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Exploring Rural markets for Private Life Insurance Players in India

Dr. P.K. Gupta

Reader (Finance & Risk Management) Centre for Management Studies, Jamia Millia Islamia, New Delhi-25 e-mail: pkg123@eth.net Mobile: 091+9811681138

In spite of high urbanisation in India, rural India still lacks in terms of availability of various financial products especially the risk products like insurance. Rural insurance statistics still indicates a significantly low penetration and poor density even after the privatisation of insurance sector in 1999. Rural India offers a tremendous scope for insurers where the protection of human life and income generating assets is a matter of concern. Regulators have also tried to impose rural insurance obligations for the insurance companies. Except Life Insurance Corporation of India (LIC) representing the public sector, which has predominantly in existence and monopoly for decades, most of the private players have not been able to tap the opportunities in the rural life insurance market to a satisfactory level. This paper examines the present state of affairs of rural life insurance in India and attempts to explore the causes, which led to poor penetration of rural life insurance markets. A survey of the rural customers has been conducted to examine their perception and attitude towards buying life insurance products. This paper also analyses the rural insurance marketing practices of private life insurance players in India and offers suggestive remarks for capturing the rural potential.

Key Words: Rural Insurance, Penetration, Marketing Strategy, IRDA, GDP, Private Players JEL Classification: G22

Indian life insurance industry is one of the oldest in the world and has witnessed dramatic changes in the last two centuries. The first Indian life insurance company The Oriental Life Insurance Company was established in Kolkata in 1818 followed by Bombay Life Assurance Company in 1823. Afterwards, the insurance business increased manifold in the country and the number of insurers reached to 250, but with a regional focus and targeting a few consumer segments. The unethical practices adopted by some players in the sector during this development phase led the government to regulate the insurance business. The Indian Life Assurance Companies Act, 1912 was the first statutory measure to regulate life insurance business. Later in 1928, the Indian Insurance Companies Act was enacted to enable the Government to collect statistical information about both life and non-life insurance business transacted in India by Indian and foreign insurers including provident insurance societies. In 1938 with a view to protecting the interest of insuring public, the earlier legislation was consolidated and amended by the Insurance Act 1938 with comprehensive provisions, detailed and effective control over the activities of insurers. The Act was amended in 1950 resulting in far reaching changes in the insurance sector. These included a statutory requirement of equity capital for companies carrying on life insurance business, ceiling on share holdings in such companies, stricter control on investments, submission of periodical returns relating to investments etc. to control and put a ceiling on expenses of management and agency commission for mismanaged companies. By 1956, 154 Indian insurers, 16 foreign insurers and 75 provident societies were carrying on life insurance business in India. Life insurance business was concentrated in urban areas and confined to the higher strata of the society (Gupta, 2004). On January 19, 1956, the management of life insurance business of 245 Indian and foreign insurers and provident societies then operating in India was taken over by the Central Government and Life Insurance Corporation (LIC) was formed as a statutory body. The LIC prevailed in monopoly with the responsibility of providing life insurance protection to the Indian masses till 1999. In tune with the economic reforms that were initiated in India in early nineties, the Government set up a Committee on Reforms (popularly called the Malhotra Committee) in April 1993 to suggest reforms in the insurance sector. The Committee recommended the privatisation of insurance sector to bring competition and choices to the consumer. Of the carious motives behind privatisation, one important one was

to improve the penetration of insurance as a percentage of GDP, which remains low in India even compared to some developing countries in Asia. Reforms were then initiated with the passage of Insurance Regulatory and Development Authority (IRDA) Bill in 1999. IRDA was set up as an independent regulatory authority, which has put in place regulations in line with global norms. As of now, 16 life insurance companies have been registered by IRDA of which 15 belong to private sector. Life Insurance Corporation (LIC) is the only player in the public sector (Table 6). The period after the year 1999 saw a revolution in the Indian insurance sector, as major structural changes took place in the sector especially the competition, products and distribution channels. In 2006, insurance companies mobilized over $31 billion, nearly four times as much as in 1999 when investments were $8 billion. The private sector market share has also increased sharply in the last few years (Hogan, 2007). In spite of this development, the critical issues before the Indian insurance sector that still are to be addressed are the penetration levels in response to GDP, geographical distribution and availability of customised insurance products. Of these, the growth of the rural life insurance market and the role of private sector is the central issue in this paper. The growth of Indias GDP has been above 7.0% in the last few years and is expected to cross 8% mark in the near future well ahead of the developed economies of the world. However, the growth in insurance as a percentage of GDP is quite low. In 2000, the insurance penetration as percentage of GDP was 1.77% compared to the various developed countries where it ranged from 5%-14%. It has improved marginally afterwards. IRDA reports of 2004-05 suggest that insurance penetration in India is still low compared to the developed countries. In 2005, the penetration level (measured as premium as a %age of GDP) was 2.53% compared to 8.90% in U.K. and 10.84% in South Africa. The insurance density in the year 2005 was 18.30 compared to 3278.10 in U.K., 2956.30 in Japan and 30.50 in China. Though there is an improvement, but it is not sufficient (Table 1). The factors responsible for the growth in the penetration level inter alia includes rising income levels, growing industry competition and long term perceived profitability. But, the focus is primarily on urban insured population. The untapped/underinsured sectors that need careful intention include rural, individual pensions, High Net worth individuals and the weaker sections of the society (Majumdar, 2005). According to Assocham predictions, the Indias Insurance business is likely to jump by 500% in 2010. By any yardstick, India, with about 200 million middle class households, presents a huge untapped potential for players in the insurance industry (Ranjan Das, 2007). The

growth rates observed for total premium income generated by insurers during 2001-02 to 2005-06 registered a sharp increase. The total premium mobilised by life insurance companies has gone up from Rs. 50,094.46 crores to more than double viz. Rs. 1,05,875.77 crores in 2005-06. However, the share of LIC vis--vis private sector is declining (Table 7). The IRDA Regulations, 2000 makes it compulsory for the insurers, existing and new to promote the rural insurance. The regulations prescribed for undertaking benchmark percentages for insurances in the rural insurance sector for the players. The regulations provide that those who are proposing to carry on the life insurance business in the year 2000 or later, are required by these regulations to write in the rural sector, at least 5% of the total policies written directly in the first financial year, and 7%, 9%, 12%, 14% and 16% respectively in the subsequent financial years. However, the notable feature is that most of players including the LIC have been able to just fulfil the statutory requirements. There is no growth observed in the rural market shares, rather the proportion of LIC rural business to total business is declining sharply, after privatisation. It is only after the definition of rural sector was amended in 20041, the contribution to rural sector has improved for LIC. Rural population constitutes 70% of the Indias population and 90% of them are in villages with less than 2000 people (Rao, 2005). The penetration rate in rural markets as per figures of 2002-03 published by IRDA was 20% (Table 3). The agriculture development programs of the government in the past few years have helped to increase the income in agriculture sector, which in turn has created greater purchasing power in rural markets. Studies by NCAER provide evidence of the increased income of the rural households. Households in the lower income group have reduced while there is a strong growth in the number of households in upper middle and higher income households. Never the less, a large part of rural India is still untapped due to poor distribution, large distances and high costs relative to returns, however the projected figures for the Rural & Semi-urban life insurance sector are $20 Billion (Assocham, 2007). The rural business of the insurance sector before privatisation solely represented by LIC rose sharply from 1993-84 till 1999 and then declined (Figure 1).

Discussed later in this paper.

Figure 1

Rural New Business of LIC

70.00 60.00 50.00


40.00 30.00 20.00 10.00 0.00

1969-70 1974-75 1983-84 1989-90 1995-96










%age to total policies

%age to total sum assured

However in 2005-06, the New Business of LIC from rural areas amounts to sum assured of Rs. 60,971.85 crore under 74,66,484 policies representing 23.65% and 21.21% share of policies and sum assured respectively completed during the financial year 2005-06. This shows an improvement and the current statistics shows that 52% of the total policies were sold to the rural sector by LIC (Kishore, 2006). But it is not the case with private players2. Some of them have not been able to fulfil the targets. One possible reason for lesser inclination of private sector towards rural insurance is the competition leading to losses in initial years of operation. This leads the companies to rush towards urban customers so that the costs can be recovered at the earliest. Of these costs, advertising expenses and training of agents. Agents attrition rate is the highest in the insurance industry (Businessworld, 2006). As per the Swiss Re November 2005 report, 85% of the premiums are generated by agents in India (Asif et. al., 2006). According to the officials of LIC, the premiums of LIC rural products are low but the servicing costs are higher (Adhikari, 2005). The growth in the number of rural agents and their proportion to urban agents has been erratic and it can be seen that in the last couple of years the proportion of rural agents to total agents in LIC and the private sector has declined (Figure 2).

Based on discussion with experts, precise data not available.

Figure 2

Agent Statistics(2001-2006)
800,000 700,000

Number of Agents

600,000 500,000 400,000 300,000 200,000 100,000 0






LIC(Rural) Private Sector(Rural) LIC(Urban) Private Sector(Urban)

IRDA 2000 regulations defined rural sector as the one, which is not urban. Urban sector was defined to include all locations with a municipality/corporation, cantonment board or a notified town area and all other locations specifying the criteria (a) a minimum population of 5,000 (b) at least 75% of the male workforce engaged in non-agricultural activities and (c) a population density of over 400 per sq. km. The definition of rural sector was changed in 2002 to census definition. The change resulted to increase in the rural premises from 42% to 72%(Holloway & Krishnamurthy, 2006). Also, rural savings to income ratio is more than 30%, which is higher than the urban population (www.watsonwyatt.com, 2007). This indicates the rural potential for life insurers, both public and private. The rural consumer in India is perceived to be a consumer with limited educational background, limited choice of products and brands, choosing price over quality strongly influenced by word-of-mouth communication. The literacy rates are as low as 65% in India and communicating the benefits and features of insurance policy and selling them to the illiterates is not easy (Surjan, 2004). Rural consumer buying behaviour is significantly influenced by the income levels and distributions and marketers efforts on promotional activities. Life insurance is a hard financial product to sell and essentially requires a product-use situation to develop a market for it. The

entry of new players in brand loyal market is a difficult proposition. Rural consumer is different from urban consumer, therefore selling of insurance products by private players is not easy. Brand loyalty and competition from substitutes are threats to new entrants. The brand loyalty of the pioneer LIC is a long lasting one, and its brand image is difficult for the private insurers to break. The life insurance players have to compete with the conventional postal life insurance, which has been in existence for years. Also, the size of the market in first instance (entry) is not convincing, which the private players have experienced. The marketing segmentation employed by private life insurance players is based on value chain approach which identifies rural marketing as one dealing not only with rural consumers, but also rural producers (such as farmers). It analyses the rural producer and his value chain and identifies the players involved in rural input functions and the significance of these players in rural production functions and the significance of these players in the rural production function. Rural groups are then segmented based on the requirements posed by them on these rural input suppliers. The service based approach to life insurance marketing works but partially. The price-based approach with a personal touch has been more effective in rural India. However, this has reduced profitability of the players and had made their portfolio more risky.


Objective of this paper is to examine the present state of affairs of rural life insurance in India and attempts to explore the causes, which led to poor penetration of rural life insurance markets. The paper also suggests strategies for the private players to generate business in the rural life insurance market. The primary data used in the research consists of survey conducted on a sample of 2000 consumers arrived at using relative precision technique (Kennor & Taylor, 1997). The samples have been classified on the basis of gender and education profile. The survey includes data from the four regions of India, instrument being questionnaires filled up from the consumers and personal discussions with them. A survey of the 300 respondents who have not yet insured for life has also been conducted. An extensive exploration of the marketing practices of the private players and discussions with 70 executives at various levels both in the public (LIC) and the private sector has been carried out in the study.

Given the exploratory research model and the objectives, the study partially ignores the regional disparities especially with respect to geographical location and income distribution. However attempt has been made to generalise and the variances have been factored into the data results. A comprehensive study of life insurance products suitable to rural markets is a step towards further research. Also, mortality rates and life conditions differ significantly in the various parts of India. As such products specific conclusions are difficult to derive.


Consumer Analysis
Results indicate that males who have qualified the senior school more in the age group of 3143 represent the highest potency to buying life insurance. Those rural households with head of the family more educated but with less family income are more likely to purchase a life insurance policy than those with better social security but lesser education. Factorial analysis of rural customer preferences for life insurance products indicates the consistency of income is on the top of the rural consumers mind. The second rank is for old age provision, followed by provision for the spouse life and others. This argument can be further substantiated from the results obtained for buying behaviour. The rural customers consider safety of invested funds as the most important factor in buying a life insurance followed by claims settlement and assistance in policy purchases. This is obvious because of the low-income levels and money available for investment. Rural consumers predominantly are risk avoiders, therefore, the insurance companies cannot project the similar appearance and image they maintain for an average urban insured. (Table 9) Also, it is observed that rural customers having bank accounts have higher potential for buying insurance, which implies the possibility of cross selling or bancassurance. The agents play an important role in assisting the rural customers in buying a right kind of product. Claim settlement is also vital for rural consumers. Whereas the legal grievance redressel system is considered effective in urban India, rural customers expect hassle-free claims and dispute settlement machinery without resorting to judiciary. Traditionally, the agents play an important role in claims settlement, since they mostly do all the work relating to submission of documents with the insurer for claims till release of payments. It therefore implies that efficiency of the agents is an important aspect of rural marketing for the private insurance players. LIC has been predominantly very successful in this aspect.

Assistance in purchase and first level underwriters (the agents) has an important role to play. Rural customers need more advisory services, rely only on people of trust. The onus is also in the agents to offer a product affordable to customers and profitable to the insurer. Flexibility in premiums conventionally a strategy of LIC should also work well for private players Results suggest that 31.30% of the respondents couldnt recall even a single brand of private life insurer. This indicates poor promotional efforts on part of the private life insurance players. The brand recall of the SBI Life is higher than the ICICI Pru Life, though the ICICI Pru Life holds the second position in the Indian Life insurance market. This may be due to the deep penetration of the State Bank of India (SBI) in the rural banking gamut. This logically implies that bancassurance can be an effective means of capturing rural market (Table 8). Factorial analysis also supports the importance of distribution channels (Table 11). A significant proportion (33.40%) of uninsured rural population thinks that life insurance is not needed (Table 10). This may be due to no risk of life perception, guided by belief in God and superstition. Contrarily, the commercialisation hazards have accentuated the demand for insurance among urban masses (Lakshmi, 2004). Also, possibly, the fear of life has not been commercially communicated to the rural masses since long. The income levels and the lack of awareness are the other important reasons for rural population not being insured. This is an important implication for private players.

Insurers Analysis
The private insurers have been relying on the traditional channels of distribution especially agents for capturing the market which was in monopolised by LIC for many years. There is firm belief among these companies that agents are best suited for tapping the rural segments. But increased awareness levels have already transformed this thinking of rural people and they are relying more on unorthodox channels of distribution like bancassurance. Success of HDFC Standard Life and ICICI Prudential Life Insurance almost proves this fact. The problem of high distribution costs is a problem for private insurers. This may not be the case for LIC in the public sector since it has huge corpus and wide distribution network. Incentivisation of rural agents is not adequate leading to a cause and effect relationship between the number of agents, their efforts and the rural business. Probably this may be reason for decline in the number of rural agents. Some players are also not happy with the mandatory requirement of 100 hours training prescribed by IRDA for agents. They feel that the training requirements must be relaxed especially for the rural agents.

The results show that in the rural market there is a strong tilt towards long term saving products. Endowment policies for definite term with low premiums and standard money back policies that offer return of the accumulated saving at regular intervals rank high in popularity. The pure term insurance plans meant for only risk coverage are not popular. Most of the private players are still struggling to design and offer effective products to rural masses. Joint family system still prevailing significantly in rural areas is a hindrance for marketing of life insurance products. The payment frequency of life premiums is not found suitable in case of some players. LIC has been able to build an image of corporate responsibility and social development, which is difficult for the private players. It is communicating development as its thrust area. On similar lines, private life insurer have started organising health check-up programs, children recreation programs, and similar other activities to capture the rural market. Some of the private insurers have not been able to meet the statutory requirements especially in the initial years. However, some of them have now become proactive in their strategies and have now realised the rural potential. According to Shobit & Shukla (2004), professional style of working has failed to generate confidence and goodwill, as rural population prefers personalised approach and that too in accordance with the regional culture. Private companies somewhat lack in coordinating between their underwriting practices and marketing activities especially with their risk selection process and pricing for rural consumers. The methodology of setting premiums well above the actual risk exposure in urban markets does not work in rural markets where lower margins or cost-to-cost basis approach is quite successful. Sales communication (literature and media) in some case of private players is traditionally in English language, which makes little or no impact on potential rural customer. The use of regional languages by LIC is an effective publicity tool. Another noticeable feature of the private players is that marketing strategists are urban executives having no knowledge of rural India, which is an area of concern. Contrarily, the LIC has wide representations from the various regions of India and communities. The positioning strategies used by players are overlapping. LIC is following access based positioning strategy for market penetration, which has worked well. Some players like Birla Sun Life are following a variety based positioning and focussing on specific products like investment related schemes. Niche marketing strategy used by ICICI Pru Life has been useful to tap High Net worth Individuals (HNIs) in certain states but failed in others. Some life

insurance companies focusing on rural markets have adopted innovative means of distribution like instead of using agents; gramsevaks are used as distribution channels, which have enabled them to utilise their special knowledge for gaining local competitive advantage.

In order to reap the benefits of rural market, private insurers must change their business models. Insurers must put in appropriate resources to develop the distribution network in order to grasp the vast potential of the rural market. Private players should explore the alternative channels of distribution. Agents for rural market must be trained and incentivised exclusively. Integrating marketing efforts with local level institutions and Self-help groups could be base to penetrate. Another strategy could be partnerships with general insurance players and other financial institutions operating in rural market. Some players have now started tying up with Cooperative banks, Regional Rural Banks and NGOs for selling their products. Use of kisan credit card holders for cross selling has proved to be useful in tapping the rural market. Products need to be suitably designed keeping the rural complexion in mind. Investment linked insurance products with marginal premiums may work. Researches have shown that payment schedule of premiums on policies may be linked to the harvest, since agricultural income is the prime source for the rural masses. The focus has been on breaking even early, rather it should be devoted to building wide customer base. Private insurers should also focus on awareness programs and associate the ethnical and cultural component of the product promotion for gaining competitive advantage. Advertising efforts need to be systematised and intensified in rural markets. In developed markets, Life and Health insurance are sister products, but in India health insurance is classified as non-life product. Some regrouping or arrangement is also expected from the regulators. To conclude, the keys to success in insurance penetration in rural areas for private players are accessibility, reasonably priced products, effective communication and after-sales service.

Table 1
COUNTRY WISE INSURANCE PENETRATION AND DENSITY Countries Insurance Penetration (Premiums as a % of GDP)
2003 United Kingdom Japan United States Australia South Korea South Africa Malaysia Brazil China India 8.62 8.61 4.38 4.42 6.77 12.96 3.29 1.28 2.30 2.26 2004 8.92 8.26 4.22 4.17 6.75 11.43 3.52 1.36 2.21 2.53 2005 8.90 8.32 4.14 3.51 7.27 10.84 3.60 1.33 1.78 2.53

Insurance Density Ratio (in %) of premium to total population

2003 2617.10 3002.90 1565.70 1129.30 873.60 476.50 139.80 35.80 25.10 12.90 2004 3190.40 3044.00 1617.20 1285.10 1006.80 545.50 167.30 45.90 27.30 15.70 2005 3287.10 2956.30 1686.30 1366.70 1210.60 558.30 188.00 56.80 30.50 18.30

{Source: IDRA Annual Report 2005-06}

Table 2
RURAL NEW BUSINESS OF LIC Year No. of Policies (in Lakhs)
1969-70 1974-75 1983-84 1989-90 1995-96 1997-98 1998-99 1999-00 2000-01 2001-02 2002-03 2003-04 4.61 5.72 8.30 30.48 52.57 68.40 81.23 97.04 109.20 37.02 45.23 62.20

Sum Assured (in Rs. Crores)

251.76 464.27 1260.24 8086.35 21,263.59 27,550.69 35,372.94 44,168.19 59,676.42 25,461.94 22,574.69 35,651.22

%age share of the rural new business in the total business Policies
33.00 35.70 35.00 41.19 47.70 51.40 54.70 57.50 55.53 16.94 18.90 22.79

Sum Assured
24.50 14.90 28.54 34.68 41.00 43.30 47.00 48.70 47.76 13.65 13.37 17.85

{Source: Mishra (2004), Majumdar (2005), LIC Annual Report 2006}

Table 3
RURAL POPULATION AND PENETRATION Total population (as on July 2003) Rural Population Urban Population Penetration level in rural market {Source: IRDA Report 2002-03} 1.05 billion 72.22% 27.78% 20%

Table 4
SIZE OF INSURANCE SECTOR (IN US $ BILLION) Projections* Category Life Insurance Non-Life Insurance Total Projected figures by 2010 ** A town/village where population is less than 25000 {Source: Assocham Predictions on www.financialexpress.com/fe_full_story.php} Rural & Semi-Urban** 20 15 35 Urban 15 10 25 Total 35 25 60

Table 5
RESPONDENTS DEMOGRAPHIC INFORMATION: AGE-GENDER RELATIONSHIP Age Groups 18-30 31-43 44-56 Above 56 %age of Total Male 58.33% 58.82% 66.67% 50.00% 57.50% Gender Female 41.67% 41.18% 33.33% 50.00% 42.50% % age of Total 30.00% 42.50% 18.75% 8.75% 100.00%

Age Groups Below High School 18-30 31-43 44-56 Above 56 %age of Total 9.09% 15.15% 7.69% 33.33% 12.68% High School 31.82% 33.33% 30.77% 33.33% 32.39%

Education Senior Graduate School 27.27% 18.18% 46.15% 0.00% 25.35% 27.27% 33.33% 15.38% 33.33% 28.17%

PostGraduate and above 4.55% 0.00% 0.00% 0.00% 1.41%

% age of Total

30.99% 46.48% 18.31% 4.23% 100.00%

Table 6
LIST OF REGISTERED LIFE INSURANCE COMPANIES Sl. No. 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. Name of the Life Insurance Company LIC of India Allianz Bajaj Life Insurance Co. Ltd. ICICI Prudential Life Insurance Tata AIG Life Insurance Co. Ltd. HDFC Standard Life Insurance Co. Ltd. AMP Sanmar Insurance Co. Ltd. ING Vyasya Life Insurance Co. Pvt. Ltd. Max New York Life Insurance Co. Ltd. Birla Sun Life AVIVA Life Insurance Co. India Pvt. Ltd. Metlife India Insurance Co. Pvt. Ltd. Om Kotak Mahindra Life Insurance Co. Ltd. Shri Ram Life Insurance Co. Ltd. SBI Life Insurance Co. Ltd. Sahara India Life Insurance Co. Ltd. Bharti AXA Life Insurance Company Ltd.

{Source: www.irdaindia.com}

Table 7
TOTAL PREMIUMS MOBILISED POST PRIVATISATION (Rs. in Crores) 2005-06 90,792.22 4,261.05 3,133.58 1,569.91 1,259.68 1,075.32 880.19 788.13 621.85 600.27 425.38 224.21 205.99 27.66 10.33 0 90,792.22 15,083.55 1,05,875.77 14.25% 85.75% 27.78%

Insurer LIC ICICI Prulife Bajaj Allianz HDFC Standard Life Birla Sunlife SBI Life Tata AIG Max Newyork Kotak Mahindra Aviva ING Vyasya Reliance Life Metlife Sahara Shriram Life AMP Sanmar Public Sector (LIC) Private Sector Total Grand Total Private Sector Share LIC Share Annual Growth Rate

2001-02 49,821.91 116.38 7.14 33.46 28.26 14.69 21.14 38.95 7.58 4.19 0.48 0.28 49,821.91 272.55 50,094.46 0.54% 99.46% 46.45%

2002-03 54,628.49 417.62 69.17 148.83 143.92 72.39 71.77 96.59 40.32 13.47 21.16 7.91 6.47 54,628.49 1,109.62 55,738.11 1.99% 98.01% 11.27%

2003-04 63,167.60 989.28 220.80 297.76 537.54 225.67 253.53 215.25 150.72 81.50 88.51 28.73 31.06 63,167.60 3,120.33 66,287.93 4.71% 95.29% 18.93%

2004-05 75,127.29 2,363.82 1,001.68 686.63 915.47 601.18 497.04 413.43 466.16 253.42 338.86 106.55 81.53 1.74 0 75,127.29 7,727.51 82,854.80 9.33% 90.67% 24.99%

{Source: IRDA Annual Reports 2001-02 to 2005-06}

Table 8
BRAND RECALL PRIVATE PLAYERS Company Recalled SBI Life ICICI Pru Life HDFC Standard Life Birla Sunlife Max New York Life ING Yyasya Allianz Bajaj Tata AIG Unable to Recall Total Percentage of respondents 21.30 20.00 13.80 3.80 3.80 2.50 2.50 1.30 31.30 100.00

Table 9
FACTORS AFFECTING PURCHASE OF INSURANCE Variables Very Important Assistance in Policy Purchase Safety of Invested Funds Affordability Usefulness Claim Settlement Office Environment Administrative Procedures Post Purchase Services Behaviour of Agents 28.80 41.30 25.00 22.50 36.30 25.00 12.50 23.80 25.50 Responses (%age) Important 65.00 57.50 62.50 65.00 58.70 62.50 80.00 63.80 62.50 Not Important 6.30 1.30 12.50 12.50 5.00 12.50 7.50 12.50 12.50

Table 10
UNINSURED RESPONDENTS RESPONSES Reasons for not being insured Never felt the need of it Not enough funds for it Lack of knowledge Bad experiences of others Any other reason Total Percentage of Respondents 33.40 33.30 25.78 13.63 21.21 100.00

Table 11
FACTORIAL RESULTS BASED ON MAXIMUM LIKELIHOOD METHOD Factors Grouped F1: Distribution Channels (Post Purchase Services, Behaviour of Agents, Assistance in Policy Purchase, Administrative Procedures, Claim Settlement) F2: Insured Specific (Usefulness, Affordability, Safety of Invested Funds) F3: Other (Office Environment) .063 .2 10 .727 Variation Explained

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