Uday's Project

8/2/2019 Uday's Project

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A REPORT

ON

Customers PERCEPTION TOWARDS LIFE INSURANCE

AFTER

PRIVATIZATON


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LIST OF ILLUSTRATIONS

LIST OF FIGURES

S.No TITLE OF FIGURES PAGE No.

1 No of males and femalessurveyed

34

2 Educational qualificationsof males

35

3 Educational qualificationsof females

35

4 Popularity percentage oflife insurance companies

36

5 Familiarity of schemesamong people

37

6 Purpose of Insurance 38

7 Ranking of some benefitsof insurance (figuresexpressed in %)

39

8 Insurance as the viableoption for investment

40

9 Availability of InsuranceCover

40

10 Estimate of ITprofessionals enrolled intoinsurance

41

11 Type of investmentinterested in 42

12 Mode of premiumpayment

42

13 Services provided by theinsurance company(figures expressed in %)

43

14 Returns given by theinsurance company(figures expressed in %)

44

15 Ratings of various

insurance companies

44

16 Privatization of insurance 4517 Availability of good

services after privatization46


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LIST OF TABLES

S.No TITLE OF TABLES PAGE No.

1 Popularity percentage oflife insurance companies 36

2 Familiarity of schemes 373 Purpose of Insurance 38

4 Ranking of some benefitsof insurance (figuresexpressed in %)

39

5 Estimate of ITprofessionals enrolled intoinsurance

41

6 Mode of premiumpayment

42

7 Ratings of variousinsurance companies

44


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PURPOSE, SCOPE AND LIMITATIONS

The purpose of this report is to find out the change in the perception of the

people towards life insurance after privatization and to understand and compare

the current insurance market with the market existing before opening up of the

industry for the private and outside players with some current issues and latest

development. This report also takes in to consideration the new innovative and

contemporary products available to the customers in the market and to which

level they are satisfied with these products and what is their recommendation for

any changes that should be done in the products.

The project report is structuredaccording to the data procured from the websites of life insurance companies,

IRDA annual report, and insurance council of India and through the survey

conducted by means of preparing a questionnaire. A small sample size is taken

for conducting the survey. The survey is conducted only in the Delhi so the

statistical data collected, analyzed and results drawn only reflects views and

perception of local residents, professionals about the life insurance and

insurance products. So the results through this effort may vary and deviate from

the actual findings and proceedings.


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INDUSTRIAL ANALYSIS

Historical Background:

The Indian economy is currently showing signs of vibrancy; it is also

depicting a qualitative change in its composition. The economy

which had been essentially built on agricultural wealth, has

transformed itself in stages over the period of the five year plans,

init ial ly into an economy, where industry assumed a leadership role

accompanied by a perceptible change in the last few years or so

with an accent on information technology and other service sectors.

Today, the Gross Domestic Product of the country is predominantly

derived from the services sector. This wil l naturally have its effecton the state of capital market of which insurance sector is an

integral part.

Government's decision to accept the recommendations of the

Committee on Reforms in the Insurance Sector and to constitute an

interim Insurance Regulatory Authority, by an executive order in

January 1996, to look into the modifications, the regulatory frame

work of the insurance sector, has resulted in the establishment of astatutory body, for regulating the players and in broadening the

sector by admission of new players from the private sector. Such a

development has had a ripple effect leading to the establishment

and development of professional institutions that are connected with

the industry. Subsequent sections of this report deal with these

aspects.

As more than 42% of the country's current GDP is being generatedby the services sector, obviously necessary steps are required to be

taken to sustain this process of growth and towards this end a

coordinated approach is necessary. And insurance being a service

industry could prima facie act as an engine of growth. In this

regard, the history of development of insurance industry in India has


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been one of under-performance and under-achievement.

Appreciation for the necessity to cover risks of both personal l ives

and property has been very poor. In fact, the growth in the l i fe

insurance market has been mainly driven by income tax

considerations and this had been the primary reason why the urban

population has been a major beneficiary of l i fe policies. Coverage

of property to risks of different types has always been a secondary

consideration of its owners and has been prompted by lenders'

requirements. Unless there exists a compulsion on the part of

owners to cover the risks of loss, the industry shall not move in the

high gear for development. All these characteristics of the current

market are changing, albeit slowly, as a result of the transformationthat has been ushered in with the current developments in the

insurance sector. The compell ing reason for the same which was to

provide an opportunity for the consumers to have a choice in the

matter of selection of their r isk bearers is slowly unfolding into a

system whereby newer and newer dimensions are being added to

the product profi les that the companies produce. There is sti l l

considerable work to be done in this area by insurance companies.

But decidedly the first step in this direction has now been taken by

admission of new players and the Authority hopes that this step,

though small in nature, wil l be a signif icant one.

In the statements that fol low, the Authority portrays some basic and

fundamental statistics that relate to the Indian economy which are

relevant to the insurance industry. Also added to these statements

is a short table which depicts the state of insurance penetration in

the Indian context. A discerning reader may note that the level of

development of insurance in the country is sti l l not on the same

level as the development noticed in the neighborhood but the

increase shown in a period of the past few years is encouraging.


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The opening of the market to private participation is a bold

experiment and was necessitated by the public perception of a

necessity to have a free availabil i ty of choice to customers. Hopes

were entertained that the opening up of the market wil l deepen the

insurance penetration, bring about a rationalization of premium

structure, end cross subsidization, provide covers which were

lacking in the market and provide the necessary resources for

infrastructure development. The functioning of the old insurers gave

enough hopes to nurture and encourage these thoughts. The new

companies have also supported this philosophy by their current

actions; however, they have been active for so l i tt le a t ime that their

effect on the market wil l be felt only in the years to come. Some ofthe hopes have been achieved - in the areas of innovation of

products, extension of facil i t ies to cus tomers etc.

CURRENT DEVELOPMENTS IN ULIP

It is nearly seven years since the Indian insurance market was

opened up. In l i fe insurance, we have seen unprecedented growth

which is continuing. By the end of the financial year 2007-08 we arelikely to see more than twenty l i fe insurance companies in India. A

frequently asked question is: what is the optimum number of

insurance companies that is ideal for Indias needs? Considering

that l i fe insurance penetration is 3% of GDP and that one is aiming

at say 7% or 8% of GDP, that vast sections of people are sti l l not

covered by l i fe insurance and large geographical areas are

untouched by insurance, we can say that we have a long way to go

and that there is room for more insurance companies. The annual

new business growth has been a round 100% for the last three

years and it looks l ikely that such a growth wil l continue for some

time. That such an incredible growth, to a great extent, has been

due to ULIP products is another matter


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TABLE 1

MILESTONES OF INSURANCE REGULATIONS IN THE

20THCENTURY

Year Significant Regulatory Event

1912 The Indian Life Insurance Company

Act

1938 1938The Insurance Act:

Comprehensive Act to regulate

insurance business in India

1956 Nationalization of life insurance

business in india

1972 1972Nationalization of general

insurance

business in India

1993 Setting up of Malhotra Committee

1994 Recommendations of

Malhotra Committee

1995 Setting up of Mukherjee Committee

1996 Setting up of

(interim) Insurance Regulatory

Authority (IRA)

1997 The

Government gives greater

autonomy to LIC, GIC and its

subsidiaries with regard

to the restructuring of boards and

flexibility in investment norms aimed

at

channeling funds to the


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infrastructure sector

1998 The cabinet decides to allow

40% foreign equity in private

insurance companies-26% to

foreign companies and 14% to

NRIs, OCBs and FIIs

1999 The Standing Committee headed by

Murali Deora

decides that foreign equity in private

insurance should be limited to 26%.

The

IRA bill is renamed the Insurance

Regulatory and Development

Authority (IRDA)

Bill1999Cabinet clears IRDA

Bill2000President gives Assent to

the IRDA

Bill Sources: Various Monopoly Raj The nationalization of life insurance was

justified mainly on three counts. (1) It was perceived that private companies

would not promote insurance in rural areas. (2) The Government would be in a

better position to channel resources for saving and investment by taking over

the business of life insurance. (3) Bankruptcies of life insurance companies had

become a big problem (at the time of takeover, 25 insurance companies were

already bankrupt and another 25 were on the verge of bankruptcy). The

experience of the next four decades would temper these views.

Life Story of the Life Insurance Corporation The life insurance

industry was nationalized under the Life Insurance Corporation (LIC) Act of India.

In some ways, the LIC has become very successful. (1) Despite being a

monopoly, it has some 60-70 million policyholders. Given that the Indian middle-

class is around 250-300 million, the LIC has managed to capture some 30 odd

percent of it. (2) The level of customer satisfaction is high for the LIC (one of the


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findings of the Malhotra Committee, see below). This is somewhat surprising

given the frequent delays in claim settlement. (3) Market penetration in the rural

areas has grown substantially. Around 48% of the customers of the LIC are from

rural and semi-urban areas. This probably would not have happened had the

charter of the LIC not specifically set out the goal of serving the rural areas. One

exogenous factor has helped the LIC to grow rapidly in recent years: a high

saving rate in India. Even though the saving rate is high in India (compared

with other countries with a similar level of development), Indians exhibit high

degree of risk aversion. Thus, nearly half of the investments are in physical

assets (like property and gold). Around twenty three percent are in (low

yielding but safe) bank deposits. In addition, some 1.3- percent of the GDP are

in life insurance related savings vehicles. This figure has doubled between 1985

and 1995. Life Insurance in India: A World Perspective In many countries,

Insurance has been a form of savings. Table 2 shows that in many developed

countries, a significant fraction of domestic saving is in the form of (endowment)

insurance plans. This is not surprising. The prominence of some developing

countries is more surprising. For example, South Africa features at the number

two spot. India is nestled between Chile and Italy. This is even more surprising

given the levels of economic development in Chile and Italy. Thus, we can

conclude that there is an insurance culture in India despite a low per capita

income. This bodes well for future growth. Specifically, when the income levelimproves, insurance (especially life) is likely to grow rapidly.


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Malhotra Committee

Liberalization of the Indian insurance market was recommended in a report

released in 1994 by the Malhotra Committee, indicating that the market should

be opened to private-sector competition, and ultimately, foreign private-sector

competition. It also investigated the level of satisfaction of the customers of the

LIC. Curiously, the level of customer satisfaction seemed to be high. The union of

the LIC made political capital out of this finding (The following are the purposes

of the committee. (a) To suggest the structure of the insurance Industry, toassess the strengths and weaknesses of insurance companies in terms of the

objectives of creating an efficient and viable insurance industry, to have a wide

coverage of insurance services, to have a variety of insurance products with a

high quality service, and to develop an effective instrument for mobilization of

financial resources for development. (b) To make recommendations for changing

the structure of the insurance industry, for changing the general policy framework

etc. (c) To take specific suggestions regarding LIC and GIC with a view to

improve the functioning of LIC and GIC. (d) To make recommendations onregulation and supervision of the insurance sector in India. (e) To make

recommendations on the role and functioning of surveyors, intermediaries like

agents etc. in the insurance sector. (f) To make recommendations on any other

matter which are relevant for development of the insurance industry in India. The

committee made a number of important and far-reaching recommendations.(a)

The LIC should be selective in the recruitment of LIC agents. Train these people

after the identification of training needs.

(b) The committee suggested that the Federation of Insurance Institute, Mumbai

should start new courses and diploma courses for intermediaries of the insurance

sector. (c) The LIC should use an MBA specialized in Marketing (a similar

suggestion for the GIC subsidiaries). (c) It suggested that settlement of claims

were to be done within a specific time frame without delay. (d) The committee


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has several recommendations on product pricing, vigilance, systems and

procedures, improving customer service and use of technology. (f) It also made a

number of recommendations to alter the existing structure of the LIC and the

GIC. (g) The committee insisted that the insurance companies should pay special

attention to the rural insurance business. (h) In the case of liberalization of the

insurance sector the committee made several recommendations, including entry

to new players and the minimum capital level requirements for such new players

should be Rs. 100 crores (about USD 24 million). However, a lower capital

requirement could be considered for a co-operative sectors' entry in the

insurance business. (i) The committee suggested some norms relating to

promoters equity and equity capital by foreign companies, etc.Mukherjee

Committee Immediately after the publication of the Malhotra Committee Report, a

new committee (called the Mukherjee Committee) was set up to make concrete

plans for the requirements of the newly formed insurance companies.

Recommendations of the Mukherjee Committee were never made public. But,

from the information that filtered out it became clear that the committee

recommended the inclusion of certain ratios in insurance company balance

sheets to ensure transparency in accounting. But the Finance Minister objected.

He argued (probably on the advice of some of the potential entrants) that it could

affect the prospects of a developing insurance company.

Insurance Regulatory Act (1999)After the report of the Malhotra Committee

came out, changes in the insurance industry appeared imminent. Unfortunately,

Instability in Central Government, changes in insurance regulation could not pass

through the parliament. The dramatic climax came in 1999. On March 16,1999,

the Indian Cabinet approved an Insurance Regulatory Authority (IRA) Bill that

was designed to liberalize the insurance sector. The bill was awaiting ratification

by the Indian Parliament. However, the BJP Government fell in April 1999. The

deregulation was put on hold once again. An election was held in late1999. A

new BJP-led government came to power. On December 7, 1999, the new

government passed the Insurance Regulatory and Development Authority (IRDA)

Act. This Act repealed the monopoly conferred to the Life Insurance Corporation

in 1956 and to the General Insurance Corporation in 1972. The authority created

by the Act is now called IRDA. It has ten members. New licenses are being given


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to private companies (see below). IRDA has separated out life, non-life and

reinsurance insurance businesses. Therefore, a company has to have separate

licenses for each line of business. Each license has its own capital requirements

(around USD24 million for life or non-life and USD48 million for

reinsurance).Some Details of the IRDA Bill On July 14, 2000, the Chairman of

the IRDA, Mr. N. Rangachari set forth a set of regulations in an extraordinary

issue of the Indian Gazette that details of the regulation.

Regulations

The first covers the Insurance Advisory Committee that sets out the rules and

regulation. The second stipulates that the "Appointed Actuary" has to be a

Fellow of the Actuarial Society of India. Given that there has been a dearth of

actuaries in India with the qualification of a Fellow of the Actuarial Society

of India, this becomes a requirement of tall order. As a result, some companies

have not been able to attract a qualified Appointed Actuary (Dasgupta, 2001).

The IRDA is also in the process of replacing the Actuarial Society of India by a

newly formed institution to be called the Chartered Institute of Indian Actuaries

(modeled after the Institute of Actuaries of London). Curiously, for life insurers

the Appointed Actuary has to be an internal company employee, but he or she

may be an external consultant if the company happens to be a non-life insurance

company. Third, the Appointed Actuary would be responsible for reporting to theIRDA a detailed account of the company. Fourth, insurance agents should have

at least a high school diploma along with training of 100 hours from a recognized

institution. More than a dozen institutions have been recognized by the IRDA for

training insurance agents (the list appears online at

http://www.irdaonline.org/press.asp).Fifth, the IRDA has set up strict guidelines

on asset and liability management of the insurance companies along with

solvency margin requirements. Initial margins are set high (compared with

developed countries). The margins vary with the lines of business (for example,fire insurance has a lower margin than aviation insurance). Sixth, the disclosure

requirements have been kept rather vague. This has been done despite the

recommendations to the contrary by the Mukherjee Committee

recommendations. Seventh, all the insurers are forced to provide some coverage


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for the rural sector. (1) In respect of a life insurer, (a) five percent in the first

financial year; (b) seven percent in the second financial year; (c) ten percent in

the third financial year; (d) twelve percent in the fourth financial year; (e) fifteen

percent in the fifth year (of total policies written direct in hat year). (2) In respect

of a general insurer, (a) two percent in the first Financial year; (b) three percent in

the second financial year; (c) five percent thereafter (of total gross premium

income written direct in that year).New Entry Immediately after the passage of

the Act, a number of companies announced that they would seek foreign

partnership. In mid-2000, the following companies made public statements that

they already were in the process of setting up insurance business with foreign

partnerships (see Table 3). However, not all the partnerships panned out in the

end (see below) There are three other companies with "in principal" approvals:(1)

Max New York Life. It is a partnership between Delhi based pharmaceutical

company Max India and New York Life, the New York based life insurance

company.(2) ICICI Prudential Life Insurance Company. This is a joint venture

between Mumbai based Industrial Credit & Investment Corporation and the

London based Prudential PLC. (3) IFFCO Tokio General Insurance Company. It

is a joint venture between Indian Farmers' Fertilizer Cooperative and Tokio

Marine and Fire of Japan. To date (end of April 2001), the following companies

have thus been granted licenses: ICICI -Prudential, Reliance General, Reliance

Life, Tata-AIG General, HDFC-Standard Life, Royal-Sundaram, Max-New YorkLife, IFFCO-Tokio Marine, Birla-SunLife, Bajaj-Allianz General, Tata-AIG Life,

ING-Vyasa, Bajaj-Allianz Life, SBI-Cardiff Life. Note that all of these companies

are either in the life insurance business or in the non-life insurance business. No

license has been granted for reinsurance business so far (the size of the

reinsurance business can be 10-20% of the total revenue). No stand-alone health

insurance company has been granted license so far. Enter the Dragon On

December 28, 2000, the State Bank of India (SBI) announced a joint venture

partnership with Cardif SA (the insurance arm of BNP Paribas Bank). Thispartnership won over several others (with Fortis and with GE Capital). The entry

of the SBI has been awaited by many. It is well known that the SBI has long

harbored plans to become a universal bank (a universal bank has business in

banking, insurance and in security). For bank with more than 13,000 branches all

over India, this would be a natural expansion. In the first round of license issue,


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the SBI was absent. There were several reasons for this delay. First, the SBI was

seeking a foreign partner to help with new product design. Second, it did not

want the partner to become dominant in the long run (when the 26% foreign

investment cap is eventually lifted). It wanted to retain its own brand name. Third,

it wanted a partner that is well versed in the universal banking business. This

ruled out an American partner (where underwriting insurance business by banks

have been strictly forbidden by law). Cardif is the third largest insurance

company in France. More than 60% of life insurance policies in France are sold

through the banks. Fourth, the Reserve Bank of India (RBI) needed to clear

participation by the SBI because in India banks are allowed to enter other

businesses on a "case by case" basis. Over the course of the next twelve

months, the SBI will sell insurance in 00 branches. Over a period of 2-3 years it

will expand operation in 500 branches. Initially it will hold 74% ownership of the

joint venture company with Cardif. Over time, it will dilute its holding to 50-

60%.The SBI entry is groundbreaking for several reasons. This was the first for a

bank to enter the insurance market. This kind of synergy between a bank and an

insurance company is extremely rare in many parts of the world. In Continental

Europe, it is called bancassurance (in France) or allfinanz (in Germany). Second,

even though the regulators have said that banks would not (generally) be allowed

to hold more than 50% of an insurance company, the SBI was allowed to do so

(with a promise that its share would be eventually diluted).

Broken Marriages Several partnerships broke down during the year 2000.

Probably the most dramatic breakdown took place between Hindustan Times (a

newspaper group) and the Commercial Union of the UK. The management of

Hindustan Times realized that they are heavily reliant on a steady daily cash flow

(Kumari, 2001). Insurance is a completely different business. Their shareholders

would revolt if they faced large one-time losses (common in insurance

business).Similarly, by the end of July 2000, Kotak-Mahindra and Chubb

declared their divorce. Dabur Group and Allstate also parted company. Allianz

and Alpic broke their partnership.Re-pairing of Partners A curious trend has

developed by the end of 2000. Several divorced partners have come back to the

field to tie knots to some other partners. Dabur has decided to tie the knot with

another divorcee - Commercial Union. Allianz has announced a new partnership


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with the giant Indian scooter-maker Bajaj.Back to the Future: Mostly Swaraj with

a Foreign Twist At present, 312 million middle class consumers in India have

enough financial resources to purchase insurance products like pension, health

care, accident benefit, life, property and auto insurance. Only 2.5 per cent of this

insurable population, however, have insurance coverage in any form. The

potential premium income is estimated at around US $80 billion. This will place

India as the sixth largest market in the world (after the US, Japan, Germany, UK

and France).


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CHAPTER-2

RESEARCH OBJECTIVES AND METHODOLOGY

OBJECTIVES OF THE STUDY:

1. To understand the growth of bancassurance in india as a new concept2. To suggest the ways and means to improve the existing performance by way of

collecting responses from the customers.

3. To know the awareness of the customer and view points of the customer about

insurance as well as bancassurance.

4. Which distribution channel would customer preferred to get insurance policy through

banks.

RESEARCH METHODOLOGY OF THE STUDY

RESEARCH

Research can be defined as the search for knowledge, or as any systematic investigation,

with an open mind, to establish novel facts, usually using a scientific method.

RESEARCH DESIGN: The research design is defined as, it is the plan for collecting and utilizing data so that desired

information can be obtained. There are two types of research design:

1. QUALITATIVE: Qualitative research a method of inquiry employed in many different academic disciplines, traditionally in the

social sciences, but also inmarket researchand further contexts. Qualitative researchers aim to gather an in-depth understanding of

human behaviorand thereasonsthat govern such behavior.

2. QUANTITATIVE: Quantitative research design is the standard experimental method of most scientific disciplines. Quantitative

experiments all use a standard format, with a few minor inter-disciplinary differences, of generating a hypothesis to be proved or

disproved. This hypothesis must be provable by mathematical and statistical means, and is the basis around which the whole
http://en.wikipedia.org/wiki/Social_scienceshttp://en.wikipedia.org/wiki/Social_scienceshttp://en.wikipedia.org/wiki/Market_researchhttp://en.wikipedia.org/wiki/Market_researchhttp://en.wikipedia.org/wiki/Market_researchhttp://en.wikipedia.org/wiki/Human_behaviorhttp://en.wikipedia.org/wiki/Human_behaviorhttp://en.wikipedia.org/wiki/Reasonhttp://en.wikipedia.org/wiki/Reasonhttp://en.wikipedia.org/wiki/Reasonhttp://www.experiment-resources.com/research-hypothesis.htmlhttp://www.experiment-resources.com/research-hypothesis.htmlhttp://www.experiment-resources.com/research-hypothesis.htmlhttp://www.experiment-resources.com/statistics-tutorial.htmlhttp://www.experiment-resources.com/statistics-tutorial.htmlhttp://www.experiment-resources.com/statistics-tutorial.htmlhttp://www.experiment-resources.com/research-hypothesis.htmlhttp://en.wikipedia.org/wiki/Reasonhttp://en.wikipedia.org/wiki/Human_behaviorhttp://en.wikipedia.org/wiki/Market_researchhttp://en.wikipedia.org/wiki/Social_sciences


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experiment is designed. The two basic means of obtaining primary quantitative data and descriptive research our survey and

observation..

1.SURVEY METHODS involves a direct questioning of respondents, where is observation entails recording responded behavior.

Surveys involve the administration of a questionnaire and may be classified, based on the method or mood of administration, as:

1. traditional telephone interviews

2. in-home personal interviews

3. Mail surveys

4. Internet surveys

2. OBSERVATIONAL METHODS may be classified as structured or unstructured, disguised or on disguised, and natural or

contrived. The major methods are:

a.) personal observation

b) .mechanical observation

DATA COLLECTION: There are two sources of data collection:

PRIMARY DATA COLLECTION

In primary data collection, we collect the data our self using methods such as interviews

and questionnaires. There are many methods of collecting primary data and the main

methods include:

questionnaires

interviews

Observations

SECONDARY DATA COLLECTION


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All methods of data collection can supply quantitative data (numbers, statistics or

financial) or qualitative data (usually words or text). Quantitative data may often be

presented in tabular or graphical form.

RESEARCH DESIGN: Exploratory Research.

EXPLORATORY RESEARCH: aims to gain familiarity and new insights into any

phenomenon while analytical research aims at analyzing the current scenario and thereby

using that to project the future performance. This research aims at studying the historical

performance of the company in bancassurance and it also evaluates the future prospects

of the company

SAMPLING SIZE: 50 CUSTOMERS

SAMPLING TECHNIQUE:

SAMPLING DESIGN:

A sampling design is a definite plan for obtaining a sample given population. There are

different methods of sampling. Here Convenience sampling technique has been used.

CONVENIENCE SAMPLING

This method of sampling involves selecting the sample elements using some convenient

method without going through the rigor of sampling method. The researcher may make

use of any convenient base to select the required number of samples. Accordingly, the

area selected for the study was DELHI-NCR.

SAMPLING INSTRUMENTS:

NO.OF QUESTIONS: TYPE OF QUESTIONS: Both open ended and close ended questions

LIMITATIONS OF THE STUDY:


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Time has played a biggest constraint that the research could not be carried out

comprehensively as the duration of the study was only a month

As a research contains the secondary data for knowing the customer perception or

satisfaction

The sample size for collecting the primary data was meager as it includes only 75

respondents hence the conclusion would not be a universal one

Personal biases and prejudices of the customers may also affect the study.


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Questionnaire

Name__________________________________________

Age_____

Gender: Male/Female

Educational Qualification:

a) Engineering

b) CA/MBA

c) MCA

d) Others

If Others. Specify_______________________

Email id __________________________________

1. Tick the life insurance companies you are familiar with:-

1) LIC 2) ICICI-Prudential

3) SBI Life 4) Bajaj-Allianz


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5) Max New York Life 6) Birla Sun Life

2. Tick the types of schemes you are familiar with:-

1) Term plan

2) Endowment plan

3) Money Back plan

4) ULIP ( Unit Linked Insurance Plan)

5) Child plan

6) Pension plan

3. Tick on what the life insurance company provides?

a) Security for life

b) Investment Opportunity

c) Tax Benefits

d) High returns

e) Pension

4. Rank the following benefits of Insurance on a 1-5 scale:

_____ Financial Expenses

_____ loved Ones future security

_____ Exemption from tax

_____ Mortgage payments/Rent fund

_____ College/School Education


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5. Do you think insurance is the viable option for investment?

Yes No

Why?........................................................................................................................

.....................

6. Do you have any insurance cover?

Yes No

If Yes, then which

company?.......................................................................................................

7. What type of investment are you interested in?

Short term Long term ULIP

Why?..................................................................................................................

..........................

8. What is idea behind your investment in insurance?

Tax Benefit Future Security High Returns

9. What is the mode of your premium payment?

1) Monthly

2) Quarterly

3) Half-Yearly

4) Yearly


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10. Are you happy with the services provided by the insurance company?

Yes No

11. Are you happy with the returns given by the insurance company?

Yes No

12. Which is the most trusted insurance company at present? (Both in the public and the

private sector)

Rate on the basis of 1-5 scale 1- least trusted . 5- Most trusted (Tick the

appropriate no.)

LIC 1 2 3 4 5

SBI-Life 1 2 3 4 5

ICICI-Prudential 1 2 3 4 5

Bajaj-Allianz 1 2 3 4 5

Birla- Sun Life 1 2 3 4 5

13. Entry of large no. of private insurance companies is good for the public?

Yes No

14. After privatization whether the public is getting good products/service?

Yes No

15. What do you think about the role of the IRDA?

Regulator . .

Facilitator

A govt. body


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ANALYSIS OF THE study

The survey was conducted to understand the knowledge and perception of the people

towards life insurance after privatization. The response is quantified by means of

response obtained in the form of answers and views put forward by the people in a survey

conducted. The survey includes response from professionals, businessmen, daily workers,

and housewives and working in different sectors and fields in delhi. Almost everyone

knew insurance and relates insurance with LIC and those who have invested in insurance

products mainly invested for availing tax exemption and all traditional reasons of

investing like risk coverage and loved ones future security while some of them also said

that insurance is not a good option for investment due to inflation and when long term

gains were considered. Use of bar, line graphs, tables and pie diagrams are done to

represent the findings of the survey.


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No of males and females software professionals surveyed

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

malefemale

24

7

58.33

4.16

20.83

16.66

Educational qualifications of males

Engg.

CA/MBA

MCA

Others


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Even though, the private sector insurance companies are increasing, the most sought afterinsurance company even among people is LIC which has the highest market share in

India. This is also depicted by the pie-chart as shown above.

42.85

14.28

0

42.85

Educational qualifications of females

Engg.

CA/MBA

MCA

Others

80.64

67.74

61.29

41.93

45.16

61.29

Popularity percentage of life insurance companies

LIC

ICICI

BAJAJ

BIRLA

HDFC

SBI


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Among many plans available, the most preferred one among the mass is money back

plan. This plan helps you to withdraw your money at regular intervals and still staying

insured. This plan is famous for its high liquidity advantage. The other product gaining

popularity is ULIP (unit linked insurance plan), as its serve multiple purpose, it give high

returns, tax benefit, life insurance , critical illness cover and is admired for its flexibility

for paying premium amount.

25.8

38.7

67.74

58.06

Familiarity of Schemes

term plan

endowment plan

money back

ULIP

CATEGORY RESPONSE (in %)

1. LIC 80.64

2. ICICI 67.743. BAJAJ 61.29

4. Birla 41.93

5. HDFC 45.16

6. SBI 61.29


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SCHEMES RESPONSE (in %)

1. Term plan 25.8

2. Endowment plan 38.73. Money back 67.74

4. ULIP 58.06

Objective for investment in Insurance

Among the surveyed people about 61.29% view insurance tax saving product. Life

insurance plans of some private insurance companies are giving 100% tax exemption.

Even the IT returns are also 100% tax free on annual basis. After that around 46 percent

buy insurance to cover risk followed by good returns and savings objective.



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33

Ranking of some benefits of insurance (figures expressed in %)

Among some benefits of insurance, loved ones security secured the least percentage i.e.

overall the highest rank. So, people take insurance so that their loved ones and they

themselves get secured and enjoy the life cover.


1. Life Insurance 45.16

2. Investment 32.25

3. Tax Benefit 61.29

4. High Returns 22.58

5. Savings 29.03


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1. Final Exp. 254

2. Loved ones security 187

3. Income Needs 200

4. Housing Loans 316

5. Children Edu. 374

Insurance as the viable option for investment

Among the surveyed, 80% of them said that insurance is the viable option for investment.

The reasons were there that it is the medium of tax benefit, risk coverage and regular

savings. But, 20% of them said that it is not favorable for investment due to inflation and

comparatively less returns than other financial instruments.

0%

20%

40%

60%

80%

yesno

80%

20%


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Availability of Insurance Cover

Among the people surveyed, 90% of them said that they had life-insurance cover but only

10% of them were devoid of insurance but were planning to take one in the future.

Estimate of IT professionals enrolled into insurance

About 54.83% of IT professionals have chosen LIC as their premier insurance investment

company. And the rest all insurance companies having their insurance cover are far less


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as compared to LIC. So, this illustrates that even the IT professionals have faith in LIC as

their most favored life insurance company.

INSURANCE COMPANY RESPONSE (in %)

1. LIC 54.83

2. Birla Sun-Life 6.45

3.ICICI 12.90

4.MetLife 3.22

5. Bajaj- Allianz 6.45

6. ING-Vyasa 3.22

7. SBI-Life 6.45

8. Tata- AIG 3.22

9. HDFC 3.22

10. Reliance 6.45

Type of investment interested in

About 54.83% people said that the type of investment which they are interested in is long

term investment. This is because they wanted to reap benefits for a longer term. Long life

insurance cover will naturally give them high risk coverage and higher returns.

32.25

54.83

16.12

Short term

Long term

ULIP


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Mode of premium payment

About 38.7% of them said that they paid their premium through quarterly and yearly

mode. And only 22.58% favored monthly and half yearly medium of premium payment.

Services provided by the insurance company (figures expressed in %)

38.7

22.5822.58

38.7

quarterly

monthly

half yearly

yearly

MODE OF PREMIUM

PAYMENT

RESPONSE (in %)

1. Quarterly 38.7

2. Monthly 22.58

3. Half- yearly 22.58

4. Yearly 38.7


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About 90.32% of people said that they were happy with the services provided by theinsurance company. And only 6.45% were not satisfied. This shows that life insurance

companies are fairly performing well especially in India.

Returns given by the insurance company (figures expressed in %)

About 70.96% of people have view that they were happy with the returns given by the

insurance companies. But 22.58% were not. The reason for their dissatisfaction is that

they think that other financial instruments like bonds, shares, debentures, securities and

0

20

40

60

80

100

Yes No

90.32

6.45

0

20

40

60

80

Yes No

70.96

22.58

Yes

No


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mutual funds are other good options for investment and they think that insurance does not

provide investment opportunity for the short term.

Ratings of various insurance companies

LIC of India is the most preferred life insurance company even among software

professionals as depicted through the above bar graph. It has a rating of 4.64. The other

private life insurance companies are having less percentage of share of it.

00.5

1

1.5

2

2.5

3

3.5

4

4.5

5

LIC SBI-Life ICICI Bajaj-Allianz Birla SunLife

4.64

4.03

3.12 3.16 3.12

INSURANCE COMPANY RATING

1. LIC 4.64


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Privatization of insurance

78 % people of those surveyed were of the view that privatization is good for the public.

This is because they think that the many private insurance companies have come up withsome attractive plans like ULIPs which are fetching good returns even for a short period.

Only 22% of them think that that investing in a private insurance company is risky

because the returns are not guaranteed.

Availability of good services after privatization

0

5

10

15

20

25

Yes No

24

7

2. SBI-Life 4.03

3. ICICI 3.12

4. Bajaj- Allianz 3.16

5. Birla- Sun Life 3.12


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About 70.96 % of people think the insurance companies are providing good services even

after privatization. This is because they have come up with some new schemes and plans

which are innovative and are giving better returns even for a short period than compared

to plans pertaining to public sector insurance company like LIC. Only 19.35% think that

services are not good after privatization as they have less belief on these private life

insurance companies or they do not consider life insurance as important investment

option and also the private insurance companies have high premium allocation charges

and high surrender charges, fixed charges and other formalities.

70.96

19.35

Yes

No


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CONCLUDING REMARKS

Unit Linked products are finally products of choice. If you feelequipped to manage your investments on your own or are not

comfortable with long lock-ins or you can't make the most of these

tax breaks, you may be better off investing elsewhere after securing

your l i fe insurance needs.

1. There is a great need to disclose the risk involved in the schemes

properly to the investor/insurance seeker by the

insurance/investment companies.

2. The Insurance Regulatory and Development Authority has to

issue set of guidelines on ULIP policies offered in the market.

3. The charges in the init ial years should be brought down.

4. The high returns (above 20 per cent) are definitely not

sustainable over a long term, as they have been generated duringthe biggest Bull Run in recent stock market.

5. Investors/Insurance seeker has to take switching charges into

consideration as they have a long-term implication on the returns

generated.


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REFERENCES

1.www.irdaonline.com

2.www.licindia.com

3.www.lifeinsurancecouncil.com

4.www.sbilife.co.in
http://www.irdaonline.com/http://www.irdaonline.com/http://www.irdaonline.com/http://www.licindia.com/http://www.licindia.com/http://www.licindia.com/http://www.lifeinsurancecouncil.com/http://www.lifeinsurancecouncil.com/http://www.lifeinsurancecouncil.com/http://www.sbilife.co.in/http://www.sbilife.co.in/http://www.sbilife.co.in/http://www.sbilife.co.in/http://www.lifeinsurancecouncil.com/http://www.licindia.com/http://www.irdaonline.com/


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Changes1. Analysis

2. Suggestions

3. Limitations

4. Add conclusions5. Add some details of the co.

6. Make it cut short the historical background

7. Impact of privatization

Date post:	05-Apr-2018
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