distribution have to be utilized to intensify
the reach of insurance both in urban and rural markets. This will create huge
employment opportunities not only within insurance companies but also as agents and
consultants of insurance companies.
Marketing Mix Policies
Different companies can choose to position themselves differently and hence the
marketing mix are different. However there are certain common characteristics that one
can cull out form the possible strategies that companies adopt.
Product:
The development of flexible products to suit individual requirements is what will
differentiate the winners form the also-rans. The key to success is in providing
insurance salutations, not standardized insurance products. The concept of
riders/optional benefits has already been a huge innovation brought about by the new
players, which has led to customization of products for individual needs. However,
companies may differentiate themselves on the basis no 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 companies will make different choices. Many
companies like HDFC Standard Life are focusing on all channels whereas 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:
43
Price is a relevant differentiator only in two segments- pure term insurance and in pure
annuities. Here too, service delivery and financial strength will need to be present at a
minimum acceptable level for price to be a relevant differentiator. In case of savings
oriented products, long-term returns generated 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 long-term maturity value for customers. Norms
have been laid down on all of these by IRDA and adhering to these while delivering
good returns will be a challenge.
Promotion and Advertising:
The level of demand is latent and will have to be activated considerably. The market
needs to be developed. Greater awareness of insurance and the need to have it as a
protection tool rather than as a tax planning measure needs to be appreciated by the
Indian people. Various communication tools including advertising, direct marketing and
road shows 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
of the third-party administrator (TPA) regime has facilitated the transition to the hugely
convenient era of cashless settlement of health auto insurance claims. TPRs are
entities who process claims on behalf of insurer: the IRDA license them after it is
satisfied that they have the financial strength, the trained manpower, the infrastructure
and the skill 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 sprit 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 bear
a higher risk that an insurer who covers the lives of, say, 100 people. Further, a broader
base will provide grater efficiencies on costs such as distribution, management and
44
claims. A broad basing of the mortality experience, therefore, gives insurers the
elbowroom to complete by lowering premiums, and that trend is expected to continue.
Premium Payment Flexibility: Insurers have imparted certain flexibility to premium
options in order to address this concern. For instance, one now have the opeion to pay
your premiums upfront, which is then carried forward for the tenure of the policy. They
yearly premiums are drawn form the initial corpus. Insurers have also introduced the
concept of automatic cover maintenance’ to protect your policy form lapsing owing to
your omission to pay your premium on time. Under this, in the event f 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 off-line 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 base on a long-term basis.
45
MARKETING STRATEGY/ DISTRIBUTION CHANNELS
Analysis of the insurance industry’s marketing tactics reveals the extent of their
influence on patient care and medical research. These tactics can be arranged into five
categories according to the potential for harm to patients (from least to most harmful):
physicians-targeted promotions, direct- to-consumer advertising, unethical recruitment
of physicians, researchers’ conflicts of interest, and data manipulation in clinical trials.
Drug companies’ promotions subconsciously influence physicians’ prescription patterns.
Heavy advertising to consumers results in more prescriptions being written, whether or
not the new drug is in the best interests of patients, and therefore strongly correlates
with sales increases for the promoted new drug. The insurance industry’s public relation
firms unethically recruit physicians to endorse their companies’ clinical studies.
Researchers’ financial conflicts of interest often influence results in the corresponding
studies; in many cases, the employed researchers receive extra financial benefits, such
as stock options and funding for future projects, from the drug company for which they
are conducting clinical trials. Insurance companies manipulate research data to prevent
negative data from leaking to the public. Much evidence suggests that the insurance
industry’s economic influence on the medical field is substantial.
PHYSICIANS-TARGETED PROMOTIONS
Drug companies’ promotions subconsciously influence physicians’ prescription patterns.
In 2002, the insurance industry spent $ 5.63 billion on promotions, which include free
office supplies, all-expenses-paid events, sales representatives, and awards to
physicians (Parker and Pettijohn, 2003, p. 283). Dr. Israel reports that, of this
promotional budget, $8,000 to $ 3,000 is spent on each physician (2003, p. 533). In
Orlowski and Wateska’s study of prescription patterns, doctors assert that the insurance
company’s all-expenses-paid seminars at “popular sunbelt vacation site[s]” do not affect
their objectivity ( 1992, p. 270). Yet, when Orlowski and Wateska compared the number
of prescriptions written for two promoted drugs before and after the physicians attended
the seminar, they found that the numbers of prescriptions for those two drugs, when
compared against the national average, significantly increased after the seminar.
Promotion-induced subconscious influence is a widely studied phenomenon.
46
A 10-year study of internists at seven university hospitals, published in 1990, found that
frequent contact with sales representatives also changed prescription practice (Israel,
2003, p. 533). Eleven years later, in a 200 study, Parker and Pettijohn reach the same
conclusion: “Doctors who had contact with insurance representatives were 3 times more
likely to ask that a particular drug be added to an insurance plan’s list of approved
drugs” (2003, p. 283). An ideal physician provides his or her patients the best available
care for the most economical price; however, despite physicians’ reassurances, studies
show that promotions influence how they prescribe. If doctors under subconscious
influence prescribe the promoted drug and it is a more expensive alternative, thereby
causing patients to incur higher treatment costs, in theory at least, the patients are still
receiving quality care.
DIRECT-TO-CONSUMER ADVERTISING
Heavy direct-to-consumer (DTC) advertising strongly correlates with increased sales for
the promoted drugs but, in terms of both money and health, may not be in the best
interest of patients. Between 1990 and 1998, the number of patients who sought
medical attention for allergy symptoms hovered around 4 million; the number sharply
rose to 8 million in 999. This rise coincided with the expenditure in the same year of 5%
+ of the $ .85 billion DTC advertising dollars that were targeted at prescribed oral
antihistamines. (This 5 % accounts only for the three most heavily advertised and
prescribed oral antihistamines: Claritin, Allegra, and Zyrtec). The following data better
illustrate the fact that higher expenditures in drug advertisements result in an increase in
the number of prescriptions written for that drug and thus, greater profitability. In 1999,
prescriptions for the top 25 DTC- advertised drugs rose 34.2% and sales grew by 43%
over the previous year’s figures (NIHCM-2000, p. 2, Figs. , 2, 5). DTC advertising rose
from $2.3 billion in 2000 to a projected $7.5 billion in 2005 (Parker and Pettijohn, 2003,
p. 279). These numbers suggest that advertisements may have prompted those who
previously had no need for the drug to imagine that their conditions were more serious
and needed the help of the drug (Parker and Pettijohn, 2003).
47
The average cost of developing a new drug is estimated to be $300 million to $600
million(1). The drug companies spend huge amount of money on developing new
drugs, as well as they also spend lavishly in sales promotion to earn profits. This highly
competitive insurance industry is also the most profitable in United States with a 13%
return on the sales in 1989. It is estimated that at least $5 billion were spent on
marketing in USA a decade ago(2). As per the informal study of the marketing
executives of different insurance companies, it was found that about 21-25% of different
companies spend the turnover on the sales promotion. According to the latest annual
report of Reliance Life Insurance Ltd., the company spent 20 crore rupees on sales
promotion for the year ending 31st Dec. 2001(3). Social scientists describe and the
insurance industry follows the, “norm of reciprocity” i.e., the obligation to help those who
have helped you, as one of the fundamental guiding principle of human interactions. It is
not surprising, therefore, that insurance companies rely on this principle of human
nature by giving gifts to physicians in hope that they will prescribe their firm’s product in
return. Physician and insurance Industry Interaction Interaction of the medical
professional with the insurance industry starts as early as in medical school. The
physician and sales representative meet about 4 times a month. These interactions are
controversial in many ways. According to one school of thought, the interaction is
necessary for education, information and biomedical research. In contrast, others see in
such arrangement “the essence of good bribery”, and have concern that all such
contracts between doctors and industry involve compromise and should therefore be
avoided as far as possible.insurance companies is devoted in modifying the drug
prescribing behaviour of the physicians. The policies adopted by the insurance firms
may include extravagant marketing practices like: (a) Offering vacation/travel expenses;
(b) Gifts of substantial value; (c) Lavish meals and entertainment; (d) Offering cash/
commission for prescribing a particular brand/ drug; (e) Offering money for drug trial;
( f ) Samples and promotional material; and (g) CME funding and honoraria(10). (a)
Vacation Expenses. The expenses for travel, stay and even local sight seeing are paid
directly to the tour operator by the insurance company or travel ticket and hotel
accommodation are booked by the company in the name of the physician. The
expenses of not only the physician but also of their spouse and family are borne by the
48
insurance companies. This new dimension of family sponsorship is threatening to
reduce academic exercises to social outings. Evidence supports that drug company
sponsorship of travel expenses change the prescribing behavior of physicians. These
doctors who avail the travel expense are 4.5-10 times more likely to prescribe the
company’s product after such sponsorship than before.
The ties between clinical researchers and industry include not only grant support, but
also a host of other financial arrangements. Researchers serve as consultants to these
companies whose products they are studying. They also join advisory boards and
speakers bureaus, enter into patent and royalty arrangements, agree to be listed
authors of articles ghost written by interested companies, promote drugs and devices at
company sponsored symposiums, and allow themselves to be plied with expensive
gifts. They may also have equity interest in the companies. India, being a developing
country with large patient load, that is usually illiterate and economically jeopardized,
has enormous potential for being exploited by multinational drug companies with
mammoth financial strength. All this makes our population an easy target of even some
of the very risky drug trials. More so, when lucrative incentives are offered to the
physicians. Some of the insurance companies offer money based on the number of
patients/volunteer recruited for drug trials by the physicians.
Samples and promotional material Almost all insurance companies
offer drug samples and promotional material meant specifically for physicians. Nearly
more than 90% of residents receive patient education items(18). Frequency of receiving
drug samples varies from 5.4% daily to 48% monthly among physicians(19). There
appears nothing wrong in accepting drugs samples and related promotional literature
that helps in improving the knowledge and skill on new drugs and devices. However,
offering a physician $100 to simply read a company’s literature that encourages
prescribing of a manufactured by the company. One of the senior executive belonging
to a fairly well known drug company during informal chat disclosed to this author that
one doctor even demanded honeymoon package in Switzerland for his son in lieu of
prescribing a newly introduced drug by his company.
Money for drug trial
49
Newer drugs are added in the insurance market at a very fast pace. Before license to
manufacture a drug is issued, it is mandatory to have clinical studies about its
advantage and other related issues. Most clinical studies that help in bringing out new
more than half of the income of the organizers of CME/symposia is generated from
insurance industry. The interaction between physicians and insurance industry shares
some common interests like: (a) use of drugs in treatment and care; (b) monitoring of
the drug use; and (c) innovation of new drugs. However, both parties have different
emphasis and focus on different stakeholders. Physicians are primarily interested in
patient care and scientific advances, while industry is more interested in commercial
outcome. Business houses or corporate bodies run insurance firms. They spend huge
amount of money in interacting with the physicians. This is not done as an act of
generosity, but it is a well planned marketing strategy employed by the insurance
industry to bolster their bottom lines. The act of receiving gifts and other benefits from
the insurance firm by physicians establish relationship with the giver and assumes
certain social duties such as: grateful conduct, grateful use, and recipro-cation. It is
bound to compromise the physician’s decision making. Further, it is also unrealistic to
expect the insurance industry that contribute large sums of money in different manner to
physicians, will not influence their attitude and behavior towards them. Since no profit
minded company would distribute gifts and other freebies out of disinterested
generosity. In the context of medicine, however, many feel that the act of accepting a
gift has far reaching ethical consequences that put the “gift” at too great a price.
Key Points
• The interaction between physicians and insurance industry has transformed into a
marketing strategy.
• The freebies offered by the insurance industry to physicians are not an act of
disinterested generosity and ultimately costs the patient.
• Formulation and strengthening of ethical norms and MCI code to regulate the
physicianinsurance industry interaction is the need of the hour.
As it expands its core business, the industry is being forced to adapt its business model
to recent changes in the operating environment. The first and most significant change
50
was the January 1, 2005 enactment of an amendment to India’s patent law that
reinstated product patents for the first time since 1972. The legislation took effect on the
deadline set by the WTO’s Trade-Related Aspects of Intellectual Property Rights
(TRIPS) agreement, which mandated patent protection on both products and processes
for a period of 20 years. Under this new law, India will be forced to recognize not only
new patents but also any patents filed after January 1, 1995[2]. Indian companies
achieved their status in the domestic market by breaking these product patents, and it is
estimated that within the next few years, they will lose $650 million of the local generics
market to rightful patent-holders[42]. In the domestic market, this new patent legislation
has resulted in fairly clear segmentation. The multinationals narrowed their focus onto
high-end patients who make up only 12% of the market, taking advantage of their
newly-bestowed patent protection. Meanwhile, Indian firms have chosen to take their
existing product portfolios and target semi-urban and rural populations.
The new patent regime to have taken effect at a time when Indian companies had
recently started to aggressively pursue global opportunities, so it is not clear whether
the flurry of international activity surrounding the enactment date is a result of the
change in legislation. Mergers, acquisitions and alliances have been taking place on an
unprecedented scale, most notably with companies in the U.S. and Europe. As stated in
The Hindu Business Line, “In the last 10-odd months, the Indian pharma industry has
possibly seen the single largest number of global transactions in its 50-year history.”
These transactions provide Indian companies with access to foreign markets and
facilitate the process of seeking regulatory approval for new products, which can be
quite daunting for a company that only has operations on Indian soil.[10]
Product development
Companies are also starting to adapt their product development processes to the new
environment. For years, firms have made their ways into the global market by
researching generic competitors to patented drugs and following up with litigation to
challenge the patent. This approach remains untouched by the new patent regime and
looks to increase in the future. However, those that can afford it have set their sights on
51
an even higher goal: new molecule discovery. Although the initial investment is huge,
companies are lured by the promise of hefty profit margins and the recognition as a
legitimate competitor in the global industry. Local firms have slowly been investing more
money into their R&D programs or have formed alliances to tap into these opportunities.
Small and medium enterprises
As promising as the future is for a whole, the outlook for small and medium enterprises
(SME) is not as bright. The excise structure changed so that companies now have to
pay a 16% tax on the maximum retail price (MRP) of their products, as opposed to on
the ex-factory price. Consequently, larger companies are cutting back on outsourcing
and what business is left is shifting to companies with facilities in the four tax-free states
- Himachal Pradesh, Jammu & Kashmir, Uttaranchal and Jharkhand. As SMEs wrestled
with the tax structure, they were also scrambling to meet the July 1 deadline for
compliance with the revised Schedule M Good Manufacturing Practices (GMP). While
this should be beneficial to consumers and the industry at large, SMEs have been
finding it difficult to find the funds to upgrade their manufacturing plants, resulting in the
closure of many facilities. Others invested the money to bring their facilities to
compliance, but these operations were located in non-tax-free states, making it difficult
to compete in the wake of the new excise tax.
Strategies to face the Major Marketing Challenges:-
Technological Strengthening
The most common strategic concern that 2005 has raised for Indian insurance
companies is the perceived need for technological strength. Companies are faced with
the realization that the only way they can continue to sell first generation drugs (in the
absence of licensing or distribution agreements) is by discovering and developing them
indigenously. For Indian firms, there are two routes to this end. They can either latch
onto the skills of MNCs or they can embark on programs to develop their own technical
capacities. Most Indian firms surveyed here have decided that new drug discovery is an
unfeasible short term goal and have consequently pursued more modest technological
programs. Sun
52
and Lupin fall into this category. While acknowledging that new drug discovery belongs
on their long-term horizons, they have devised strategies that afford profitable
operations without new drugs. Both have worked to bring more of the production
process under their own control (through forward and backward integration) while
simultaneously sharpening their existing R&D practices. Lupin, for example, prides itself
on its innovative line extensions. Even if these companies had more capital at their
disposal, they would be unlikely to pursue new drug discovery programs because their
managers firmly believe that technological competence needs to be fostered gradually.
Redefining New Drug Discovery
Several Indian companies (e.g., Ranbaxy, DRL, Dabur, and Wockhardt) are turning the
prospect of increased patent protection to their advantage by spearheading new drug
discovery programs. Their efforts have attracted much attention. Skeptics assert that
Indian companies are not large enough to discover and develop their own drugs
successfully. Indian companies also lack the experience of the major players; leading
MNCs have spent the better part of the twentieth century honing R&D skills. Developing
new drugs is time- and capital- intensive. Companies usually test thousands of
substances in order to bring a single product to market. However, companies such as
DRL have advanced products to the clinical trials phase only a decade after initiating
new drug discovery programs. Their costs have been substantially lower than global
benchmarks—for example, Anji Reddy, chairman of DRL, estimates his research costs
are one eightieth of those of his MNC competitors—and their success rate has been
higher. Indian companies have yet to place their own products on global markets, but
there is reason to believe that at least some of their endeavors will succeed as planned,
although potential complications (such as the emergence of unexpected costs) could
still result. Even if one accepts DRL’s exceptional cost claims, Indian companies are still
advised to seek ways to reduce costs and risks, and thereby, to increase new drug
discovery, which remains, in essence, a hit-or-miss affair. Several options are available.
First, contracting with other firms to aid in various stages of the research process seems
to be a preferred course of action. Both DRL and Ranbaxy have allied with foreign firms
to conduct costly clinical trials in Western markets. This amounts to giving up profit
potential in exchange for reducing exposure, and allows the Indian companies to devote
53
more resources to the core of the discovery process. Firms also find relief at the front
end of the research process by taking leads from public R&D centers and other
companies that focus on early stage (in vitro) screening of new compounds. Second,
some companies are considering investment in combinatorial chemistry in order to
increase the volume of molecules with which they have to work. Third, some Indian
companies emphasize practices that are designed to improve success rates. For
example, DRL focuses almost solely on a related chain of Syndrome X diseases that
have similar causes and similar cures.
Public research
Most individuals surveyed for this paper were decidedly negative about India’s public
research facilities. In theory, public R&D labs should be an invaluable resource to
India’s smaller drug companies because they allow them access to lead molecules and
other specialized R&D functions that they could not otherwise afford. In practice,
however, the current quality of such labs is so poor that relying on them for survival, in
the opinion of most experts, is one of the biggest mistakes companies can make. A
notable exception to this maxim is the Indian Institute of Science (IIS), which has been
quite successful at conducting clinical trials. Whether or not other public research labs
can follow IIS’ example remains to be seen.
Growing Larger
Indian companies—which have traditionally limited themselves to domestic production
and distribution—must therefore grow larger to enter discovery and clinical trials in
addition to their current operations, and/or to expand to developed export markets. This
section reviews the means by which these companies are growing. Mergers,
Acquisitions, and Partnerships The process of consolidation is well under way. Five of
the twelve firms covered in this paper have engaged in some sort of M&A activity, while
two others have purchased large assets from competitors over the past five years.
Mergers have occurred between Indian companies such as DRL and Cheminor,
between MNC subsidiaries such Hindustan Ciba-Geigy and Sandoz India (Novartis),
and between Indian and foreign companies. With respect to acquisitions, companies
such as Ranbaxy, Sun, and DRL have purchased assets from firms based in other
countries in order to expand their international presence. M&A has also been motivated
54
by the desire to shift focus, toward or away from revenues dependent on technological
processes. Sun’s acquisition of Knoll’s bulk lab, for example, was motivated by the
former’s technological strengthening program, in addition to the latter’s skeptical
attitudes about the post-2000 patent laws. Partnerships and marketing alliances are
also increasingly common. These provide companies with the opportunity to join forces
without the drawbacks and complications associated with formal marriage. Knoll is
actively pursuing a strategy to court foreign multinationals without an India presence
(including a fifteen year agreement with NovoNordisk) to distribute their products after
2005. Conversely, other Indian companies are looking to international partners to
market, distribute, and gain approvals for their products in foreign markets.
Help from Parent Companies
Some MNC subsidiaries (e.g., HMR, Knoll, and Glaxo) have adopted a more relaxed
posture toward 2005 than India-based companies. For them, adaptation consists of
waiting to see where opportunity lies and then capitalizing on it by transferring
resources from their parent organization.
Market Diversification
Presence in multiple markets, especially in the regulated markets, is a positive from the
credit perspective. Low entry barriers in the unregulated markets make companies
serving only these markets vulnerable to considerable pricing pressures. The quality
and process requirements of the regulated markets also act as entry barriers for low-
end players and this offers a degree of stability to prices and volume sales. Companies
targeting exports to unregulated markets alone are often characterised by low margins,
long credit periods, and low returns on capital employed, with the result that they are
likely to have significantly low coverage numbers. However, a company’s ability to
sustain its presence in the regulated markets is an issue that ICRA evaluates by
considering its track record, its R&D investments, its approved manufacturing
capacities, its current product portfolio and pipeline, its current and proposed distribution
arrangements, and such other factors. Some of the bigger Indian insurance companies
have already established a strong distribution network in the regulated markets. Most
medium and small companies are however still in the process of establishing their
presence in these markets.
55
Strong domestic market presence is considered a positive by ICRA. The highly
competitive nature of the domestic insurance market imposes strong low-cost
manufacturing discipline, which is a key strength in this industry. Also strong distribution
network and brand presence may open up in-licensing opportunities from original patent
holders targeting the Indian market. ICRA’s assessment of domestic market presence
includes analysis of the therapeutic mix of the domestic sales of the company. A
diversified therapeutic presence, relatively strong market position in key segments, and
focus on new product introductions are considered positive by ICRA. On the other hand,
high therapeutic or product concentration exposes a company to significant business
risks. The movement in market share data and ranking in the relevant segments over
the years are also analysed to understand the trend and consistency in the company’s
performance. Strong sales network and first-mover advantage in a segment hold the
key to developing a strong brand, and are given adequate weightage by ICRA.
While low-cost manufacturing capability is a key strength for Indian insurance
companies, it is also critical for those targeting exports to regulated markets to maintain
systems and processes that ensure product quality. ICRA, therefore, assesses the
systems followed by the company during manufacturing, its testing facilities, the quality
of its trained manpower, and the quality of its documentation during manufacturing.
Backward integration may be crucial in sustaining cost advantages in exports, as that
usually provides for greater value addition. For instance, some Indian manufacturers
have been able to sustain profitability even after over 90% price erosion on generics,
through effective cost control. Upgrading and maintaining a manufacturing facility that
meets the standards of the regulated markets call for significant financial commitments.
Also, inspection and approvals being a time-consuming process, companies with
existing facility approvals from agencies like US FDA4, UK MHRA5, and ANVISA6 can
have a crucial time advantage over others. Besides, companies with quality
manufacturing facilities can also cash in on potential opportunities in the field of contract
manufacturing and custom synthesis.
56
The insurance industry operates in a very dynamic environment, with significant events
in one market—like product development, patent expiry and regulatory changes—often
impacting players in other markets. Exports opportunities also throw up complex
management challenges, with profitability (and price erosion) being influenced by niche
opportunities, unique chemistries or dosage forms, and complex legal and marketing
issues. These have become particularly relevant, given the retaliatory strategies
increasingly being adopted by innovator companies to thwart generic challenges.
Quality of management remains a key factor for all credit ratings. Lack of a seasoned
management team in areas like R&D, regulatory affairs, business development, and
manufacturing can significantly increase the business risks of a insurance company.
The industry is also seeing several acquisitions, driven by the need for inorganic growth.
Besides a strong balance sheet, depth in management is a prerequisite for the
successful handling of integration related issues that acquisitions throw up almost
invariably. Going forward, there would be increasing competition for the trained-
manpower available, especially in critical areas like R&D and business development.
Therefore, professional management structure and focus on human resources would be
of crucial importance for the industry.
57
CHAPTER 5
Analysis And Interpretation
1. DATA GIVES PREFERENCE OF RESPONDENTS OF INSURANCE COMPANIES
COMPANY’S NAME NO. OF SHARE (%)
L.I.C. 312 78
RELIANCE LIFE INSURANCE 12 3
ICICI PRUDENTIAL 40 10
SBI LIFE 28 7
HDFC 8 2
TOTAL 400 100
INTERPRETATION
The sample size is 400. 78% Respondents prefer LIC for life insurance
policies, 3% respondents prefer RELIANCE LIFE INSURANCE, 10% respondents
prefer ICICI PRUDENTIAL, 7% respondents like SBI LIFE, and last 2% respondents
prefer HDFC.
58
2. DATA GIVES BENEFITS OF INSURANCE PERCEIVED BY RESPNDENTS
BENEFITS NO. OF
RESPONDENTS
SHARE (%)
Cover Future Uncertainty 220 55
Tax deductions 80 20
Future Investment 100 25
Total 400 100
Cover Future Uncertanity Tax Deductions
Future Investment
INTERPRETATION
55% of the respondents believe that covering future uncertainty is the biggest benefit of
an insurance policy.
Whereas, 20% and 25% of them believe that the other benefits are tax deduction and
future investments respectively.
3. DATA PROVIDES FEATURES OF INSURANCE POLICY THAT ATTRACTED
RESPONDENTS
FEATURE NO. OF
RESPONDENTS
SHARE (%)
Money Back
Conversance
60 15
Larger Risk Conversance 148 37
Easy Access to Agents 28 7
Low Premium 120 30
59
Company’s Reputation 44 11
TOTAL 400 100
15 37
7
3011
100
Features Of Insurance Policy Money Back Conversance
Larger Risk Conversance
Easy Access to Agents
Low Premium
Company’s Repu-tation
INTERPRETATION
Majority of the respondent (37%) found larger risk conversance as the most attracted
feature of the all.
60
4. DATA PROVIDES NUMBER OF INSURANCE POLICY TYPE RESPONDENTS
POLICY TYPE NO. OF RESPONDENTS SHARE (%)
LIFE POLICY 210 75
NON LIFE POLICY 70 25
BOTH 126 45
NATURE OF POLICY
LIFE POLICY
BOTH
INTERPRETATION
75% of the respondents have life insurance policy while 45% have both. (The % is
calculated out of 280 positive response)
61
5. DATA GIVES PEOPLE PERCEPTION ABOUT INSURANCE
RESPONSE NO. OF
RESPONDENTS
SHARE(%)
A saving tool 324 81%
A tax saving device 296 74%
A tool to protect your
family
400 100%
81%
74%
100%
Share (%)
INTERPRETATION
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.
62
6. DATA SHOWS PEOPLES HAVING INSURANCE
RESPONSE NO. OF RESPONDENTS SHARE (%)
Yes 280 70%
No 120 30%
Total 400 100%
70%
30%
INTERPRETATION
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 there is
already matured.
And at present 100% of the respondents are with the view that insurance is a tool to
protect your family.
63
7. DATA SHOWS BUYING PROCESS OF THE PEOPLE
BUYING PROCESS NO. OF RESPONDENTS SHARE (%)
Customer approached
insurance company
/agent
178 44.5%
Company/agent
approached customer
222 55.5%
Total 400 100%
Customer approached insurance company/agent
Company/agent approached customer
INTERPRETATION
44.5% of the respondents approached the insurance company/agent.
Whereas, 55.5% of the respondents were approached by the company/ agent.
64
8. DATA SHOWS REASONS BEHIND FOR INSURANCE
RESPONSE NO.OF RESPONDENTS SHARE(%)
Tax saving 226 80.71%
Saving/investment 226 80.71%
Family protection 280 100%
80.71%
Share (%)
INTERPRETATION
80.71% of the respondents opted for insurance 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.
65
9. DATA SHOWS SATISFACTION OF RESPONDENTS WITH RESPECT TO POLICY
40%
60%
Satisfied Not satisfied Not Responded
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.
In this case all of those who have taken a policy have responded.
10. DATA SHOWS SATISFACTION OF + RESPONDENTS WITH RESPECT TO
SERVICE AGENT
RESPONSE NO. OF RESPONDENTS SHARE (%)
Satisfied 246 45%
Not Satisfied 154 55%
Not Responded 0 0.0%
Total 280 100%
66
45%
55%
Satisfied Not Satisfied
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.
11. DATA SHOWS NUMBER OF ESPONDENTS PAYING TAX
RESPONSE NO. OF RESPONDENTS SHARE (%)
Paying tax 400 100%
Not paying tax - 0%
Total 400 100%
100%
Paying tax Not paying tax
INTERPRETATION
Of the sample size of 400 respondents, all the respondents are paying tax.
12. DATA SHOWS REPONDENT’S INVESTMENTS FOR TAX SAVING
INVESTMENTS NO. OF SHARE (%)
67
RESPONDENTS
LIC 204 51%
NSC 133 33.25%
Bonds 129 32.25%
PPF 101 25.25%
PF 84 21%
EPT 46 11.5%
51.00%
33.25%33.25%
25.25%
21.00%11.50%
LIC
NSC
Bonds
PPF
PF
EPF
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.
13. DATA SHOWS RESPONDENTS PERCEPTION ABOUT BEST FORM OF
INVESTMENT FOR THEIR FUTURE
NO. OF RESPONDENTS SHARE (%)
Fixed Assets 301 75.25%
Bank deposits 44 11%
Jewellery 100 25%
Securities i.e. bonds,
MFs
162 40.5%
Shares 42 10.5%
68
Fixed assets
Bank deposits
Jewellery
Securities i.e. bonds, MFs
Shares
INTERPRETATION
75.25% of the respondents as with the view that fixed assets is the best form of
investment for security their future.
70.5% of the respondents are with the perception that insurance is the best form of
investment for security their future, which is one of the highest and this shows that
insurance is an important key for security your future.
14. DATA SHOWS WHAT PEOPLE INTENT TO FAIN FROM THEIR INVESTMENT
RESPONSE NO. OF RESPONDENT SHARE (%)
Saving & Returns 400 100%
Security 360 90%
Tax benefits 287 71.75%
100%
90%
72% Share (%)
Saving & Returns
Security
Tax benefits
INTERPRETATION
100% of the respondents intent to gain saving and returns from their investment.
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90% of the respondent’s intent to gain security form their investments.
Whereas, 71.75% of the respondent’s intent to gain tax benefits form their investments.
15. DATA GIVES PEOPLE’S PERCEPTION ON APPROPRIATE AGE FOR BUYING
INSURANCE
RESPONSE NO. OF RESPONDENTS SHARE (%)
After 25 years 116 29%
After 35 years 42 10.5%
After 45 years 0 0%
Anytime 242 60.5%
After 25 years After 35 years After 45 years Anytime
INTERPRETATION
29% of the respondents are with the view that insurance should be bought after the age
of 25 years.
10.5% of the respondents are with the view that insurance should be buoyed 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 limitation. it can be purchased any
time according to the need.
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16. DATA SHOWS PEOPLE OPINION ABOUT INDIAN INSURANCE COMPANIES
RESPONSE NO. OF
RESPONDENTS
SHARE (%)
Rigid plans 268 67%
Non user friendly 118 29.5%
Unsatisfactory services 106 26.5%
Non Aggressive 143 35.75%
Satisfactory 96 24%
Good 41 10.25%
Very good 0 0%
67.00%
29.50%26.50%
35.75%
24.00%
10.25%
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 service of Indian insurance companies are unsatisfactory.
35.75% of the respondents are with view that Indian insurance companies are non-
aggressive.
24% of the respondents feel that products and services of Indian insurance 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.
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17. DATA SHOWS WHAT PEOPLE WOULD LOOK FOR IN AN INSURANCE
COMPANY
RESPONSE NO. OF RESPONDENTS SHARE (%)
A trusted name 328 82%
Friendly Service &
Responsiveness
284 71%
Good plans 326 81.5%
Accessibility 199 49.75%
Share (%)
A trusted name Friendly service & responsiveness Good plans Accessibility
INTERPRETATION
82% customers look for a trusted name in a company for insurance.
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.
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18. DATA SHOWS PEOPLE PLANNING FOR NEW INVESTMENTS
RESPONSE NO. OF RESPONDENTS SHARE (%)
Planning 350 87.5%
Not planning 50 12.5%
Total 400 100%
87.50%
12.50%
Planning Not planning
INTERPRETATION
Only 12.5% of the customers contacted are not planning for new investment presently.
Whereas, 87.5% of the customers are still planning for new investments this can be a
great potential Reliance Life Insurance to take them on their favor.
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19. 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 172 43%
No 176 44%
Uncertain 52 13%
Total 400 100%
Yes No Uncertain
INTERPRETATION
The interested customer i.e. 43% are ready to go for insurance even away form a city of
services and products are worthwhile, which again is a good prospect (potential) for
Reliance Life Insurance to take them on their favor.
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CHAPTER 6
FINDINGS
I have my summer training from reliance life insurance where I find so many things.
Both positive and negative things. My findings are as follows:
The work environment was very good and encouraging in reliance life insurance.
Trainers always motivates the trainees at every extent.
Company spent much money on providing facilities to trainees
The training was very stress full.
We were under stress about completing our insurance selling targets.
One thing I found in the organization that advisors do not have much respect
than others.
While selling policy I have found that consumers have different type of attitude
about investment plans.
Some consumers have a very rough attitude towards policy and policy agent.
In 45 days of training I sell insurance policies, and I found that selling insurance
policies is more complicated task than selling a product.
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CHAPTER 7
RECOMMENDATIONS AND CONCLUSION
As the people think that insurance is a tool 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 Delhi. With the objective and goals to meet
the demands & expectations of the public. Because the entrance of private players will
increase the completion and it would be a tough task to secure a good position in
market.
Since Reliance Life Insurance 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 there by forming a
long and trusted relationship.
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 form
their home is providing it. But intend they should provide good products and services.
The company should provide good products and services. The company should try to
convince these customers and get them in its favor.
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CHAPTER 8
LEARNINGS
First of all it taught me and my team members what insurance is all about.
The visit to various companies (organizations) gave us an excellent opportunity to know,
learn and understand various intangible things like their thinking patterns, how to deal
with different type of people in such a way so as to achieve our goals.
In order to get some information of some work done out of somebody it is very important
to highlight his interest in the whole affair.
The communication skills were improved a great deal upon.
The exposure to the field, taught how to deal with the difficulties and limitations of the
market.
How to identify and understand the needs of the customers.
How to interact in the corporate world.
Last, but not the least it made me realize what an opportunity lies ahead of me in this
very field of insurance.
The project ““A CUSTOMER SATISFACTION WITH THE MARKETING STRATEGIES
OF RELIANCE LIFE
INSURANCE.”
has been mainly conceived with a view to have a insight of insurance sector & to
provide the company with essential factors which are looked upon by the customers as
well as buying behavior of the insurance policy.
It has been observed that people perception regarding insurance is that it is a tool to
protect their family, a tax saving device etc. people are focused towards the benefits of
the insurance & a strong need in felt for having the insurance. People are in the process
of buying policies one after the other and they do not feel the need of age specification
for purchasing insurance.
As the private insurance companies are emerging, people are having preoccupied
thinking that they will provide better products & services.
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CHAPTER 9
ANNEXURE
QUESTIONNAIRE
ARE YOU EMPLOYED?
Yes No
If yes, only then proceed
1. Do you have any insurance policy?
Yes No
2. WHICH INSURANCE POLICY DO YOU HAVE?
Life Non-Life Both
3. WHICH C0’S INSURANCE POLICY YOU PREFER THE MOST?
(RANK THEM)
LIC
ICICI PRUDENTIAL
SBI LIFE INSURANCE
ING VYSYA LIFE
RELIANCE LIFE INSURANCE
TATA AIG LIFE
ANY OTHER
4. HOW DO YOU LOOK FOR IN AN INSURANCE COMPANY?
A TRUSTEE NAME
FRIENDLY SERVICE AND RESPONSIVENESS
GOOD PLAN
ACCESSIBILITY
5. ARE YOU INTERESTED IN FOR GOING FOR INSURANCE IF A SERVICE
PROVIDER AWAY FROM THE CITY OFFERS BETTER SERVICE AND PRODUCTS?
YES
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NO
UNCERTAIN
6. WHAT DO YOU THINK ARE THE BENEFITS OF INSURANCE COVER?
COVER FUTURE UNCERTAINTY
TAX DEDUCTIONS
FUTURE INVESTMENT
ANY OTHER
7. WHICH FEATURE OF YOUR POLICY ATTRACTED YOU TO BUY IT?
LOW PREMIUM
LARGER RISK CONVERSANCE
MONEY BACK GUARANTEE
REPUTATION OF COMPANY
EASY ACCESS TO AGENTS
ANY OTHER ___________(specify)
8. ARE YOU PLANNING FOR YOUR INVESTMENT?
PLANNING
NOT PLANNING
9. WHAT YOUR OPINION ABOUT INDIAN INSURANCE COMPANIES?
RIGID PLANS
NON USER FRIENDLY
UNSATISFACTORILY SERVICE
NON AGGRESSIVE
e. SATISFACTORY
d. GOOD
e. VERY GOOD
10 WHAT’S YOUR PERCEPTION ABOUT INSURANCE?
A SAVING TOOL
A TAX SAVING DEVICE
C) A TOOL TO PROTECT FUTURE
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11. HOW HAS/ WOULD YOU BOUGHT/BUY AN INSURANCE?
CUSTOMER APPROACHED INSURANCE COS
INSURANCE COS APPROACHED CUSTOMER
12. ARE YOU SATISFIED WITH THE POLICY?
SATISFIED SAVING TOOL
NOT SATISFIED
NOT RESPONDING
13. ARE YOU SATISFIED WITH THE SERVICE AGENT?
SATISFIED SAVING TOOL
NOT SATISFIED
NOT RESPONDING
14. DO YOU PAY TAXES?
Yes No
15 WHERE HAVE YOU INVESTED OR TAX SAVING?
LIC
NSC
BONDS
PPF
PF
EPF
16. WHICH IS THE BEST FORM OF INVESTMENTS?
FIXED ASSETS
BANK DEPOSITS
JEWELLERY
SECURITIES, I.E. BONDS, MFS
SHARES
INSURANCE
17. WHAT DO YOU INTENT TO FAIN FORM INVESTMENTS?
SAVING & RETURNS
SECURITY
TAX BENEFITS
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18. WHAT’ THE RIGHT AGE TO BUY INSURANCE?
a) After 25 years
b) after 35 years
c) after 45 years
d) anytime
19. WHY YOU BOUGHT INSURANCE POLICY ?
a) tax saving
b) saving\ investment
c) family protection
81
CHAPTER 10
BIBLIOGRAPHY
BOOK/MAGAZINES REFFERED :
AUTHOR NAME – BY AIMS
BOOK NAME – PRINCIPLES & PRACTICE OF LIFE \ GENERAL INSURANCE
PUBLISHING HOUSE – INSURANCE INSTITUTE OF INDIA.
INSURANCE WATCH
MONEY OUT LOOK
WEBSITES REFFERED:
http://www.reliancelife.co.in/website/aboutus.asp
http://www.reliancelife.co.in/website/products/reliance_endowment_plan.asp
http://www.reliancelife.co.in/website/products/
reliance_special_endowment_plan.asp
http://www.reliancelife.co.in/website/products/
reliance_special_endowment_plan.asp
http://www.reliancelife.co.in/website/products/reliance_cash_flow_plan.asp
http://www.reliancelife.co.in/website/products/reliance_child_insurance_plan.asp
http://www.reliancelife.co.in/website/products/reliance_term_plan.asp
http://www.reliancelife.co.in/website/products/
reliance_whole_life_insurance_plan.asp
http://www.reliancelife.co.in/website/products/reliance_market_return_plan.asp
http://www.reliancelife.co.in/website/products/reliance_golden_years_plan.asp
http://www.reliancelife.co.in/website/tnc.asp
REPORTS / ARTICLES REFFERED:
REPORT: ISSUES & CHALLENGES FACING THE INSURANCE
INDUSTRY …30 SEPT 2007
BRIEF PROFILE OF LIC, INDIA …. DEC 2007
REPORT: COPING WITH COMPETITION ….. JAN 2008
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