Sample Report Presentation

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Project Report

DISTRIBUTION CHANNELS IN LIFE INSURANCE INDUSTRY:A STUDY WITH REFERENCE TO BHARTI AXA

A dissertation submitted in partial fulfillment of the requirements for the degree course of

Master of Business Administration

By

KalaiselvanEnrolment No:

Under the Supervision of

Dr. O P GoelAcademic CounselorIGNOU, Bangalore

School of Management StudiesIndira Gandhi National Open University

Maidan Garhi

New Delhi 110 068

May 2010


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Dedicated

To my beloved

Parents, Wife & Children


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INTRODUCTORY PAGES


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PREFACE

The Economic Liberalization has swept across in the last decade of this country hasbrought into sharp focus the significance of the Quality Levels in the service sector.

The changed scenario of economy has led to a lot of change in the social setupresulting in continuous and regular use of Insurance in the day to day life.

The Middle Class, Higher income group and Industries are increasingly usingInsurance owing to its affordable price and Benefits. But a large section of the Customers ,Channel Partners and the Insurance companies are facing difficulties in maintaining servicequality levels and their market share.

This study attempts to bring out the service quality levels of the Bharti AXAinsurance through customer and Channel partners feedback and satisfaction levels in termsof various tangible and intangible benefits and to suggest alternate strategies for furtherimprovement.

K.Kalaiselvan

Place : Bangalore,Date : 24 th May 2010


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ACKNOWLEDGEMENT

Indeed, it is very appropriate to state here on the names of people who supported me

to complete my Project. Success is the epitome of not only hard work, perseverance, zeal,

steadfast determination but also guidance and encouragement served as a beacon light and

crowned my efforts with success.

With a deep sense of gratitude and indebtedness, I sincerely and whole heartedly

thank Dr. O P Goel, Academic Counselor, IGNOU Bangalore, my project supervisor for sparing

his valuable time, guidance and giving me valuable suggestions for improvement at every

stage of the project.

I shall be falling in my duties, if I forget to thank all the respondents, without their

active co-operation this study would have never been possible.

I also express my deep gratitude to my wife Dr.M.Prema, Sons: K.Kalai Raj & K.Santosh

Father-in-law Dr.S.Maruthappa, and colleagues : Mr.Rajesh & Mrs.B.Ramani, who supported

my efforts all through the study.

I am also thankful to Miss.Shalini who took lot of effort to help me in typing out the

entire project within a short period of time.

K.Kalaiselvan

Place : BangaloreDate : 24 th May 2010


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CONTENTS

Page No.

COVER AND TITLE PAGE

INTRODUCTORY PAGES

Preface

Acknowledgement

Table of Content(vii) to

(ix)

Synopsis Approval

Originality certificate

Bio-Data of the Author and Supervisor(xiii) to

(xv)

Synopsis(xv) to(xvii)

1CHAPTER - I : INTRODUCTION AND CONCEPTUALFRAMEWORK

1

1.1 Insurance On Threshold 3

1.2 Broadening of Benefits 4

1.3 Global Scenario 5

1.4 Untapped Opportunities 6

1.5 Key- Innovation and Variety of Products 7


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1.6 Insurance Agents 10

1.7 Qualification of the applicant 11

1.8 Practical Training 11


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CONTENTS

Sl.No. Description Page No.

1CHAPTER I : INTRODUCTION AND CONCEPTUAL FRAMEWORK(CONTINUED)

1.9 Primary Functions 14

1.10 Secondary Functions 16

1.11 Other Functions 18

1.12 Company Profile 19

2 CHAPTER II : RESEARCH METHODOLOGY

2.1 Objective of the study

2.2 Research Design

2.3 Life Insurance Companies in Bangalore

2.4 Data Collection Period

2.5 Profile of Respondents

3 CHAPTER III : DATA ANALYSIS AND INTERPRETATION

3.1 Analysis of customers Data

3.2 Analysis of Channel Partners Data

4CHAPTER IV : FINDINGS, CONCLUSIONS, RECOMMENDATIONS ANDIMPLICATION FOR FUTURE RESEARCH

4.1 Findings4.2 Conclusions

(viii)


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CONTENTS

Sl.No. Description Page No.

4CHAPTER IV : FINDINGS, CONCLUSIONS, RECOMMENDATIONS ANDIMPLICATION FOR FUTURE RESEARCH ( CONTINUED)

4.2 Conclusions ( Continued)

4.2.1 New Product offerings

4.2.2 Customer service

4.2.3 Channels of Distribution

4.3 Recommendations

4.4 Implications for future study

4.5 Limitations of the Study

5. APPENDICES

5.1 Exhibit A : Questionnaire for Customers

5.2 Exhibit B : Questionnaire for Channel Partners

6 REFERENCE SECTION

BIBLOGRAPHY

Abbreviation

Quote

(ix)


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CERTIFICATE OF ORIGINALITY


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GUIDE BIO-DATA

(xiii)

(xiv)


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SYNOPSIS

(xvii)


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CHAPTER I

1.0 INTRODUCTION AND CONCEPTUAL

FRAMEWORK


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1.1 INTRODUCTION : The service industry in our country started growing very fast

especially in metropolitan cities like Bangalore, Delhi, Chennai, Mumbai etc,. Economic

development led to structural changes in our social and cultural setups are the main factors

which resulted in sudden growth of Service sector. Understanding of the concept and the

characteristics of service is necessary to study the real requirement of the customer.

Obviously, service is different from physical product. The specific characteristics of services

are Intangibility, Inseparability, Heterogeneity, Ownership, Perishability etc,.

The service characteristics have direct impact on distribution decisio ns. Distribution

means PLACE decisions relate to Location, Delivery and Coverage. The most important

decision element in the distribution strategy relates to the issue of location of the service so

as to attract the maximum number of consumers. Distribution in services can be broadly

classified into two categories- direct sales and sales via intermediaries.

Direct sales has specific marketing advantages as they help in maintaining better

control over how the service is provided or performed and also in obtaining direct feedback

from customers. Companies are using electronic channels for direct sales. Typical benefits

the companies see in electronic distribution of services are Consistent delivery for

standardized services, Low cost, Customer convenience, Wide distribution, Customer choice

and ability to customize, and Quick customer feedback.

Sales via Intermediaries: To the extent the middlemen exist in a service channel,

they are typically sales agents, since there are no inventories to be purchased or

distributed. Place decisions are therefore, all extra-corporate entities between producers


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and prospective users that is utilized to make the service available and/or convenient. A

Distribution Channel for service organization is, therefore, is a sequence of firms (or units)

involved is moving a service from producer to consumer.

Keeping in view the characteristics of service and the potential management

problems in retailing of services, as shown in Fig.1 below, there is distinct channel

configurations, which one can notice in service sector. Rathmell has suggested the

dominant channel configuration in the service sector where agents and brokers play the key

role in distribution of services.

Fig.1. Channel Configuration of Services

The major function of these agents and brokers is, like any other intermediary, to bring the

producer of service and the user or consumer together. There are obvious benefits in

distributing services through Agents and Brokers. Firstly, they help in reducing the selling

and distribution costs besides a wider representation in the market. Secondly,

intermediaries possess special skills, expertise and the knowledge of local markets.

Product or Creator of Service

Agent or BrokerSellin

Agent or Broker

Agent or BrokerBu in

Customer or Industrial Customer


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However, these agents and brokers also pose some challenges. For example representation

of multiple service principals may lead to poaching in territories of others resulting in loss of

control over pricing and other aspects of marketing.

In case of Insurance services, actual product is not transferable and therefore

tangible representations are created and transferred. This type of channel is used for

marketing insurance services, where a contact document exists as a physical and tangible

representation of the services.

Major issues which should be addressed before hand in deciding the distribution

strategy involving intermediaries: Conflict over objectives and performance, Conflict over

costs and rewards, Control of service quality, Empowerment versus control, and Channel

ambiguity

A service organization can develop an effective channel system if it helps the

intermediary to develop customer-based service processes by providing the required

support. Also through training, it may develop the intermediary to deliver service quality

and gradually move to a cooperative management system and controls. The problem of

standardization and uniformity restrains the service organization to use middlemen to any

great extent and limit the geographical area which the service organizations propose to

reach and cover.

1.2 CONCEPTUAL FRAMEWORK :Insurance is a social device where uncertain risks of

individuals may be combined in a group and thus made more certain small periodic

contribution by the individuals provide a fund, out of which those who suffer losses may be


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reimbursed. In addition to being a means to protect oneself, the Insurance Industry is an

effective conduit for the savings of people to be channeled towards economic growth. In

India, the Insurance Industry is more than 50 years old. It was monopolized by two Public

Sector Undertakings in their respective fields of Life and General Insurance.

Insurance plays a very

important role in the

day-to-day activities of

the common man, business houses, industries, agriculturists and other service providers as

shown in fig.2. Insurance not only provides protection for individual and industry through

risk coverage; it also mobilizes funds for economic activity and encourages savings. Thus an

insurance cover is considered an important tool for economic stability. The insurance

industry is a key sector in the economy of any country.

The liberalization of the financial sectors in India was started in 1991 and carried

forward by successive governments. These reforms were carried out in a phased manner

and affected the entire financial sector. The insurance sector had been left out of this

reform process for a very long time. The passage of the Insurance Regulatory and

Development Authority of India (IRDA) bill in December 1999 has paved the way for the

entry of private players into this long neglected aspect of the Indian economy. However,

the opening up of this sector does not mean that its character will undergo a sea change.

The public sector behemoths will continue to enjoy a huge market share. It is up to the new

players to device innovative strategies to both grab business from the existing companies as

Fig.2 Insurance schemes


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well as expand the size of their pie. The new entrants will look for new channels of

distribution for their products. Banks will play a very important part as they are likely to act

as interfaces between the insurance companies and their prospective customers. The main

benefits of this new competitive environment will be to the consumer, who had limited

products and shoddier service.

This report gives a brief background of the sector and proceeds to highlight the

shortcomings of the existing setup and players. The benefits of a liberalized sector are

enumerated. The report also tried to identify the market potential for insurance products

and the strategies that can be employed to exploit the same.

The number of potential buyers of insurance is certainly attractive but much of this

population might not be accessible. New insurers must segment the market carefully to

arrive at the appropriate products and pricing. Since distribution will be a key determinant

of success for all insurance companies regardless of age or ownership; a total change is

expected in the distribution network as the product move towards the mature stages of

communization (increased awareness and popularity).

1.2.1 INSURANCE ON THRESHOLD :The liberalization of the Indian insurance

sector has been the subject of much heated debate for some years. The policy makers were

in the catch 22 situation wherein for one they wanted competition, development and

growth of this insurance sector which is extremely essential for channeling the investments

in to the infrastructure sector. At the other end, the policy makers had the fears that the

insurance premium which are substantial, would seep out of the country; and wanted to


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Exhibit - A illustrates the current scenario in Insurance

market


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Yet, multinational insurers are keenly interested in emerging insurance because

their home markets are saturated while emerging countries; like India have low insurance

penetrations and high growth rates. International insurers often derive a significant part of

their business from multinational operations. As early as 1994, many of the UKs largest life

and general insurers derived 40% to 60% of their total premium from outside their home

markets. Though the global operations of the multinational insurers have an immense

impact on their typically foreign insurers take only a small share of an individual countrys

market. For example in Taiwan the foreign companies took only a 3% share even seven

years after opening up while in Korea, their share was barely 1% after 20 years. In India,

therefore, the new entrants would face the challenge of playing within a small share of a

large and growing market which could be possibly profitable.

1.2.4 UNTAPPED OPPORTUNITIES: There is no doubt that the potential market for

the buyers of insurance is significant in India and offers a great scope of growth. First, while

estimating the potential of the Indian insurance market we often tempt to look at it from

the perspective of macro-economic variables such as the ratio of premium to GDP which is

indeed comparatively low in India. For example, Indias life insurance premium as a

percentage of GDP is 1.3% to 1.5% against 5.2% in the US, 6.5% in the UK or 8% in South

Korea. But the fact is that; the large part of the Indias, (the number of potential buyers of

insurance) is certainly attractive. However, this ignores the difficulties of approaching this

population. New entrants in other mass industries such as consumer products or retail


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banking have discovered this after suffering heavy losses. Much of the demand may not be

accessible because of poor distribution, large distances or high costs relative to returns.

Secondly most new entrants have a tendency to target the business of existing

companies rather than expanding the market, this is myopic. This not only leads to intense

competition for the new players but also much of their effort is spent on trying to capture

existing customers by offering better service or other advantages. Hence, the benefits of

this strategy are likely to be limited. For example, 50% of the current demand for general

insurance comes from the corporate segment. The corporate are likely to shop around for

the best rates, products and service. Nevertheless, the corporate segment, as a whole will

not be a big growth area for new entrants. This is because penetration is already good,

companies receive good service because of their size and rates are tariff-governed. In both

volumes and profitability therefore, the scope for expansion is modest. A better approach

may be to examine specific niches where demand can be met or stimulated.

1.2.5 NEED OF INNOVATION FOR NICHE PRODUCTS & SERVICE :The new entrants

would be best served by micro-level two pronged strategies. First, is to introduce innovative

products offering a right mix of flexibility/risk/return depending which will suit the appetite

of the customers and the secondly they would target specific niches, which are poorly

served or are not served at all.

(i) The first prong of a new insurers strateg y could be to stimulate demand in areas

that are currently not served at all e.g. Indian general insurance focuses on the

manufacturing segment. Whereas, the services sector is taking a large and growing share of


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Indias GDP. This offers immense opportunit ies for expansion opportunities. e.g. revenue

from remote processing activities in information technology is estimated at US $50 billion in

the next ten years. Insurers could respond with various liability covers.

(ii) Being the agrarian economy again there are immense opportunities for the new

entrants to provide the liability and risks associated in this sector like weather insurance,

rainfall insurance, cyclone insurance, crop insurance etc.

(iii) Financial sector is aggressively targeting retail investors. Housing finance, auto

finance, credit cards and consumer loans all offer an opportunity for insurance companies

to introduce new products like creditor insurance etc. Similarly, organized sector sale of

TVs, refrigerators, washing machines and audio systems in 1998 was around Rs.110 billion.

Only a negligible portion of these purchases was insured. Potential buyers for most of this

insurance lie in the middle class. Existing players can also profitably exploit these areas.

(iv) Life Insurance products have to compete with savings and mutual funds hence

should offer various dimensions of risk/return/flexibility so they can be linked to stock

market indices, inflation etc. making them more competitive and appropriate risk/return

appetite for different investors at present there are no such products. For instance, pure

protection products like term assurance account for up to 20% of policies sold in developed

countries. In India, the figure is less than 1% because policies are inflexible. They compete

with investment and savings options like mutual funds. It is imperative that they should

offer comparable returns and flexibility and there is immense scope of developing pure

insurance products with flexibility.


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(v) The lack of a comprehensive social security system and demand for pension

products will be large. However, current penetration is poor. Making pension products into

attractive saving instruments would require only simple innovations already prevalent in

other markets. For example, their returns might be tied to index-linked funds or a specific

basket of equities. Buyers could be allowed to switch funds before the annuities begin and

to invest different amounts at different times

(vi) Health insurance is another segment with great potential because existing Indian

products are insufficient. Till now, LICs Mediclaim scheme covered only 2.50 million

people. Indian products do not cover disability arising out of illness or disability for over 100

weeks due to accident. Neither do they cover a potential loss of earnings through disability.

1.3 INSURANCE AGENTS :

Agents in a legal sense means a person who is employed to perform and act on half

of others (principal) for a price called as commission. Agents in life insurance context means

the person holding a valid license from Insurance Regulatory Development Authority (IRDA)

issued in accordance with the IRDA Regulations.

1.3.1 QUALIFICATIONS OF THE APPLICANT: The applicant shall possess the

minimum qualification of a pass in 12th Standard or equivalent examination conducted by

any recognized Board/Institution, where the applicant resides in a place with a population

of five thousand or more as per the last census, should have passed in 10th Standard or

equivalent examination from a recognised Board/Institution if the applicant resides in any

other place.


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1.3.2 PRACTICAL TRAINING: The applicant shall have completed from an approved

institution, at least, one hundred hours' practical training in life or general insurance

business, as the case may be, which may be spread over three to four weeks, where such

applicant is seeking license for the first time to act as insurance agent.

Provided that the applicant shall have completed from an approved institution, at

least, one hundred fifty hours' practical training in life and general insurance business,

which may be spread over six to eight weeks, where such applicant is seeking license for the

first time to act as a composite insurance agent.

1.3.3 LICENSE: Where the applicant, referred to under sub-regulation should have

completed, at least, fifty hours' practical training from an approved institution viz:

(i) An Associate/Fellow' of the Insurance Institute of India, Mumbai;

(ii) An Associate/Fellow of the Institute of Chartered Accountants of India, New Delhi;

(iii) An Associate/fellow of the Institute of Costs and Works Accountants of India, Kolkata.

(iv) An Associate/Fellow of the Institute of Company Secretaries of India, New Delhi.

(v) An Associate/Fellow of the Actuarial Society of India, Mumbai;

(vi) A Master of Business Administration of any Institution/University recognised by any

State Government or the Central Government; or

(vii) Possessing any professional qualification in marketing from any Institution/University

recognized by any State Government or the Central Government:


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1.3.4 Renewal of license: An applicant, who has been granted a license after the

commencement of these regulations, before seeking renewal of license to act as an

insurance agent, shall have completed, at least twenty-five hours' practical training in life or

general insurance business, as the case may be, from an approved institution.

Provided that such applicant before seeking renewal of license to act as a composite

insurance agent shall have completed from an approved institution, at least, fifty hours'

practical training in life and general insurance business.

1.4 FUNCTIONS OF INSURANCE:

Insurance is system by which the losses suffered by a few are spread over many,

exposed to similar risks. Insurance is a protection against financial loss arising on the

happening of an unexpected event. Insurance policy helps in not only mitigating risks but

also provides a financial cushion against adverse financial burdens suffered. Insurance

policies cover the risk of life as well as other assets and valuables such as home,

automobiles, jewelry etc,. The functions of Insurance can be bifurcated into three parts:

Primary Functions, Secondary Functions and Other Functions

1.4.1 PRIMARY FUNCTIONS :

(i) Provide Protection : The primary function of insurance is to provide protection

against future risk, accidents and uncertainty. Insurance cannot check the happening of the

risk, but can certainly provide for the losses of risk. Insurance is actually a protection against

economic loss, by sharing the risk with others.


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(ii) Collective Bearing of Risk: Insurance is a device to share the financial loss of few

among many others. Insurance is a mean by which few losses are shared among larger

number of people. All the insured contribute the premiums towards a fund and out of

which the persons exposed to a particular risk is paid.

(iii) Assessment of Risk: Insurance determines the probable volume of risk by

evaluating various factors that give rise to risk. Risk is the basis for determining the

premium rate also.

(iv) Provide Certainty: Insurance is a device, which helps to change from uncertainty

to certainty. Insurance is device whereby the uncertain risks may be made more certain.

1.4.2 SECONDARY FUNCTIONS:

(i) Prevention of Losses: Insurance cautions individuals and businessmen to adopt

suitable device to prevent unfortunate consequences of risk by observing safety

instructions; installation of automatic sparkler or alarm systems, etc. Prevention of losses

causes lesser payment to the assured by the insurer and this will encourage for more

savings by way of premium. Reduced rate of premiums stimulate for more business and

better protection to the insured.

(ii) Small Capital to cover Larger Risks: Insurance relieves the businessmen from

security investments, by paying small amount of premium against larger risks and

uncertainty.


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(iii) Contributes towards the Development of Larger Industries: Insurance provides

development opportunity to those larger industries having more risks in their setting up.

Even the financial institutions may be prepared to give credit to sick industrial units which

have insured their assets including plant and machinery.

1.4.3 OTHER FUNCTIONS:

(i) Means of Savings and Investment: Insurance serves as savings and investment,

insurance is a compulsory way of savings and it restricts the unnecessary expenses by the

insured's For the purpose of availing income-tax exemptions also, people invest in

insurance.

(ii) Source of Earning Foreign Exchange: Insurance is an international business. The

country can earn foreign exchange by way of issue of marine insurance policies and various

other ways.

(iii) Risk Free Trade: Insurance promotes exports insurance, which makes the

foreign trade risk free with the help of different types of policies under marine insurance.

1.5 COMPANY PROFILE :

Bharti Enterprises is one of Indias leading business groups with interests in

telecom, agri business, financial services, retail and manufacturing. Bharti has been a

pioneering force in the telecom sector with many firsts and innovations to its credit. Bharti

Airtel has been voted as India's most innovative company, in a survey conducted by The

Wall Street Journal. Bharti Teletech is the countrys largest manufacturer and exporter of


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telephone terminals. Bharti has joint ventures with AXA, world leader in financial protection

and wealth management, for Life Insurance, General Insurance and Asset Management.

Bharti has retail business under a company called Bharti Retail. It also has a joint venture -

Bharti Wal-Mart - with Wal-Mart for wholesale cash-and-carry and back-end supply chain

management operations in India.

AXA GROUP (AXA SA): Since the AXA name was created in 1985, the Group's

growing international presence and wide range of quality products and services have

established. AXA as one of the few successful global brands in the financial services

industry. As of 31 December 2009, AXA had over 85 million clients worldwide, 135,000

employees, 91.2 billion Euros in consolidated revenues, 816 billion Euros in assets under

management, and 4,044 million Euros in underlying earnings. Headquartered in Paris and

active across all five continents in 55 countries. Group supports its clients, both individuals

and businesses, at every stage in their lives by providing products and services to meet their

needs, including insurance, personal protection, savings and estate planning.

AXA is listed on most of the world's major stock markets. The Group enjoys AA-

range ratings with the three leading global rating agencies. AXA was also ranked 15th in

2008s FORTUNE GLOBAL 500 survey of The Worlds Largest Corporations, and ranked top

under the category Insurance: Life, health (stock). AXA was ranked no. 55 in Interbrands

list of Top Global Brands in the Business Week magazine published in September 2008.

Bharti AXA Life Insurance is a joint venture between Bharti, one

of the Indias leading business groups with interests in telecom, agri


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business and retail, and AXA, world leader in financial protection and wealth management.

The joint venture company has a 74% stake from Bharti and 26%

stake of AXA. The company launched national operations in

December 2006. Today, the company employs more than 8000

persons across twelve states in the country and a national

footprint of distributors trained to provide quality financial advice and insurance solutions

to large Indian customer base. As the company plans to expand its presence across the

country with a large network of distributors, it continues to provide innovative product and

service offerings to cater to specific insurance and wealth management needs of customers.

Retail : Bharti AXA has made available an array of insurance policies that one can

rely on for protection in various kinds of circumstances personal and business viz Motor,

personal accident, health, fire, marine, engineering, liability etc,. Security of family against

spiraling costs of hospital treatment. Insurance of car or two-wheeler against theft and

damage, and proceeding on a vacation check out our travel insurance.

Commercial : Bharti AXA's offerings in Commercial Insurance cater to the varied

needs of different sizes and types of businesses. Our understanding of business's

requirements is evident from these products which are flexible and cost-effective. From

micro-enterprises, SMEs to large corporations, Bharti AXA has addressed the risks faced by

them and provides the right insurance solution to manage those risks effectively. It brings

your reliable financial protection to your business.

Rural : The many important economic activities that are carried in rural areas such

as farming, cattle rearing, sericulture etc. are exposed to several risks that threaten the


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livelihoods of the people engaged in them. Attentive to the needs to the rural sector, Bharti

AXA has a range of Rural Insurance products to mitigate those risks and offer financial

protection to its rural customers.

Exhibit - B : Published articles of Bharti AXA is given below for illustration

CUSTOMER TESTIMONIALS

"Our claim for car insurance has been now settled satisfactorily by your company. Thanks for thequick actions and co-operation extended from your side in this regard." Anjali Kulkarni, Pune

"We are thankful to you and your service. Payment was made before commitment date. Thanks foryour support, and we are happy with your hospitality service." Babu, Radha Madhav Toyota,Vijaywada

"We are very happy with the services received by Bharti AXA General Insurance." Mahesh Iyer,TATA Chemicals, Rajkot


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Exhibit C Publication by Bharti CEO


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Exhibit D Bharti : Insurance claim form


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CHAPTER II2.0 RESEARCH METHODOLOGY


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to conclude whether the present quality level of the service is favorable to their own

growth in Bangalore city.

2.3 METHODOLOGY AND SAMPLING:

Tools For Primary Data Collection : In this study, the popular method of collection

of Primary data is done through structured questionnaire. A pre-designed questionnaire is

used to collect the data from the customers. The questions are formulated in advance; all

the required information is obtained an orderly and systematic manner through the

questionnaire. The exact wordings of the questions have been carefully worked out to

reduce the possibility in ambiguity and misunderstandings. The questions are put before all

respondents in the same order, it offers maximum control on the interviewing process and

information content. The reason for adapting structure direct interviews through

questionnaire method is listed here.

i. A structured questionnaire has fixed alternative answers to each question. They are

simple to administer and relatively inexpensive to anlayse.

ii. Population to be covered is very large and study wishes to collect data about specific

aspects of customers awareness, attitude, and opti ons etc. through recording of

verbal responses to the questions.

iii. Respondents could be probed on a wide diversity of issues by questioning.

iv. It is an economical and faster method of data collection.

In order to ensure that all respondents are able to give the information on the

questions asked, every care has been taken to limit the questions purposiveness to the


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required information. Questions are worded such that they are easily understood, they are

simple, and they are concrete and the question sequence co nforms to respondents way of

thinking.

Sampling Plan: Sampling plan encompasses the target population, sampling unit,

sampling size and sampling method. In developing sampling Design, the first step is to

define population of the study consisting of all customers of Bharti AXA residing in

Bangalore so as to satisfy their needs.

The sampling units considered in this study are an individual customer and channel

partners of Bharti AXA irrespective of gender, class, caste, creed, income etc. This is aimed

at defining strategy for the target market segment. The study envisaged simple random

sampling technique. The study is restricted to the city limits of Bangalore.

Sample Size Determination: The exact sample size decision in a survey of this nature

depends on the following factors:

(i) The average estimate of the responses to question asked i.e., if we try to get

responses from 10 people, only about 7 may respond and the remaining 3 may

refuse to respond.

(ii) The precision with which it is desired to estimate the parameter.

(iii) The confidence with which it is desired to achieve the level of positive opinions

chosen.

The Data from the customers was collected using a structure questionnaire. After

doing a pilot survey of 10 respondents, the questionnaire was amended to make it simpler


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and easy understandable by the respondents. One hundred questionnaires were printed

and were personally administered by the researcher. The respondents were selected

randomly within Bangalore city limits and were reached in their offices and also at their

residences. One hundred completely filled up questionnaires were included in the study.

Another questionnaire was designed and used to collect primary data from the

channel partners ( the agents) of the Insurance companies. Twenty five agents , who deal in

selling life insurance policies were interviewed personally by the researcher.

The data collection instrument used for obtaining desired information is the

structured questionnaire for customer and Channel Partners. The same is appended as

Appendix -A and Appendix -B for reference.

Interviews : An attempt has been made in conducting the unstructured direct In -

depth interviews through probing questions from one to one interaction and discussions

to Bharti AXA employees, Bangalore office to obtain all the desired information considered

necessary for the study in this project.

The interview was conducted on a casual, informal manner to ensure the

respondent was at ease. The level of vocabulary used to ensure that questions are fully

understood and good rapport was developed and maintained throughout the interviews.

The advantages of the interviews are : Its ability to discover and be explored at lengths. It

provides a lot of flexibility to the unsuspected motivation. It encourages respondents to

express interview.


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Secondary Data : As the secondary data about Bharti AXA in the city is scarcely

available, except newspaper advertisements/websites, so all information have to be

obtained from primary source only.

2.4 LIFE INSURANCE COMPANIES IN BANGALORE

Name Address

Allianz Bajaj Life InsuranceCompany Ltd.

Legacy House, #6, 1st Floor, Convent Road (off RichmondRoad),Bangalore 560 025

AMP Sanmar AssuranceCompany Limited

Vistar Enclave, No. 12, Ground Floor

4th Main Road, MalleswaramBangalore 560003

Birla Sun Life Insurance Co Ltd.H.M.Geneva HouseGround Floor 14 Cunningham RoadBangalore 560052

Dabur CGU Life Insurance Co. PvtLtd

Shubaram Complex, IV Floor144, M.G.Road, Bangalore 560001

HDFC Standard Life InsuranceCompany Limited

2nd Floor, Embassy Classic, 11, Vittal Mallya RoadBangalore 560001

ING Vysya Life Insurance Co. PvtLtd 14, Sankey Road, Bangalore 560003

Life Insurance Corporation of India (LIC)

Jeevan Prakash, J.C Road Bangalore 560002

Max New York Life4th Floor, Landmark Building, 21/15 M G RoadBangalore 560 001

Metlife India Insurance CompanyPvt. Ltd.

Brigade Seshamahal, No. 5, Vani Vilas Road,Basavanagudi, Bangalore-560 004.

National Insurance Company Ltd.144, Shubram ComplexBangalore - 560 001

OM Kotak Mahindra LifeInsurance

Flat nos.102 1st floor, Cears Plaza, 136 Residency RoadBangalore 560025


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2.4 LIFE INSURANCE COMPANIES IN BANGALORE(continued)

Name Address

The Oriental Insurance Company Leo Complex,Residency RoadBangalore - 560 025

TATA AIG Life InsuranceCompany of India

Khanija Bhavan, 5th Floor, West Entrance Race CourseRoad ,Bangalore 560 001

The New India Assurance Co. Ltd.2B Unity Building, Annexe Mission RoadRajajinagar Bangalore - 560 027

United India InsuranceCorporation Ltd.

35/1, Alappat Building2nd Floor Bangalore - 560 052

Bharti AXA Life InsuranceCompany

25, M. G. RoadBangalore - 560 001

ICICI Prudential Life InsuranceBull Temple Road, Near South end circle , JayanagarBangalore -560011

2.5 DATA COLLECTION PERIOD:

The data was collected personally by the researcher from between 5th

May10 and

20 th May 2010.

2.6 PROFILE OF RESPONDENTS:

2.6.1 Age Group of the Respondents:

The above pie chart gives us the age

group of the survey respondents.

Maximum respondents (66%) were inChart 2.6.1 Age group of respondents


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the age group of 25-40 followed by 32% in the age

bracket of 40-50 years. There was no respondent

above the age of 50 years.

2.6.2 Employment status of the respondents

All the respondents were found to be in the working category.

2.6.3 Monthly household income

: Family earning profile of the

respondents is depicted in the

chart 2.6.3 above. More than

half ( 55%) of the respondents

had an earning of Rs. 10 to 20 thousand

per month followed by 18% of them who

whose household income was ranging

between Rs. 20 thousand to 30 thousand.

2.6.4 Possession of Life insurance policy: All the respondents had at least one insurance

policy. Thirty eight percent of them had two policies and 14% had more than two policies.

2.6.5 Types of Insurance Policies owned : As

can be seen in the chart no 2.6.5, Endowment

policies are found to be most popular policies

followed by the Money Back policies.

Chart 2.6.2 Employment status

Chart 2.6.3 Monthly Household Income

Chart 2.6.4 Possession of Life Insurance policy

Chart 2.6.5 Types of Policies owned


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Chapter III

3.0 DATA ANALYSIS AND INTERPRETATIONS


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CHAPTER - III

3.0 DATA ANALYSIS AND INTERPRETATIONS

3.1 DATA PROCESSING:

The data collected from the field survey was processed and analyzed as laid down in

the research plan. The processing of data involved the following steps: Editing, Coding,

Classification and Tabulation of the data collected, so that they are amenable to analysis.

(i) Editing of Data : The editing of data involved a careful scrutiny of the completed

questionnaire. Raw data was examined to detect errors, omissions and to correct

them so as to ensure completeness, consistency, accuracy and homogeneity. All the

questionnaire schedules were edited. Corrections were carried out for the obvious

could also be recorded by reviewing other information Such data was corrected for

obvious errors, such as an entry in the wrong place and in appropriate or missing

replies.

(ii) Coding of Data: For coding of data, Alphabetical symbols were assigned to the

answers so that the responses could be recorded in a limited number of categories.

However, the coding decision was made at designing stage of the questionnaire itself.

This enable the simplification of tabulation of data for further analysis.


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(iii) Classification of Data: The raw data collected through the survey has been reduced

into homogenous groups for meaningful analysis. Thus the data was arranged in

groups or classes on the basis of certain characteristics. Further based on certain

attributes, qualitative classification is attempted to. All the classifications data were

logically and systematically arranged to constitute certain statistical senses.

(iv) Tabulation: The tabulation of data is made based on classification of data with

reference to certain variable. The tabulation of data is used for summarization and

condensation of data. Further the analysis of relationship, trends and other

summarization of data was made. The Tabulation is used to organize the information

and prepare a summary that highlights the salient features. Grouping of similar

responses were carried out to convey similar information.

The collected data has been analyzed keeping the research objectives in mind. It results

obtained have been divided into two parts: Analysis of Customers data and Analysis

Channel P artners data

3.2 ANALYSIS OF CUSTOMERS DATA:

3.2.1 Preference of Insurance distribution channels

Agents 58%

Insurance Companys branch 24%

Internet 13%

Banks ATMs 5%


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the other channels until the internet mode becomes much more popular among the

customers.

3.2.3 Age of the Insurance policy:

The data in Chart no: 3.1

indicates 12% respondents have

had a life cover for more than 15

years, 42% respondents have had a

life cover for 10-15 years, 36 %

respondents between 5-10 years and 10% respondents for less than 5 years.

3.2.4 The benefits Perceived of Life insurance policy by the Customers

Chart no. 3.2

Chart no : 3.1


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According to chart no 3.2, majority of the respondent (49%) believe that covering

future uncertainty is the biggest benefit of insurance policy. Thirty nine percent & 12% of

them, respectively, believe that tax benefit and future investment are the biggest benefit

of life cover.

3.2.5 Importance of various features of the policy :

Policy Term Sum Assured Rider Benefits Premiumpaying Term

Returns &Benefits

4% 16% 6% 12% 62%

Table no: 3.3

As can be noticed from the table no 3.3 , the most important feature, the customers

( 62%) look at while buying an insurance policy, has been reported as the returns and

benefits that included the life cover provided by the insurance policy.

3.3 ANALYSIS OF CHANNEL PARTNERS DATA:

Out of total 25 nos. of agents interviewed by the researcher, twenty one of them

reported to be dealing with more than insurance company , but 4 of them deals with LIC

only.

3.3.1 Agents dealing in various Life Insurance Companies:

It is common for insurance agents to deal in multiple companies. As the data in chart

3.3 depicts, all the respondents deal in LIC policies where as 84 % of the agents deal in

Bharti AXA insurance policies.


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Chart : 3.3

3.3.4 Channel Partners ( agent s) perception of various companies:


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Chart :3.4 ( 5 point scale)

(i) Availability of Products/Policies : Insurance Channel partners have opined that

Life Insurance corporation has the widest range of products in the form of insurance

policies. Bharti AXA has been ranked at no. 4 at a rating of 3.9 on a 5 point scale (chart

no.3.4)

(ii) Rate of Premium for Equivalent benefit Policies

Chart 3.5 ( 5 point scale)

LIC and Bajaj Allianz has been reported to be the best insurance company when it

comes to value for money. As presented in the chart no 3.5, Bharti AXA along with ICICI

Prudential have been rated at no. 3.


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(iii) Quality of Customer Service

ICICI has topped the list of best service providing companies. The data in chart no

3.6 reveals that LIC lags behind al the private sector insurance companies when it comes to

providing superior customer service.

Chart 3.6

(iv) Quality and Speed of Claims Settlement

ICICI Prudential has emerged as the best claim settlement company with a rating of

4.5 on a 5 point scale. ( chart 3.7)


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Chart 3.10

3.3.5 Problems faced by Bharti AXA channel Partners (agents)

Seventy Six percentages of the agents of Bharti AXA agents reported some or the

other type of problem faced from the company.

Problem type : % age of respondents

Poor Response from the office/call centre : 72%

Training not up to the mark : 68%

Late information on New products : 54%

Delayed payment of commission : 25%


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3.3.6 Overall rating of Bharti AXA Insurance company by the channel Partners ( by onlythose who deal into Bharti AXA along with at least one more company)

45% of the channel partners report that , on an overall basis, Bharti AXA is among

the top 10 insurance companies in the country, where as 35% of them feel it is among the

top 3. However 20 % report it as the best in class insurance company.

a) Best in Class : 20%

b) Among top 3 : 35%

c) Among top 10 : 45%

d) One of the worst : 0


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CHAPTER - IV

4.0 FINDINGS, CONCLUSIONS,RECOMMENDATION AND IMPLICATION

FOR FUTURE RESEARCH


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CHAPTER 4

FINDINGS, CONCLUSIONS, RECOMMENDATIONS ANDIMPICATIONS FOR FUTURE RESEARCH

4.1 FINDINGS:

(i) Biggest strength of Bharti AXA Insurance company can be attributed to its preparedness

towards using new channels of distribution in insurance sector. As the per capita usage

of internet is on a steep rise in the country, it looks quite obvious that more and more

customers shall start using this channel of insurance.

(ii) Although the company has been fairing well in terms of customer service and value for

money along with its rival companies like ICICI, the management need to clearly

differentiate its product offerings to find a prominent place in the mind of the

customers.

(iii) Products offering is a relatively weaker area of Bharti AXA , when compared with LIC.

The company needs to identify the target segment and offer a complete solution to

the customers which can be clearly differentiated through a package of products and

services.

(iv) Until the time alternate channels of delivery assume significant importance, it is

necessary for any of the insurance company to keep its agents satisfied and motivated.

Majority of the agents reporting some of other kind of issue with Bharti AXA is a serious


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cause of concern which the management must address on priority. Seventy two of the

agents, not getting expected response from the companys office or the call centre

needs immediate attention.

(v) The channel partners have significant impact on the companys top line as well as

bottom line. This becomes more important when the same agent also deals in the

competitive products. Almost half of the agents perceive Bharti AXA as a very mediocre

company falling into upper 10 companies in the sector. Until an agent is convinced that

the company which he represents is the best in the industry, the success possibilities of

the companys offerings would depend only on chance.

4.2 CONCLUSIONS:

Life insurance industry of India is as old as it is in any other part of the world. A

number of players (over 250 in life insurance and about 100 in non-life insurance) mainly

with regional focus are present all across the country. However, the Government of India,

concerned by the unethical standards adopted by some players against the consumers,

nationalised the industry in two phases in 1956 (life insurance) and in 1972 (non-life

insurance). The insurance business of the country was then brought under two public sector

companies, Life Insurance Corporation of India (LIC) and General Insurance Corporation of

India (GIC).

4.2.1 Insurance market in India : By any yardstick, India, with about 200 million middle

class households, presents a huge untapped potential for players in the insurance


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industry. Saturation of markets in many developed economies has made the Indian

market even more attractive for global insurance majors. With the per capita

income in India expected to grow at over 6% for the next 10 years and with

improvement in awareness levels, the demand for insurance is expected to grow at

an attractive rate in India.

4.2.1 Winds of change : Reforms have marked the entry of many of the global insurance

majors into the Indian market in the form of joint ventures with Indian companies.

Some of the key names are AIG, New York Life, Allianz, Prudential, Standard Life, Sun

Life Canada and Old Mutual. The entry of new players has rejuvenated the erstwhile

monopoly player LIC, which has responded to the competition in an admirable

fashion by launching new products and improving service standards.

The following are the key winds of change brought about by privatization :

(i) Market Expansion: There has been an overall expansion in the market. This

has been possible due to improved awareness levels thanks to the large number of

advertising campaigns launched by all the players. The scope for expansion is still

unlimited as virtually all the players are concentrating on large cities and towns -

except by LIC to an extent there was no significant attempt to tap the rural markets.

(ii) New Product Offerings : There has been a plethora of new and innovative

products offered by the new players, mainly from the stable of their international

partners. Customers have tremendous choice from a large variety of products from

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


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CHAPTER - V

5.0 REFERENCE SECTION


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APPENDIX - A

QUESTIONNAIRE- CUSTOMERS

I am carrying out a study on Distribution channels in life insurance industry:

A study with reference to Bharti AXA The information provided by you shall be used

for academic purposes only. Kindly give your free responses. Your cooperation will be highly

appreciated.

Kalaiselvan

1. Your Age Group ( in years) :

(1) 21-25 (2) 25-40

(3) 40-50 (4) above 50

2. Are you employed?

(1) Yes (2) No

3. Your monthly household income ( in Rs. Thousands)

(1)


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4. Do you have any life insurance policy?

(1) Yes (2) No

If yes than how many policies do you have .

5. What is the policy type?

(1) Endowment (2) Money Back

(3) Term Cover

6. For how many years do you have insurance policy.

(1)


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10. Are you satisfied with the following feature of the policy?

(1) Yes (2) No

11. Are you satisfied with problem solving system of your insurance Company?

(1) Yes (2) No

12. Is your insurance agent/consultant available as per your requirement?

(1) Yes (2) No (3) Some time

13. What is the chance of your buying (policy) from your earlier insurer?

(1) Definitely will (2) Very likely take

(3) Probably will take (4) Might or might not take

(5) Definitely will not take

14. Do you think your life insurance policy can give life to your beneficiaries after death?

(1) Yes (2) No (3) Cant Say

15. Bharti AXA Insurance company available in your near area?

(1) Strongly Agree (2) Agree (3) Disagree

(4) Strongly Disagree (5) Neutral


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16. Is BHARTI AXA Insurance more affordable than the other Insurance available on your

nearest Area?

(1) Strongly Agree (2) Agree (3) Disagree

(4) Strongly Disagree (5) Neutral

17. Please indicate your most preferred Insurance distribution channels

Agents

Insurance Companys branch

Internet

Banks ATMs

Any other


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18. Please rate your experience with the distribution channels of following Life

Insurance Companies ( with whom you have dealt- with ONLY) using a 5 point scale

( 5 for best and 1 for worst).

Company Agents Company

Branch

Internet Banks ATMs Any other

LIC

ICICI Pru

Bharti AXA

HDFE Life

Bajaj Allianz

Any other

(Pls specify)

Thank you for your co operation.


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APPENDIX B

QUESTIONNAIRE - CHANNEL PARTNERS

I am carrying out a study on Distribution channels in life insurance industry:

A study with reference to Bharti AXA The information provided by you shall be used

for academic purposes only. Kindly give your free responses. Your cooperation will be highly

appreciated.

Kalaiselven

1. Which all insurance companies you deal in ? Pls tick whichever is applicable

LICICICI Prudential

Bharti AXA

HDFC

Bajaj Allianz

Any other (Pls specify)


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2 Based on your perception or experience, please rate the following insurance companieson a scale of 1 to 5 ( 1 being worst and 5 being best ).

Item LIC ICICI Prudential Bharat AXA HDFC Bajaj Allianz

Product/Policies

Premium

Customer Service

Claim Settlements

Any Other (Pls specify)

3 If your have ticked on Bhaarti AXA in question no 1, please answer the followingquestions

- Do you face any difficulty while dealing with the company

Yes / NO

If yes, please explain the types of issue you face

4 How would you compare Bharti AXA with other insurance companies on an overallbasis ? Please tick any one

a) Best in Class

b) Among top 3

c) Among top 10

d) One of the worst

5 Would you like to share any other information about the company ? Please feel free towrite below

Thank you for your co-operation


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BIBLIOGRAPHY

BOOKS

Gupta, Pradeep and Bhyana, Sanjay, 'Insurance Sector: Challenges & Strategies', JIMS 8-

M, (October-December, 2002).

Muralidharan, S., 'Distribution Strategies: New Avenues', Chartered Financial Analyst,

(February, 2004).

Rao, C.S., 'Insurance Industry: The Happening Sector', Chartered Financial Analyst,

(February, 2004).

Roy, Dilip and Banerjee, Saikat, 'Some Aspects of Insurance in the Context of Risk

Management', The Vision: The Journal of Business Perspective, (January-June, 2003).

JOURNALS

Brochures / Information Booklets of Bharati AXA

Product List Bharati AXA

The Insurance Regulatory and Development Authority Bill, 2004.

WEBSITES REFERRED

www.irdaindia.org.com

http://www.indiainfoline.com/bisc/insu.html


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http://www.mib.com/kd/html/India_InsuranceMarket_Next.html

http://www.einsuranceprofessional.com/artgeneva.htm

http://www.timesofmoney.com/insurance/jsp/insurance_news.jsp
http://www.timesofmoney.com/insurance/jsp/insurance_news.jsphttp://www.timesofmoney.com/insurance/jsp/insurance_news.jsphttp://www.timesofmoney.com/insurance/jsp/insurance_news.jsp

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