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PROJECT REPORT

A Study on

CONSUMER BUYING BEHAVIOUR

OF INSURACE PRODUCTS

With reference to

ICICI PRUDENTIAL

Submitted bySUNNY MUKESH BHAMBHANI

Roll No. 03

Under the guidance of Prof. M. Gowri Shankar

Submitted In Partial Fulfillment of the Requirements forMasters of Marketing Management (MMM)

from

Lala Lajpatrai Institute of ManagementMumbai



A Study on CONSUMER BUYING BEHAVIOUR OF INSURACE PRODUCTS

With reference to ICICI PRUDENTIAL

ACKNOWLEDGEMENT

I take this opportunity to thank Prof. M. Gowri Shankar,

as my project guide, without whose valuable guidance

& suggestions this project would not have been

completed.

I am greatly thankful to MR. HARESH GHODINDE(Manager-Chembur Branch), who has given me

direction and support that how to complete this project.

I would also like to express my heart-felt gratitude

towards my family and friends, who have willingly and

with utmost commitment helped me during the courseof my project work. I am extremely thankful to them for

their unprecedented support.

I would like to give thanks to our fellow classmates and

Computer Labs.

And last but not least I would like to express my

profound gratitude towards LALA LAJPATRAI

INSTITUTE OF MANAGEMENT for giving me the

opportunity to work on this project. It has surely helped

me broaden my knowledge experience.

2





EXECUTIVE SUMMARYBuying Behavior is the decision processes and acts of people involved in buying

and using products.

• Why consumers make the purchases that they make?

• What factors influence consumer purchases?

• The changing factors in our society.

Consumer Buying Behavior refers to the buying behavior of the ultimate

consumer.

It was very surprising for us to find that almost 58% of Insurance seekers were

NOT sure of the specific end benefit that they wanted to derive from owning the

insurance instrument.

Amongst the ones who were specific in their requirement, Pension security

emerged as the most sought after benefit, closely followed by economic security

to Children and finally Tax-saving.

Now this might sound counter-intuitive, but here's some of our explanations:

A large chunk of Insurance seekers are specifically looking for ULIPs and this

segment is not very clear of the benefits apart from the investment opportunity .

Tax Saving is a low priority - given the months for which data is collected. Had

the data pertained to the first quarter of a calendar year, this would have been a

higher percentage.3





Pension & Children plan are up there in the preference, partly due to the high

decibel campaigns run by most insurers- specifically targeting these benefits.

Insurance give help to fulfill life stage need i.e. child marriage and education.

People think that insurance is good financial tool to face influence and

accumulating fund (due to compulsory saving). Mindset is changing, now people

take insurance according to their need and not due to their fear, they understand

their needs. So due to this reason now people first concentrate on policy scheme

and brand, when they are going to choose Insurance Company and policy.

Whole life policy is popular due to family need, endowment policy is popular due

to life stage need (money back policy) and ULIP is popular due to old age saving

and fulfill different life stage need. In insurance, relationship and service is also

important, so mostly people want to buy insurance direct from company and

agent, because agent and brand fulfill relationship and service need.

Premium mode also influences buying behavior of customer. Every income group

likes annual and half yearly mode. Insurance buying decision is mainly influenced

by family. Due to brand and advertisement (aggressive) people are aware about

insurance and they are changing their mindset towards it. Now people know that it

is important for everyone and it gives us protection from 3d’s (death, disabilities,

and diseases), approx 80% people accept this fact. More than half of the people

agree that guarantee bonus will increase the attractiveness of insurance, because in

India people do not take more risk and more important they want to secure

towards safety of their money.4





Network reach and visibility of Insurance is a very important criterion for the

customer while buying an insurance policy. We can also conclude from our

analysis that network reach in terms of Branches is directly proportional to the

market share in case of Private Players.

5





OBJECTIVES

A fundamental understanding of consumer behaviour underpins all

marketing activity and is a necessary prerequisite to organizations

being marketing orientated and thus profitable.

• To identify critical factor (internal and external) which influence the

buying behavior of individual,

• Why people purchase insurance policy?

• To know about mindset of people.

• To analysis of customer perception of the quality of product, so that to take

steps to maximization of customer satisfaction.

• Identifying the consumers preference of Insurance as Security / Saving /

Investment / Tax saving tool. It can also judge the needs and wants of the

customers buying an insurance

• How to best tap the potential customer for selling insurance can be

concluded by this research.

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• The satisfaction level of the customers buying insurance from ICICI

Prudential

• The various reasons for investing in Insurance Products by ICICI

Prudential

• The role of an Advisor / Agent in selling a Policy

• How Brand Image plays a role in buying a Insurance Policy?

7





LIMITATIONS OF THE STUDY

This is a brief research conducted during short span of time. In order to know the

depth one requires a lot of information, money and involvement of manpower. As

is the case with every research effort, this study also leaves a lot of room for

further improvements. The major Limitations of this study are given below.

• The survey was limited only to the physical boundaries of the city of

Mumbai and there by limited in the population studied.

• Different people have different thought process and different attitudes. As

a result, their manner of answering the questions of the study differs.Therefore, the answers received were sometimes good while sometimes

they were negative and may be sometimes biased.

• The time period of the survey being only one & half months, it was not

possible to conduct a highly in-depth and detailed study, which in turn

might affect the findings.

8





RESEARCH DESIGN

A two stage Research been conducted:

• Secondary Research :

Collection of data from websites and catalogues to understand the product and the

charges of the different Insurance Company.

• Primary Research :

A Primary Research been conducted:

The questionnaire was prepared for the companies and following areas covered:

Distribution Channel of Insurance Company

Consumer profile

Satisfaction level with the current Insurance Company on the basis of return

Reason for the selection of specific insurance policy and company

Desirable features of the product and risk aptitude

Sampling Plan:

Elements: The target population of the study included the general population

above the age of 25 yrs.

Sampling design and sampling unit are as follows:

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Target population: Adults meeting qualifications-over 25 years, working class,

businessman, personnel having children

Sampling frame- Urban class in the Mumbai region

Sample size: 50

Sampling unit: Urban Class Personnel

10





DATA COLLECTION METHODS

Data Collection Plan:

The first of Research consisted of secondary data search from the following

sources:

• Catalogues

• Websites

For the conclusive research, questionnaires been developed on basis of secondary

data to gather information on the research objective.

I conducted a pilot study to test these questionnaires. In this sample of 10 people

picked up from the target population on convenience basis, as to determine the

limitation and deficiencies in the questionnaires.

The final draft of the questionnaire (see Annexure) was then prepared on basis of

the observations from the pilot study. These then finally filled by 50 consumers,

for the conclusive study.

Finally, the data collected fed into the data analysis software- SPSS, to be

analyzed using statistical techniques: frequencies, means, t-tests, Chi square

distribution, cross tabs and analysis of variance (ANOVA) etc.

11





Types of Primary Data collected :

1) Demographic /Socioeconomic Characteristics:

Demographic and socioeconomic characteristics sometimes called “states of

being” in that they represent the type of people. The factors on which we are

working are age, sex and occupation. Monthly income is also an important

parameter but it is difficult to verify. Although the amount of money that an

individual earns in a month is an absolute, not a relative quantity but it is a

sensitive topic in our society and it is difficult to determine.

2) Attitudes/Opinions:

Through the questionnaire we have tried to get hold of individual’s preference,

inclination and requirement from the products that the insurance company delivers

to the customer. Attitude is an important notion in the marketing literature, since

generally it is previewed that the attitudes are relating to the behavior of

individual.

3) Awareness/Knowledge:

They are used in marketing research refers to what respondents do or do not know

about the product.

4) Motivation:

Through questionnaire have tried to find the hidden need or want of an individual

and have tried to find out that why people buy insurance.

5) Behavior:

12









INDUSTRY PROFILE

15





INSURANCE INDUSTRY IN INDIA The insurance sector in India has made a full circle from being an open

competitive market to nationalization and back to a liberalized market again.

Tracing the developments in the Indian insurance sector reveals the 360 degree

turn witnessed over a period of almost two centuries. The business of life

insurance in India in its existing form started in India in the year 1818 with the

establishment of the Oriental Life Insurance Company in Calcutta. In 1912, the

Indian Life Assurance Companies Act enacted as the first statute to regulate the

life insurance business. The Indian Insurance Companies Act was enacted in 1928

to enable the government to collect statistical information about both life and non-

life insurance businesses. 1938, earlier legislation was consolidated and amended

with the objective of protecting the interests of the consumer. In 1956, 245 Indian

and foreign insurers and provident societies were taken over by the central

government and nationalized. Life Insurance Corporation of India (LIC) was

formed by an Act of Parliament, viz. LIC Act, 1956, with a capital contribution of

only Rs. 5 crore from the Government of India.

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

the Triton Insurance Company Ltd., the first general insurance company

established in the year 1850 in Calcutta by the British. In 1907, The Indian

Mercantile Insurance Ltd. was set up, the first company to transact all classes of

general insurance business. In 1957, General Insurance Council, a wing of the

Insurance Association of India, framed a code of conduct for ensuring fair conduct

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and sound business practices and in 1968, The Insurance Act was amended to

regulate investments and set minimum solvency margins and the Tariff Advisory

Committee was set up to ensure a transparent price mechanism. In 1972, The

General Insurance Business (Nationalisation) Act, 1972 nationalised the general

insurance business in India with effect from 1st January 1973. 107 insurers

amalgamated and grouped into four companies viz. the National Insurance

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

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

a company.

In 1993, Malhotra Committee, headed by former Finance Secretary and RBI

Governor R. N. Malhotra, evaluated the Indian insurance industry and

recommended its future direction. The reforms were aimed at “creating a more

efficient and competitive financial system suitable for the requirements of the

economy keeping in mind the structural changes currently underway and

recognizing that insurance is an important part of the overall financial system

where it was necessary to address the need for similar reforms

The committee emphasised that in order to improve the customer services and

increase accessibility of the various insurance products in India, the insurance

industry should be opened up to competition. But at the same time, the committee

felt the need to exercise caution as any failure on the part of new players could

ruin the public confidence in the industry. Hence, it was decided to allow

competition in a limited way by stipulating the minimum capital requirement of

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Rs.100 crore. The committee felt the need to provide greater autonomy to

insurance companies in order to improve their performance and enable them to act

as independent companies with economic motives. For this purpose, it had

proposed setting up an independent regulatory body, The Insurance Regulatory

and Development Authority (IRDA). Reforms in the insurance sector were

initiated with the passage of the IRDA Bill in Parliament in December 1999. The

IRDA since its incorporation as a Statutory body in April 2000 has fastidiously

stuck to its schedule of framing regulations and registering the private sector

insurance companies.

The other decision taken simultaneously to provide the supporting systems to the

insurance sector and in particular the life insurance companies was the launch of

the IRDA ’s online service for issue and renewal of licenses to agents. The

approval of institutions for imparting training to agents has also ensured that the

insurance companies would have a trained workforce with high degree of

technical competence and capacity to work efficiently as insurance agents to sell

their products. Since being set up as an independent Statutory body the IRDA has

put in a framework of globally compatible regulations and has been working

closely with all the stakeholders including consumer organisations like VOICE

Society

India with about 200 million middle class household shows a huge untapped

potential for players in the insurance industry. Saturation of markets in many

developed economies has made the Indian market even more attractive for global

insurance majors. The insurance sector in India has come to a position of very

high potential and competitiveness in the market. Indians, have always seen life18





insurance as a tax saving device, are now suddenly turning to the private sector

that are providing them new products and variety for their choice.

Consumers remain the most important centre of the insurance sector. After the

entry of the foreign players the industry is seeing a lot of competition and thus

improvement of the customer service in the industry. Computerisation of

operations and updating of technology has become imperative in the current

scenario. Foreign players are bringing in international best practices in service

through use of latest technologies

The insurance agents still remain the main source through which insurance

products are sold. The concept is very well established in the country

like India but still the increasing use of other sources is imperative. At present the

distribution channels that are available in the market are listed below.

• Direct selling

• Corporate agents

• Group selling

• Brokers and cooperative societies

• Bancassurance

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Customers have tremendous choice from a large variety of products from pure

term (risk) insurance to unit-linked investment products. Customers are offered

unbundled products with a variety of benefits as riders from which they can

choose. More customers are buying products and services based on their true

needs and not just traditional moneyback policies, which is not considered very

appropriate for long-term protection and savings. There is lots of saving and

investment plans in the market. However, there are still some key new products

yet to be introduced - e.g. health products.

The rural consumer is now exhibiting an increasing propensity for insurance

products. A research conducted exhibited that the rural consumers are willing to

dole out anything between Rs 3,500 and Rs 2,900 as premium each year. In the

insurance the awareness level for life insurance is the highest in rural India, but

the consumers are also aware about motor, accidents and cattle insurance. In a

study conducted by MART the results showed that nearly one third said that they

had purchased some kind of insurance with the maximum penetration skewed in

favor of life insurance. The study also pointed out the private companies have

huge task to play in creating awareness and credibility among the rural populace.

The perceived benefits of buying a life policy range from security of income bulk

return in future, daughter's marriage, children's education and good return on

savings, in that order, the study adds.

20





COLOR PAGE

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About Promoters

ICICI Bank

ICICI Bank Limited (NYSE:IBN) is India's largest private sector bank and the

second largest bank in the country, with consolidated total assets of $121 billion

as of March 31, 2008. ICICI Bank’s subsidiaries include India’s leading private

sector insurance companies and among its largest securities brokerage firms,

mutual funds and private equity firms. ICICI Bank’s presence currently spans 19

countries, including India

Prudential Plc

Established in London in 1848, Prudential plc, through its businesses in the UK,

Europe, US, Asia and the Middle East, provides retail financial services products

and services to more than 20 million customers, policyholder and unit holders and

manages over £267 billion of funds worldwide (as of December 31, 2007). In

Asia, Prudential is the leading European life insurance company with life

operations in China, Hong Kong, India, Indonesia, Japan, Korea, Malaysia, the

Philippines, Singapore, Taiwan, Thailand, and Vietnam. Prudential is one of the

largest retail fund managers for Asian sourced assets ex-Japan. Its fund

management business has expanded into ten markets, comprising of China, Hong

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The Company ICICI Prudential Life Insurance Company is a joint venture between ICICI Bank,

a premier financial powerhouse, and Prudential plc, a leading international

financial services group headquartered in the United Kingdom. ICICI Prudential

was amongst the first private sector insurance companies to begin operations in

December 2000 after receiving approval from Insurance Regulatory Development

Authority (IRDA).

ICICI Prudential Life's capital stands at Rs. 42.72 billion (as of June 30, 2008)

with ICICI Bank and Prudential plc holding 74% and 26% stake respectively. For

the quarter ended June 30, 2008, the company garnered Retail Weighted New

Business Premium of Rs. 1,174 crores as against Rs 810 crores for the quarter

ended June 30, 2007, thereby posting a growth of 45% and has underwritten over

6 lakh policies over this period. The company has assets held over Rs. 30,600

crore as on August 31, 2008.

ICICI Prudential Life is also the only private life insurer in India to receive a

National Insurer Financial Strength rating of AAA (Ind) from Fitch ratings. TheAAA (Ind) rating is the highest rating, and is a clear assurance of ICICI

Prudential's ability to meet its obligations to customers at the time of maturity or

claims.

24





For the past seven years, ICICI Prudential Life has retained its leadership

position in the life insurance industry with a wide range of flexible products that

meet the needs of the Indian customer at every step in life.

25





BIBLIOGRAPHY

Reference Books

Marketing Research

Marketing and Management

Sales Management

Customer Relationship Management

Web sites

www.google.comwww.wikipedia.com

www.iciciprulife.com

www.pgpmiflyhigh.com

www.marketresearch.com

www.irda.org

26

http://www.google.com/

http://www.wikipedia.com/

http://www.iciciprulife.com/

http://www.pgpmiflyhigh.com/

http://www.marketresearch.com/

http://www.irda.org/

http://www.google.com/

http://www.wikipedia.com/

http://www.iciciprulife.com/

http://www.pgpmiflyhigh.com/

http://www.marketresearch.com/

http://www.irda.org/





ANNEXURE – 1

Survey of life insurance buying behaviors

Name:______________________________________ Age……..

Occupation: 1. Service 2. Business .3 Self employed4.Retired

Income category: a. 2 to 3Lac /p.a . b. 3 to 5 Lac/p.ac. 5 to 7Lac/p. ad. 7 to 10Lac /p.a

e. Above 10Lac /p.a

Q 1. Why have you taken insurance policy?a. Investment b. tax saving c. security d. discipline saving

Q 2. Your objective to take Insurance cover is for a. Social relaxation b. life stage needs c. fear d. cover

liabilities

Q3. Which criteria do you apply for selecting insurance company?a. Policy scheme b. income c. service d. reliability

Q5. Are you satisfied with the return on investment, which you aregetting from your policy?

1. 2. 3. 4.Very satisfied satisfied not much satisfied dissatisfied

Q6. Where do you have invested in?a. real estate b. gold c. mutual fund d. insurancee. pension g. equity h. other

27





Q7.which type of insurance policy do you want to entertain withincrease in return?

a. whole life policy (5 to 6 % low risk) b. endowment (9%

moderate)c. ULIP (>15% high risk) d. equity (very highrisk)

Q8. What is your purpose for buying insurance policy?a. for old age saving b. for your family needsc. time to time for fulfill different need d. for opposite

circumstances

Q9. What is the importance of your family in your life?1. 2. 3. 4. 5.

very important important some what not very not at allImportant important important

Q10. How will you prefer to buy insurance policy?a. Through broker b. direct from company c. through agentd. other (bancassurance etc.)

Q11. What will you more attract in insurance?a. bonus b. guaranteed bonus c. return depend on marketd. other (if other please specify)-………………………………….

Q12. Which will give you preference in buying a insurance policy?a. brand b. policy scheme c. relationship (agent) d.

service

Q13. What mode would you prefer to pay premium?a. single premium b. annually c. half yearly d.

monthly

Q14. In buying insurance policy, your decision is influenced bya. family b. friends & neighborsc. professional & trade union group d. brand & advertisement

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Q15. Amongst the following which one is most important for whichyou would be tempted to secure or take insurance?

a. death b. disability c. diseases d. all

Q16. Your experience with your existence insurance companyAnswer……………………………………………………………………………………………………………………………………………………

Q17. Your suggestion (to improve insurance sector)Answer……………………………………………………………………………………………………………………………………………………..

Q18. Would you like to receive a summary report of this survey. No, thank youYes, Send to my email address……………………Address:_________________________________________________

_________

Signature-……………..

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