A Summer Internship REPORT

ON
Branding and positioning of Kotak in Indian Insurance
Industry (incuding marketing strategies! saes process and
"onsumer Beha#ior$
Su%mitted %y&
ABINAS' (AS'
P)PBI*S+,-./00,-0
Under the Supervision of
Prof S.D Sharma Mr. Satyajit Rath
Faculty (A.S.B.M Mana!er Sales ("ota# $ife%Secundera&ad
1
A REPORT
ON
Branding and positioning of Kotak in Indian Insurance
Industry (incuding marketing strategies! saes process and
consumer %eha#ior$
Su%mitted %y&
ABINAS' (AS'
P)PBI*S+,-./00,-0
A report su%mitted in partia fufiment of
the re1uirements of
+BA Program of
ASIAN S"'OO2 O* B3SINESS +ANA)ENT+ENT
(istri%ution ist&
Prof4 S4 ( S'AR+A (*acuty guide$
+r4 SAT5A6IT RAT' ("ompany guide$
2
"ERTI*I"ATE *RO+ T'E "ORPORATE )3I(E
This is to certify that Abinash Dash
(PGPBIFSM/0911/01), student of Asian School of
Business Management, pursuing Post Ga!uation
Pogam In Ban"ing Insuance an! Financial
Se#ices Management has worked under my guidance
and supervision on his project entitled Ban!ing an!
$ositioning of %ota" in In!ian Insuance In!ust&.
To the best of my knowledge this is an original piece of
work.
Mr. Satyajit Rath
Mana!er Sales
3
"ota# $ife' Secundera&ad
"ERTI*I"ATE *RO+ T'E *A"32T5 )3I(E
(his is to certify that the project entitled Branding and positioning of
Kotak in Indian Insurance Industry is a piece of )or# done &y
A%inash (ash (P)PBI*S+,-./00,-0$' student of Asian Schoo of
Business +anagement' under my !uidance and supervision for the
partial fulfilment of the course Post )raduation Program In Banking
Insurance and *inancia Ser#ices +anagement' Asian School of
Business Mana!ement' Bhu&anes)ar.
(o the &est of my #no)led!e and &elief the thesis and em&odies the
)or# of the candidate himself and has &een duly completed.
Simultaneously' the thesis fulfils the re*uirements of the rules and
re!ulation related to the summer internship of the institute and + am
assured that the project is up to the standard &oth in respect to the
contents and lan!ua!e for &ein! referred to the e,aminer.
Prof4 S4(4Sharma
*acuty of Asian Schoo of Business +anagement
4
Bhu%anes7ar
DECLARATION
I do hereby declare that the work embodied in this project entitled
Branding and positioning of Kotak in Indian Insurance Industry
-arried out &y me under supervision of +r4 Satya8it Rath(+anager
Saes / Kotak 2ife Secundera%ad and Prof4 S4( Sharma(Professor
of A4S4B4+$4This project has not &een su&mitted earlier to any other
institute.
A%inash (ash(P)PBI*S+,-./00,-0$
Asian Schoo of Business +anagement

A"KNO92E()E+ENTS
.hile completin! the project at KOTAK 2I*E INS3RAN"E' + feel a deep sense of !ratitude
for all those )ho helped me durin! the tenure of my project and thus' consider it as one of my
duties to ac#no)led!e their help and than# for the same. Firstly' + )ould li#e to than# Prof4 S4 (
S'AR+A' my Faculty !uide for facilitatin! me to underta#e this project/ he provided necessary
academic !uidance' monitored )or# periodically' clarified all dou&ts throu!hout the project and
su!!ested )ays for improvement.
+ am also very than#ful to my company !uide +r4 Satya8it Rath (+anager Saes$ for his
continuous encoura!ement' !uidance and support. At the same time + am very than#ful to +r4
Amit Sharma (AB+$ for ta#in! time out of his &usy schedule and assi!nin! us our respective
tas# and for continuous !uidance durin! the project.
Special than#s to +s4 Amrita Singh for her !uidance durin! the trainin! period and after. + am
than#ful to all the employees of the company for their support and encoura!ement )hile
completin! the project.
+ )ould also li#e to than# all the mem&ers of my !roup )ithout )hom the project )ouldn0t have
&een so value additive.
!
TAB2E O* "ONTENTS
A%stract:::::::::::::::::::::::::::::::44;
04 Introduction4::::::::::::::::::::::::::::44.
<4 2iterature Re#ie7:1::::::::::::::::::::::::4.
=4 Basics of Insurance:4:::::::::::::::::::::::: 0>
?4 Industry Anaysis:4:::::::::::::::::::::::::0@
A4 Impact of 2i%eraiBation on Indian 2ife Insurance Sector::::::4:444444444 <0
>4 "ompany Profie:4 :::::::::::::::::::::::::4<<
@4 9hy Peope %uy 2ife Insurance444::::::::::::::::4::44 444<?
;4 9hy Branding is Necessary444:::::::::::::::::::::44<>
.4 "ompareti#e Anaysis:::::4::::::::::::::::::44 44 <@
0-4Product "omparison ::::::::::::::::::::::::444=<
004 +arketing Strategies444::::::::::::::::::::::::=?
0<4 Saes Process:::::::::::::::::::::::::::4444?A
0=4 Anaysis of "onsumer %eha#ior::::::::::::::::::::44?@
0?4 "oncusion:::::::::::::::::::::::::::::4>0
Bi%iography
"
ABSTRA"T
(he project aims at providin! the insi!ht into the +ndian +nsurance +ndustry and $ife +nsurance in
particular. +t studies the !ro)th in the $ife +nsurance sector and sho)s ho) much it is e,pected
to !ro) in the comin! years. (he competition in the +nsurance +ndustry is determined usin!
Porter0s Five Forces Model. (he &usiness and environmental factors )hich influence the
+nsurance +ndustry is studied usin! P2S( (Political' 2conomic' Social and (echnolo!ical
analysis.
(he project )ill help us understand the &asic functionalities and details involved in a sales
process startin! from leads !eneration' openin! a sales call till closin! of a sales deal. Moreover
it )ill help us understand and study the consumer &ehavior to)ards life insurance. Also it )ill
enhance our #no)led!e on ho) various mar#etin! concepts are implemented in a company
)hose &asic o&jective is sales and mar#etin!
(he project )ill also involve the trainees to fi, up the appointments throu!h callin! the
prospective customers and accompany the Field Sales 3fficers (FS3 on their visits to the
clients' to o&serve ho) policies are pitched to the clients. +n this process' the trainee )ill also !et
to read and understand some aspects of personal sellin! and consumer &ehavior. Also it )ill
enhance our #no)led!e on ho) various mar#etin! concepts are implemented in a company
)hose &asic o&jective is sales and mar#etin!.
#
04 INTRO(3"TION
4.ith the lar!est num&er of $ife +nsurance policies in the )orld' insurance happens to &e a me!a
opportunity in +ndia. 5ross premium collection is nearly 67 of 5DP (5ross Domestic Product
and funds availa&le )ith $+- for investment are 87 of 5DP. 9et nearly 8:7 of +ndian
population is )ithout $ife +nsurance cover )hile health insurance and non%$ife +nsurance
continues to &e &elo) international standards. -onsiderin! the !ro)th potential' forei!n
insurance companies have &een demandin! an increase in the forei!n direct investment (FD+
limit to &rin! more capital to their +ndian ventures to help e,pand &usiness. Stiff competition
&et)een private and state%run insurers has &oosted !ro)th in premium income and spread
insurance covera!e faster in the country' )hich &y itself should &e enou!h incentive to further
open up this sector. Faster !ro)th in the insurance sector is crucial to raise lon! term funds
needed to raise infrastructure li#e roads and ports )hich can help raise economic !ro)th to
dou&le di!its from the estimated ;.67 for the current fiscal year. (hus !ro)th in +nsurance sector
is important for the !ro)th of +ndian economy.
<4 2ITERAT3RE RECIE9
6.ith the initiation of the dere!ulation in the +ndian insurance mar#et' the monopoly of &i!
pu&lic sector companies in life insurance as )ell as !eneral (non%life insurance mar#et has &een
&ro#en. <e) private players have entered the mar#et and )ith their innovative approaches and
&etter use of distri&ution channels and technolo!y' they are eatin! in to the shares of esta&lished
pu&lic sector companies in +ndian +nsurance Mar#et.
=Mc"insey0s director in +ndia and &an#in! industry e,pert $eo Puri says the openin! of
insurance has &een a smooth dere!ulation process. >(he state mammoth' the $+- has not &een
desta&ili?ed and the o&jective of dere!ulation has &een met. 2mployment has !ro)n so as the
insurance &usiness.@
4 Business .orld' Ath march 6::8
6 ))).mar#etreserch.com' +ndian +nsurance +ndustry Forecast 6::;%6:44' May 4 6::8
= 5aspin! for -apital' 9assir A. Pital)alla' Business .orld 3nline' -over Story
$
B>-onsumer attitudes and perception a&out insurance have chan!ed/ +nsurance is no) considered
a via&le financial instrument to meet different needs.@ Bajaj Allian?0s 5hosh.
A+n 6::;%4:' the life insurance sector !re) &y 4:7' . $ife +nsurance penetration (i.e. premium as
a percenta!e of 5DP in +ndia )as 6.6C7 as a!ainst the !lo&al penetration level of A.6=7.
(he mar#etplace is !ettin! competitive' &ut the mar#et share of private insurance companies
remains very lo) %% in the 4:%4A percent ran!e. (he heavy hand of !overnment still dominates
the mar#et' )ith price controls' limits on o)nership' and other restraints.
C+ndian insurance industry is anticipated to )itness a A::7 !ro)th and reach to USD C: Billion
in the comin! four years' than#s to s)ellin! demand in semi%ur&an and rural areas' reported
industry cham&er Assocham.
Assocham stated that semi%ur&an areas )ould have a share of USD =A Billion and ur&an areas
)ould account for USD 6A Billion in the USD C: Billion industry.
Anil " A!ar)al' President' Assocham (Associated -ham&ers of -ommerce and +ndustry of
+ndia' reported that a lar!e se!ment of rural +ndia is still untouched &ecause of lon!
distances' poor distri&ution and hi!h return costs.
A Research Analyst at R<-3S says that the pro!ress in the semi%ur&an and rural areas )ould
lar!ely fuel the !ro)th in insurance sector. (he other factors that )ould &oost the !ro)th in this
sector are improvin! economic scenario' increasin! disposa&le incomes' and risin! product
demands.
B ))).i#).in' +nsuranceE +ndian and Forei!n Firms (est Positive for 5ro)th Steroid
A www.indiaonestop.com' Si!nificance of $ife +nsurance industry in +ndia
C ))).+ndiapr)ire.comFpressreleaseFinsurance
1%
GDespite a lar!e and !ro)in! economy' the insurance mar#et in +ndia is not yet of commensurate
si?e. (ill date' only 6:7 of the total insura&le population of +ndia is covered under various life
insurance schemes' the penetration rates of health and other non%life insurances in +ndia is also
)ell &elo) the international level. .ith one of the lo)est insurance penetration levels in the
)orld' there e,ists si!nificant potential for further !ro)th in &oth life and !eneral insurance
&usiness.
-onfederation of +ndian +ndustry (-++ stron!ly feels that this hi!her !ro)th and increase in the
spread of insurance &usiness cannot occur in isolation. (he full potential of the +ndian insurance
sector can &e reali?ed only if all the sta#eholders % the pu&lic and private insurance players'
!overnment &odies and the re!ulator % )or# in unison to achieve the common !oal.
Ho)ever' there is one &i! reason for alarm. +nsurers do need access to su&stantial capital in order
to #eep up this !ro)th despite their initial losses. But many private sector insurers are stru!!lin!
to raise the re*uired capital. (hat0s &ecause the !overnment has not yet raised the ceilin! for
forei!n direct investment (FD+ in insurance companies from 6C per cent of e*uity to B; per cent'
as outlined &y the previous !overnment. And this is actin! as an artificial constraint on the
sector0s a&ility to raise capital.
And &ecause of the 6C per cent FD+ cap' the &urden of fundin! the !ro)th falls on the +ndian
promoter. Many of them have no e,pertise' usually no sense of a lon!%term commitment to the
&usiness. (hey are essentially investors loo#in! for returns' and no) not only are they earnin!
nothin!' they are actually losin! money.
8>.hile stron! +ndian &an#s that are partners in a life insurance venture can infuse capital'
industrial houses for )hich this is a diversification do have a capital constraint'@ says Iinod
.adh)ani' vice%president' Am&it -orporate Finance Pte.
G +nsurance +ndustryE 2nsurin! a secure future' Amity 2duMedia' +ssue 6=' Jan 6Cth' :;
8 5aspin! for -apital' 9assir A. Pital)alla' Business .orld 3nline' -over Story
11
>-apital constraint is the reason )hy some of the players in the industry haven0t &een a&le to
!ro) their &usiness as compared to the top four or five players' )ho have &een &rin!in! in more
capital'@ says Ashvin Pare#h' national leader (!lo&al financial services' 2rnst K 9oun!.
As American +nternational 5roup +nc. (A+5 country head Sunil Mehta saysE companies can
re*uire capital at any point of time and Lsponsors !o throu!h cycles' so any artificial &arrier to
e*uity infusion is not conducive to orderly !ro)th and could' in fact' threaten policyholder
confidence0.
.ith !ro)th on their mind' forei!n investors )ant faster dere!ulation. .ith initial success has
come the desire for more' nota&ly the opportunity for forei!n players to !o up to B;7 of the joint
venture. Mc"insey0s Puri says the #ey issue today is o)nership. >2ach time the !lo&al players
invest in information technolo!y' mana!ement time and e,pertise' they !et &ac# only 6C7 in
economic &enefits.@
.hile the mar#et for $ife +nsurance in +ndia is still small' its !ro)th value has &een stron!
durin! the past five years and it is e,pected to persist throu!hout most of the ne,t five years. (he
e,pressive research carried out on Juvenile +nsurance is mostly in the United States and it loo#s
into reasons &ehind &uyin! the Juvenile +nsurance and ho) it has proved &eneficial for &oth the
parents and as )ell as the child.
30-onnell Ianessa (4;;C has carried out a research )hich discusses )hether it ma#es sense for
parents to o)n life insurance on a child. (he hu!e &usiness in so%called Mjuvenile policiesN/
-ontroversy surround the decision to insure a childNs life/ Reasons that insurance companies !ive
for &uyin! such a policy/ -riticsN vie) that such covera!e is e,cessive and e,pensive. (he -hild
life insurance policy provides for the childNs life' as )ell as medical and other health related
e,penses. +t offers death%&enefit protection to the insured child. +n the event of childNs death' the
insurance amount is availa&le for &urial and other related e,penses.
12
As part of the Federal Balanced Bud!et Act of 4;;G' -on!ress in United States created the
-hildrenNs Health +nsurance Pro!ram (-H+P as a )ay to encoura!e states to provide health
insurance to uninsured children.
Jaco& Ale, "lerman (4;;G in his report Health +nsurance amon! children of unemployed
parents addresses the pro&lem of lac# of health insurance for children in the United States. Usin!
the data from the 4;;:' 4;;4' and 4;;6 panels of the Survey of +ncome and Pro!ram
Participation' this report presents the interrelation &et)een parental unemployment and
children0s health insurance covera!e. As per the report nearly half of the children lose their
health insurance &ecause their parents lose or chan!e a jo&.
Rosemarie' Paul J Bo&en' Jennifer B. Bonney (6::G evaluates the State -hildren0s Health
+nsurance Pro!ram (S-H+P and ho) it has !iven state the freedom in providin! more children
)ith covera!e. (hey found out that &ecause of providin! Health +nsurance to -hildren it provides
not only cover a!ainst medical &ill &ut also participate in the customer health plannin!.
Senate Bill Report (United States (6::A on Re!ulatin! $ife +nsurance &y $a&or' -ommerce and
Financial +nstitutions evaluates 4:: $ife +nsurance -ompanies to survey their practices )ith
re!ard to the mar#etin! and under)ritin! of juvenile insurance policies. +n many cases' the
avera!e death &enefit claimed' upon the death of an insured child' far e,ceeded the economic
losses' such as funeral e,penses. -oncern e,ists that' )hile many )ell%meanin! adults may
innocently purchase inappropriate or unnecessary amounts of life insurance on children' some
may actually &e purchasin! the policies )ith criminal intent. Some ne)s stories indicate that
some children are murdered in order to o&tain insurance payments. (he report su!!est that $ife
insurers must develop and implement under)ritin! standards and procedures desi!ned to detect
and prevent the purchase of juvenile life insurance for speculative or fraudulent purposes' and
maintain records of rejected applications for 4: years.
De&orah Senn (6::G +nsurance commissioner United States says that State needs stron!er
!uidelines for -hildren0s $ife +nsurance. (he survey conducted indicates that many companies
13
offerin! juvenile life insurance do not appear to have stron! standards in place to help prevent
this #ind of tra!edy.
Shailesh Bhandari and 2li?a&eth 5ifford (6::A in their paper on -hildren )ith Health +nsurance
investi!ate patterns of children0s health insurance covera!e and e,plore the characteristics of
uninsured children. Usin! the data from the -urrent Population Survey (-PS' it provides
national estimates of the num&er and percenta!e of uninsured children &y a!e' race' family type
and family income.
Accordin! to (om Mene?es' in his )or# on >$ife insurance for child@' June' 6::G' -hild
+nsurance is one of the fastest sellin! insurance products of the ne) era. 2very insurance
company should focus on innovative products and train the advisors to approach prospective
customers.
Smitha (ripathi (6::8 loo#s into ho) Hi!her education )hich used to &e remar#a&ly cheap in
+ndia is chan!in! )ith remar#a&le s)iftness. (he paper discusses that parents should start savin!
for the child education even &efore he or she starts !oin! to nursery school. +f you are the type
)ho li#es startin! early' it mi!ht &e a !ood idea to start loo#in! at insurance policies that matures
)hen your child comes of a!e. <o) that education is !ettin! costlier' insurance companies are
also reali?in! that it0s important to offer ne) schemes. So' there are much more policies than
ever &efore. (hese policies mature )hen your child comes of a!e and the money can &e used for
hi!her education or marria!e e,penses. (he paper provides the information a&out the different
type of child policies and )hich one suits you accordin! to your need.
Mr. +an J .atts' Mana!in! Director' (ata A+5 $ife +nsurance (6::C says that -hildren $ife
insurance products not only meet the educational needs of children &ut also offer insurance
cover. -onsiderin! the costs involved for pursuin! hi!her education and also the competitive
environment that a child is e,posed to' the need for plannin! the education of a child is an
important aspect for any parent.
14
Alison -uellar' "elly J "elleher' Jennifer A Rolls and "athleen Pajer (6::8 discuss that )ithout
the Health +nsurance &enefits many youths )ill not receive timely health care. (he delin*uent
youths )ho have violated the la) have typical poor physical and mental stress )hich leads to
hi!her medical costs.
David 5am&rill (6::8 points out the importance of -hild +nsurance. +t0s a chan!in! )orld.
Almost nothin! remains the same li#e that your child dreams #eep on chan!in!. +t0s up to you to
ma#e sure that )hen time comes' she has the means to ma#e her dreams come true.
Sue $ain! (6::; &rin!s for)ard an often%overloo#ed issue' the financial impact that a child0s
illness or injury can have on family finances in her research paper -hildren0s traumaE an
undersold safety net. (he author shares her personal e,perience that clients accept the
vulnera&ility of their children far more readily than their o)n1this is just a matter of informin!
them of their options. 3f those )ith )hom children0s trauma is discussed and perhaps de&ated'
some )ill accept the advice to !o for child insurance. (he overall amount the parent0s )ill &e
committin! to their insurance pac#a!e is relatively ine,pensive as compared to the child0s
trauma.
(hou!h the returns are not very hi!h' most financial planners recommend that you &uy a
childrenNs policy. Sanjiv Bajaj' director' Bajaj -apital' Says that O-hildren insurance policies
ensure a disciplined savin! mode for the childNs future@. Moreover' since the returns are ta,%free'
you need not )orry a&out )hat the ta, structure )ill &e li#e 6: years do)n the line.O
; (he USD B4%&illion +ndian life insurance industry is considered the fifth lar!est life insurance
mar#et' and !ro)in! at a rapid pace of =6%=B per cent annually' accordin! to the $ife +nsurance
-ouncil. Since the openin! up of the insurance sector in +ndia' the industry has received FD+ to
the tune of USD A6A.C million. (he !overnment is li#ely to reintroduce the +nsurance Bill )hich
proposes to increase the FD+ cap in private sector insurance companies from 6C per cent to B;
per cent
;))).i&ef.or!' Fe&ruary 6:4:
1
BASI"S O* INS3RAN"E
A%out Insurance
+nsurance is a precaution a!ainst a possi&le un)anted outcome in life and in &usiness. +t is a
financial product )here the insured pays a premium or series of premiums in return for monetary
compensation' if a particular event happens. +nsurance is annually rene)a&le e,cept for life
insurance. (he insurance &usiness )or#s on the principle of collective stren!th. +nsurance
companies !roup to!ether a lar!e num&er of people )ho all feel e,posed to the same possi&le
circumstances. (he company #no)s that' in any one year' the total premium collected from the
!roup of people should cover the cost of the claims made &y the unfortunate fe) )ho actually
suffer a loss.
'istory of insurance
2arly insurance !oes &ac# to the 2!yptian times. At =::: B-' -hinese merchants )ere #no)n to
disperse their shipments amon! several vessels to avoid the possi&ility of dama!e or loss. (here
are some insurance companies around today in the United States that provided insurance &ac# in
the mid 4G::Ns' as )ell as some that provided relief to &an#s durin! the 4;=:Ns and the 5reat
Depression. (oday' there is insurance for innumera&le activitiesE Business' Auto' Health' $ife'
(ravel' etc. 2ach of those cate!ories includes su&%cate!ories' &ranchin! off into numerous
divisions.
9hat is 2ife AssuranceD
$ife assurance is the term used )hen the life of a person is insured. $ife assurance is a &it
different to most insurance % most policies last many years rather than havin! to &e rene)ed each
year. And Oindemnity rulesO' )here&y you cannot !et &ac# more than you have lost' do not
apply.
9hat is )enera InsuranceD
All non%life +nsurance is termed 5eneral insurance. +t has lar!e area of operation as almost all
#inds of thin!s can &e insured. A !eneral insurance policy is valid for 4 year after )hich it has to
&e rene)ed. (his means that the insurer can chan!e &oth the premium and the &enefits each year
dependin! on the ris# involved.
1!
=4 IN(3STR5 ANA25SIS
)o%a Insurance Sector
+n 6::;' )orld)ide insurance premiums amounted to USD AB=8 &n. 3f this' USD =6GB &n
accounted for $ife and USD 64CB &n to non%$ife +nsurance. +n real terms' total premium volume
!re) &y =.GA percent. .hile $ife premiums increased &y B.C percent' non%$ife premiums
increased &y 4.C percent. Profita&ility in $ife insurance improved )hen compared to 6::8. <on%
$ife &usiness remained profita&le despite hu!e hurricane losses in the United States. 4:.hile
.estern 2urope' the lar!est $ife mar#et re!ion' e,panded &y ;.A7' South and 2ast Asia
e,panded &y 46.A7. Premiums sta!nated in <orth America and mar!inally increased in Japan
and 3ceania. (he emer!in! mar#et has also !ro)n &y ;.A7 compared to industriali?ed countries
at C.B7.
5lo&al $ife insurance premium collected and mar#et share across different continents is
!iven in 2,hi&it 4
4: httpEFF))).plun#ettresearch.comF+ndustriesF+nsuranceF+nsuranceStatistics
1"
Reasons for )ro7th
Hi!h economic !ro)th
Moderate inflation
$o) interest rates and
Favora&le stoc# mar#ets in 2urope' Japan and in the emer!in! mar#ets
Mer!ers and Ac*uisitions
Fast !ro)in! incomes of relatively youn! people )hich need savin!s as old a!e
protection.
Indian Insurance Sector
(he +ndian insurance mar#et )rote total !ross premiums of DAG &illion in 6::;' this representin!
a compound annual !ro)th rate (-A5R of =:7 for the five%year period spannin! 6::A%6:4:. +n
comparison' the -hinese and the South "orean mar#ets !re) )ith -A5Rs of =;7 and C.C7
over the same period' to reach respective !ross premiums of DG: &illion and D;: &illion in 6::;.
(he $ife se!ment )as the mar#et0s most lucrative in 6::;' )ritin! total !ross premium of 4CC8
&illion +<R' e*uivalent to G;.A7 of the mar#et0s overall value. (he smaller non%$ife se!ment
contri&uted B=: &illion +<R' e*uatin! to the remainin! 6:.A7 of the mar#et0s a!!re!ate !ross
premiums.
$ife and !eneral insurance in +ndia is still a nascent sector )ith hu!e potential for various !lo&al
players )ith the life insurance premiums accountin! to B7 of the countryNs 5DP )hile !eneral
insurance premiums to 4.4A7 of +ndiaNs 5DP.
Assocham (Associated -ham&ers of -ommerce and +ndustry of +ndia has stated in a study that
&y 6:4A' +nsurance )ill &ecome D;: &illion industry. (hat is A::7 !ro)th in B years. +ndia has a
population of over 4 &illion and e,cept fe) million people/ millions of people are not insured.
2specially' in the rural areas and small to)ns' often you cannot find any person )ho has !ot
1#
insurance in a nei!h&orhood. (his is )here the revolution is !radually ta#in! place as than#s to
the media' no) rural people are even a)are a&out insurance.
Rural and semi%ur&an +ndia )ill have a mar#et si?e of DA: &illion &y 6:4A and that is )here the
main !ro)th is !oin! to come. (hus' naturally' in the comin! years +nsurance companies )ill try
to cater this mar#et )ith ne) insurance schemes.
(he other factors that )ould &oost the !ro)th in this sector are improvin! economic scenario'
increasin! disposa&le incomes' and risin! product demands.
44 +n 6:4A' the +ndian +nsurance mar#et is forecast to have a value of DG: &illion' an increase of
B47 since 6:4A. (he compound annual !ro)th rate of mar#et in the period 6:4:%6:4A is
predicted to &e 4:7 and it is sho)n in 2,hi&it 6.
Indian 2ife Insurance Sector
$ife and !eneral insurance in +ndia is still a nascent sector )ith hu!e potential for various !lo&al
players )ith the life insurance premiums accountin! to 6.A7 of the countryNs 5DP )hile !eneral
insurance premiums to :.CA7 of +ndiaNs 5DP.
And that mar#et is !ro)in! rapidly. (otal $ife +nsurance premium !re) B:7 to nearly D4:
&illion in the financial year up to march 6:4:/ non%$ife premiums !re) 487 that year to a&out
DG &illion. +n +ndia $ife is rou!hly three to four times &i!!er than non%$ife. And there is potential
)ithin $ife since most consumers see insurance as a ta,%savin!%cum investment vehicle rather as
then a pure cover.
44 SourceE Data monitor' +nsurance in +ndia' +ndustry Profile
1$
2ife Insurance Performance in the *irst 'af of <-->/<--@
(he $ife +nsurers under)rote a premium of Rs4.:;la#h crore durin! the si, months in the current
financial year as a!ainst Rs. 8G4:8 crore in the compara&le period of last year record a !ro)th of
46A per cent. 3f the total premium under)ritten' $+- accounted for Rs. G:8;4 crore and the
private insurers for Rs. =8=;; crore. (he premium under)ritten &y the $+- and the ne) insurers
!re) &y 4==.8G percent and 446.B6 percent respectively over the correspondin! period in the
previous year. (he num&er of policies )ritten at the industry level sho)ed a !ro)th of 48
percent. (he num&er of lives covered &y $ife +nsurers under the !roup scheme )as Rs 4:6 crore
recordin! a !ro)th of 446 per cent over the previous period. (he $ife +nsurers covered Rs ;6.BA
la#h lives in the social sector )ith a premium of Rs. 8:.CA crore. +n the rural sector the insurers
under)rote B8 la#h policies )ith a premium of =6GA.CA crore.
(here are 6= players in the +ndian $ife +nsurance sector )ith $+- ($ife +nsurance -orporation as
the only pu&lic player and 66 private players.
2%
?4 I+PA"T O* 2IBERA2IEATION ON IN(IAN 2I*E INS3RAN"E
SE"TOR
After ; years of openin! up of the +ndian $ife +nsurance industry to forei!n joint ventures' the
share of private players have !one up to =C7 at the end of F9 6::;%4: from 4.B7 in F9 6::4%
:6. (his is &ecause unli#e -hina' )hich imposed severe licensin! restrictions' the sin!le
licensin! norm has seen ne) &reed of insurance companies esta&lished itself and !ro) mar#et
share &y rapidly increasin! the mar#et &ase. (he $ife +nsurance mar#et has re!istered a !ro)th
of 487 in terms of ne) &usiness durin! the F9 6::;%4: over previous year.
2ife Insurance Industry F +arket Share
(he entry of ne) players has &rou!ht in an increased product ran!e includin! insurance and
pension products and therefore more choices for the customer. (here has also &een a si!nificant
improvement in the level of customer service &y the e,istin! player on account of the hi!h level
of service from ne) companies. All of this has &enefited the customer.
21
A4"O+PAN5 PRO*I2E
A%out Kotak )roup
"ota# Mahindra is one of +ndiaNs leadin! financial institutions' offerin! complete financial
solutions that encompass every sphere of life. From commercial &an#in!' to stoc# &ro#in!' to
mutual funds' to life insurance' to investment &an#in!' the !roup caters to the financial needs of
individuals and corporate.
22
A%out Kotak ife insurance
"ota# Mahindra 3ld Mutual $ife +nsurance $td. is a joint venture &et)een "ota# Mahindra
Ban# $td ("MB$' and 3ld Mutual plc. "ota# $ife +nsurance' aim to help customers ta#e
important financial decisions at every sta!e in life &y offerin! them a )ide ran!e of innovative
life insurance products' to ma#e them financially independent.
3ld Mutual )as esta&lished more than 4A: years a!o and has developed into an +nternational
financial services !roup )hose activities are focused on asset !atherin! and asset mana!ement.
(he 3ld Mutual 5roup offers a diverse ran!e of financial services in three principal !eo!raphiesE
South Africa' the United States and the United "in!dom. (he company is listed on the $ondon
Stoc# 2,chan!e )ith a mar#et capitali?ation of appro,imately DC &illion and is a mem&er of the
elite F(S2 4:: inde,. +n the 6::= ran#in!s of the .orldNs A:: lar!est corporations &y Fortune
ma!a?ine' 3ld Mutual clim&ed 8G places to position num&er =CC and )as also listed as the 4Bth
lar!est insurance company in the )orld. 3ld Mutual is the lar!est financial services &usiness in
South Africa' throu!h its life insurance' asset mana!ement' &an#in! and !eneral insurance
operations. (he company serves B million life insurance policyholders and employs over 4= :::
South Africans in its local operations.
+n the USA' 3ld Mutual is one of the top ten fi,ed annuity &usinesses offerin! an array of
specialist asset mana!ement s#ills throu!h its 6= asset mana!ement &usinesses. (he company0s
US $ife &usiness recorded sales of DB &illion at the end of 6::6. 3perations in the United
"in!dom are focused on )ealth mana!ement' throu!h 5erard as one of the leadin! private client
stoc# &ro#in! &usinesses in the U".
23
?4 9'5 PEOP2E B35 2I*E INS3RAN"ED
.hile ta#in! a policy different people have different perspectives. (here can not &e a
comprehensive list for this' &elo) mentioned are the most pro&a&le reasons for ta#in! up a life
insurance policy.
Reason No4-0 / I 7ant to sa#e taG
+t0s true that Section 8: of +ncome (a, Act provides deduction of the amount paid as insurance
premium ()ith some e,ceptions from the assessor0s ta,a&le income su&ject to limits. +f the sole
purpose of &uyin! insurance is to save on ta,' then it0s the costliest )ay to do so. +f someone
does this early in hisFher life )ith policies li#e endo)ment or money &ac# or even U$+P' their
a&ility to create )ealth diminishes &y a very hi!h de!ree.
Reason No4-< / I 7ant to sa#e,in#est
+n my opinion' this is the )orst reason for someone to &uy insurance. Savin!s is !enerally
understood as the amount remainin! )ith a person after heFshe meets all hisFher e,penses and
other cash needs. +f one has to &uild )ealth' savin!s need to &e channeli?ed into an investment
)ith specific time hori?on and !oal. +nsurance is preferred choice in this re!ard.
Reason No4-= / +y agent asked (forced$ me to %uy this poicy
(his is one of the commonest reasons you !et if you as# some one )hy heFshe &ou!ht insurance
policy. +nsurance advisors are drilled to thin# that >insurance is al)ays sold and never &ou!ht@
and this results in an advisor sellin! insurance for all )ron! reasons. Survival of the insurance
advisor is the sole driver here and not the need of the &uyer
Reason No4-? / I 7ant to pan for my retirement
+nsurance companies have devised these products #eepin! in vie) the ta, e,emption availa&le
under the +ncome (a, Act. +nvestin! here !ives the option to have immediate annuities or re!ular
pension after the vestin! a!e.
24
Reason No4-A / I 7ant to pro#ide security for my chidren for their education
(his is one of le!itimate reason for )hich insurance is to &e &ou!ht. Ho)ever' the ris# to &e
covered is not of the child &ut of the parents and that to remem&er in mind.
Reason No4-A / +y Bank asked to purchase insurance poicy
(his means it0s only due to the pressure e,erted &y &an# (to safe!uard it0s loan' it could &e other
types of lenders also li#e housin! finance companies' car finance companies etc that one )ill
&uy insurance. 3ther)ise' heFshe )ill not !et the loan. +n this situation' the purpose is o# &ut it0
)ill &e much &etter if the policies are &rou!ht )ith #no)in! the feature K the char!es that are in
&uilt )ith the product.
Reason No4-> / +y 3nce,Aunt recommended to %uy insurance
+f one0s uncleFaunt is retired andFor has ta#en up sellin! insurance as second innin!s. +ts no
secrete that insurance advisors' at least in their initial years' )ill &e as#ed to tar!et their Lnatural
mar#et0 meanin! their o)n household mem&ers' relatives' and friends etc. to sell the minimum
num&er of policies to #eep their license alive. Here a!ain insurance is &ou!ht for reasons other
than the one it0s meant for.
Reason No4-@ / +y friends tod me to %uy insurance
Here0s another youn! person )ho has some a)areness a&out insurance. But even at this sta!e the
purpose of insurance has not &ecome very clear.
Reason No4-; / +y parents tod me to %uy insurance
(his is not surprisin!' !iven the fact that includin! people )ho !raduate from the colle!e have
not much idea a&out the concept of insurance. (he advertisements one sees in (IF<e)spaper
)hich a!ain does not say much ho) insurance )or#s. +t0s al)ays advisa&le to ta#e an informed
decision rather than to )ilt under any pressure.
Reason No4-. / I 7ant to co#er my ife risk
+ have come across very fe) people !ivin! me this reason for &uyin! a life insurance
policy. Actually' this is the ri!ht reason for )hich insurance is to &e &ou!ht. (he very
2
purpose life insurance product came into e,istence )as to provide economic security to
the dependents of the &read)inner in hisFher a&sence.
A4 9'5 BRAN(IN) IS NE"ESSAR5D



2!
As there are 6= players in +ndian $ife +nsurance industry' competition is increasin! day &y day'
so it is very important to esta&lish a company0s name in consumer0s mind. Further e,plained
analysis )ill ela&orate the importance of &randin! in +ndian $ife +nsurance industry.
>4 "O+PARATICE ANA25SIS
Ne7 Business and +arket Share
Amon! the private players only some private players have dominated the scene. +-+-+ Prudential
and Bajaj Allian? are the top t)o private players0 havin! mar#et share 8.;=7 and G.=C7
respectively follo)ed &y SB+ life in . "ota# $ife is at ;th position )ith the mar#et share of 4.4;7.
+arket Share and Rank %y Ne7
Business Premium
2"
Performance %y Poicy "ount
$+- sold the ma,imum num&er of policies in this financial year. $+- accounts for 887 of the
ne) policies sold. +n terms of policy count the share of private players is just 467. (he reason
for $+- havin! more no. of policies is lo) premiums. Almost every private player prefer to ta#e
policies )ith hi!h premium' so there lo)er limit of premium is more than that of $+-0s.
Performance %y Poicy "ount
2#
Reach and (istri%ution
$+- has pan +ndia presence havin! 6:B8 &ranches. "ota# $ife has presence only in 4BC
cities havin! 64= &ranches.
(he reach of insurers coverin! different cities and num&er of &ranches till date is !iven in
2,hi&it C.
Presence of Insurers across India
2$
(istri%ution Tie/3ps
Insurers
No of
Agents
"orporate
Agents and
Brokers
Banc assurance
and Referra
"o/operati#e
Banks
Ba8a8
AianB
0<A--- ?-- 0. A-
I"I"I
Prudentia
0----- =<A 0- 0-
SBI 2ife ?---- ?A . NA
'(*"
Standard
>---- 0@- @ NA
Bira Sun
2ife
=A--- <<- ; ;
+aG Ne7
5ork
=---- A- A .
Kotak 2ife =;--- ;- > =.
A#i#a =---- @- > <>
IN) Cysya <<--- 0A- ; AA
2I" 00----- 0.A A- =A
$+- has ma,imum num&er of a!ents that is )hy it has the ma,imum reach and leadin! the
insurance industry )hereas "ota# $ife has only 46::: a!ents. +t has to e,pand in terms of
num&er of a!ents and should tie up )ith more &an#s and corporate a!ents to reach more num&er
of customers
3%
"ustomer Satisfaction
(he $ife +nsurance -orporation of +ndia ($+- enjoys the confidence of t)o out of every three
customers. Reason &ehind this is more than A: years old le!acy and the ta! of a !overnment
company. .hen it comes to money matters people still have more faith on $+-. But customers
had one sore point' they )ere unhappy )ith $+-0s cum&ersome medical e,amination process.
"ustomer Satisfaction
A&ove mentioned comparison on various parameters justify the need to have a!!ressive
mar#etin! strate!ies a!ainst competitors. Further comparison can &e done on &asis of various
products offered &y different companies.
31
@4 PRO(3"T "O+PARISON
Product +iG
+nsurers 2ndo)ment Money
Bac#
.hole
$ife
-hild
Plan
Pension (erm
Plan
Ulip Health
Plan
Mort!a!e
Plan
Bajaj
Allian?
& & & & & & & & &
+-+-+
Prudential
& & & & & & & &
SB+ $ife
& & & & & & & &
HDF-
Standard
& & & & & & & & &
Birla Sun
$ife
& & & & & & & &
Ma, <e)
9or#
& & & & & & & &
"ota#
life
& & & & & & & &
Aviva
& & & & & & & &
+<5
Iysya
& & & & & & & &
$+-
& & & & & & & &
Althou!h $ife +nsurance penetration still at 6.A=7 at the end of year 6::B' +ndia offers a &road
ran!e of products coverin! term insurance to savin! related products. Most of the insurers are
no) focusin! on unit lin#ed plans &ac#ed &y impressive stoc# mar#et performance. Most
products are sold to individuals )hich accounts for 8C7 of the ne) &usiness.
32IP (3nit 2inked Insurance Pans$
"ompany *und
+anagement
E1uity
EGposure (H$
Entry 2oad
(H$
Premium (Rs$
32
"harges
(*+"$
Ba8a8 AianB 04=A .- = Any Amount
I"I"I
Prudentia
04=A 0-- > Any Amount
IN) Cysya 04=A .- = Any Amount
+et 2ife 04=A ;A ?4A Any Amount
TATA Aig 04=A 0-- ?4A Any Amount
A#i#a ife 04=A .- =4A Any Amount
+aG ne7 5ork 04=A @- > Any Amount
Bira sun ife 04=A 0-- ?4A Any Amount
Kotak ife 04=A 0-- <4A Any Amount
Reiance ife 04=A 0-- ?4A Any Amount
SBI 2ife 04=A 0-- A Any Amount
(hese U$+P Plans in operation for the last year have !iven avera!e returns of 4=.A7. .hile none
of them have !iven a ne!ative return' individual returns are &et)een ;.AA7 and 4A.:47.
;4 +ARKETIN) STRATE)IES
Appying +arketing Too to AnayBe the Insurance Industry
(he insurance industry is !ro)in! in leaps K &ounds in the post li&erali?ation era' than#s many
to the entry of private insurance firm. +nsurance sector has vital role to play in the development
in the nation economy. +ndia0s 5DP !ro)th ?oomin! at ;.6 7 K a sta&le K ro&ust economy
cannot ta#e place #eepin! the insurance sector !ro)th at &ay. for the insurance industry to !ro)
33
K &rin! more K more people under the insurance cover an a!!ressive an effective mar#etin!
trate!y needs to &e adopted &y the insurance firms. + have applied t)o of the most effective
mar#etin! tools i.e. porter0s five forces model and P2S( analysis to analy?e the insurance
industry of +ndia.
0$4 PORTERIS *ICE *OR"ES +O(E2
i$ Threat of Ne7 Entrants
As most of the private players enter the +nsurance +ndustry in the form of Joint Ientures the
other companies fear that they mi!ht lose out the competition &ecause of hu!e capital &ase and
the technical and financial e,pertise of these ne) entrants. As the !overnment is plannin! to
increase the FD+ capital to B;7 more forei!n &i! players )ill &e attracted. Another threat for
many insurance companies is other financial services companies enterin! the mar#et.
34
ii$ Po7er of Suppiers
+ndian +nsurance +ndustry is still in the early sta!es )ith almost 8:7 of the mar#et untapped. (he
player )hich has more money in its #itty )ill &e a&le to spend more money on the promotional
activities and reach lar!e num&er of customers )hich )ill !ive them the ed!e over the others.
(here is also the possi&ility that the player offerin! hi!h salary pac#a!es )ill attract the hi!h
performin! individuals in the +nsurance +ndustry )hich )ill definitely &oost their income level.
iii$ Po7er of Buyers
+nsurance +ndustry is al)ays in loo# out for the hi!h premium payin! clients. -orporate these
days also loo# out for the +nsurance companies as providin! +nsurance cover is a mean of
sho)in! to the employees that the company care a&out them )hich not only motivates them &ut
3
also increase their productivity. (his doesn0t pose a threat &ut increases the competition and
attract more players.
i#$ A#aia%iity of Su%stitutes
+nsurance companies offer the same type of products thus there is limited differentiation at the
product level. So the su&stitutes are easily availa&le in the +nsurance +ndustry. But the companies
focusin! on <iche mar#et have a competitive advanta!e as they )ill &e a&le to reach more
customers and provide &etter service. (he advanta!e depends upon the si?e of the niche and the
&arriers on other firms to enter that se!ment.
#$ "ompetiti#e Ri#ary
+nsurance +ndustry is !ro)in! at the rate of 4A7 annually. (his is ma#in! +nsurance hi!hly
attractive and lots of ne) players are enterin! resultin! in lot of competition. As there is not
much of product differentiation insurance companies are tryin! to attract ne) customers and
retain the e,istin! ones throu!h &etter customer service' customi?ed products and !reater
efficiency. As it ta#es almost 4: years for +nsurance companies to &rea# even ne) players are
enterin! in the form of Joint Ientures.
<$4 PO2ITI"A2 E"ONO+I" SO"IA2 TE"'NO2O)I"A2 (PEST$ ANA25SIS
(RICER "ONSI(ERATION *OR INS3RERS AN(
"ORPORATIONS
Poitica
FD+ may !o up to B;7
<o .ar K internal insta&ility.
-onsensus across political parties
(errorism K na,alism under
-ontrol
.ill there &e opportunities for cross%&order
&usinessP
.ill ta, K re!ulation &e harmoni?edP
.ill cover &e availa&le and ho) much )ill it
cost.
.ill cross%&order competition increaseP
Economic
5DP !ro)in! Q ;7 plus
Stron! industrial !ro)th
Ho) the traditional insurance meet the ris#
financin! needs of !lo&al corporationsP
Proactive anti inflationary
measures practiced
+nsurance is considered as
priority sector.
+ncreasin! dominance to)ards services
industry.
+nflation affects interest rates )hich affect
the
3!
cost of capital and therefore insurance ta#e%up.
.ill the e*uity mar#et remain &uoyantP
.hat )ill &e the fre*uency of major mar#et
catastrophesP
Socia
Rapid Demo!raphic Shifts
+ncrease in a)areness amon!
people
More fra!mented K nuclear
family
+ncreasin! propensity to invest in
financial instrument
+ncreasin! need for funded pension and
securities.
+ncreasin! need for environmental cover.
+ncreasin! need for lia&ility K ne!li!ence
cover
+nsurance &etter priced for catastrophe and
)eather ris#
Technoogica
Advanced computation system
for Modelin! capa&ilities
Advanced soft)are for &etter
statistical K actuarial
Relia&le K secure data e,chan!e
technolo!y across !eo!raphic
&arriers
Developed )e& technolo!y for
more interactive K resourceful
)e&sites.
-ompetitive advanta!e throu!h information
optimi?ation
More focus on core competency
Small players )ill find it difficult to compete
effectively.
+ncreasin! demand for cover plus additional
vandalism.
+ncreasin! need for sophisticated modelin!
techni*ues.
5reater need for ris# mana!ement K
prevention
+arketing +iG poicies in Insurance
3"
Different companies can choose to position themselves differently and hence the mar#etin! mi,
)ould &e different. Ho)ever' there are certain common characteristics that one can cull out from
the possi&le strate!ies that companies can adopt.
PRO(3"T& (he development of fle,i&le products to suit individual re*uirements is )hat )ill
differentiate the )inners from the also%rans. (he #ey to success is in providin! insurance
solutions' not standardi?ed insurance products. (he concept of ridersFoptional &enefits has
already &een a hu!e innovation &rou!ht a&out &y the ne) players' )hich has led to customi?ation
of products for individual needs. As the insurance products are similar companies can position
their products &y providin! e,tra features in the form of add%ons )hich are called riders. "ota#
$ife provides Accident Benefits' Disa&ility Benefits' (erm Benefits or -ritical +llness Benefits to
the plans at nominal e,tra costs. Ho)ever' companies may differentiate themselves on the &asis
of product se!ments that they choose to focus on and e,cel in.
(ISTRIB3TION& Different companies may ho)ever choose different channels and different
!eo!raphies to focus on. (he channel options are % tied a!ency force' corporate a!ents and
&ro#ers and this is an area )here different companies )ill ma#e different choices. Many
companies li#e "ota# $ife are focusin! on all channels )hereas companies li#e Ma, <e) 9or#
$ife are focusin! on the tied a!ency force only. -ustomer interface )ill &e a #ey challen!e for
life insurance companies and includes every that interaction that the customer has )ith the
company' such as sales' ne) &usiness under)ritin!' policy servicin!' premium payments' claim
processin! and so on.
(echnolo!y can play a crucial role in deliverin! the hi!hest standards of service set &y the
company and it )ill &e imperative for any serious player to e,cel in all of these.
PRI"E& Price is a relevant differentiator only in t)o se!ments % pure term insurance and in pure
annuities. Here too' service delivery and financial stren!th )ill need to &e present at a minimum
accepta&le level for price to &e a relevant differentiator. +n case of savin!s oriented products'
lon! term returns !enerated )ill &e more relevant than just the price of the product. A focus on
3#
!eneratin! !ood investment performance and #eepin! a ti!ht control on costs )ill help in
!eneratin! !ood lon!%term maturity value for customers. <orms have &een laid do)n on all of
these &y +RDA and adherin! to these )hile deliverin! !ood returns )ill &e a challen!e.
A(CERTISIN) AN( PRO+OTION& (he level of demand is latent and )ill have to &e
activated considera&ly. (he mar#et needs to &e developed. 5reater a)areness of insurance and
the need to have it as a protection tool rather than as a ta, plannin! measure needs to &e
appreciated &y the +ndian people. Iarious communication tools includin! advertisin!' direct
mar#etin! and road sho)s )ill contri&ute to all this and different companies )ill ta#e different
approaches on these. As +nsurance is product specific' "ota# $ife uses )ord of mouth to promote
its products rather than !oin! for advertisements. (hey &elieve that satisfied customers mean
more customers. +-+-+ Prudential advertises their products throu!h hoardin!s and &anners to
catch the eyes of the customers.
(echnolo!y can play a crucial role in deliverin! the hi!hest standards set &y the company and it
)ill &e imperative for any serious player to e,cel in all these. 3verall' the $ife +nsurance is set
for rapid chan!es and !ro)th in the years ahead. Deliverin! service' &uildin! trust and &ein!
innovative are #ey areas in )hich any company )ill have to e,cel in order to do )ell in the lon!
road ahead. Different companies )ill ta#e different approaches and it )ould &e myriad of
solutions that )ill &e found to deli!ht the +ndian customer.
+arketing Strategies Adopted %y Payers in the Insurance Sector
5one )ere the days )hen the customers )ere forced to ta#e up the #ind of products' )hatever'
comin! from $+-Ns and 5+-Ns. But no)' the customer has &een portrayed as the #in! and to his
deli!ht' the products are redesi!ned and customi?ed suitin! his need ta#in! into account his
payin! capacity and multiple &enefits. (o much of his cha!rin' he has also !ot an option of
)ithdra)in! his offer )ithin a period of 4A days (free%loo# period if he is not satisfied )ith the
policy features.
I4 S'I*T IN T'E PRO(3"T PORT*O2IO
3$
2arlier the entire industry )as revolvin! around traditional investment and savin!s oriented
plans. <o) the companies are comin! out )ith Health products as they are profita&le for the
companies. (he companies are comin! out )ith many more health products to cater to various
emer!in! cate!ories of health insurance. (ata%A+5 has Health Protector Plan that allo)s hospital
cash' sur!ical &enefit' post%hospitali?ation &enefit and critical illness cover.
Unit lin#ed products are also !ainin! momentum in this country. "ota# and Birla Sun $ife have
launched unit lin#ed schemes focusin! on e*uity' de&t and !ilt ed!ed stoc#s. (hese schemes are
e,pected to yield &etter returns )hen compared to normal insurance schemes. As the a)areness
level a&out these uni*ue products is much lo)er' the companies resort to educate the customers
a&out the salient features of the products.
II4 CA23E *OR +ONE5 (C*+$
(he sea chan!e since the sector opened up has &een on the )ay the &asic products have &een
pac#a!ed innovatively' often tailor made to provide a &undle of &enefits to the customers. (his is
possi&le throu!h the introduction of riders' )hich have added value to the ris# cover at minimal
cost. Riders are nothin! &ut add%ons comin! alon! )ith the &ase policies for a sli!htly additional
premium. Riders have &ecome the major instruments for the or!ani?ations to lure the customers
a)ay from the competitors. (he removal of =:7 cap on the premium of the &ase policy for the
health riders alone has come as a shot in the arm for many players since this is used as an Uni*ue
Sellin! Proposition &y many private players vis%a%vis the $+-. $ater' $+- has also started
announcin! riders alon! )ith the main policies dancin! to the tune of the mar#et forces. (his
could see many non%life players !oin! out of the &usiness as life insurers offer a plethora of
personal line products as add%ons. Riders can also &e availed &y the e,istin! policyholders.
III4 TAPPIN) T'E NI"'E +ARKETS
Private insurers are concentratin! much on desi!nin! attractive products &y investin! heavily on
research' studyin! life e,pectancy and health statistics across a!e !roups' income levels'
professionals and re!ions on their o)n instead of relyin! on data )ith state insurers. (he
products are desi!ned )ith a technical team of actuaries and a product development team
4%
)or#in! closely to!ether to tar!et the niche mar#et. (he innovations for the niche mar#ets are
a&ounded and to name a fe)1..
R Met$ife +ndia +nsurance -ompany has recently launched a -harita&le (rust Policy in "ol#ata'
)hich has evo#ed a lot of interest especially amon! the Mar)aris &usiness community )ho )ant
to set up a temple in their name after their death. Similarly a Buy K Sell A!reement cover from
the same company permits a &usiness enterprise to ta#e out a life plan on each of its partners' to
ensure that the company continues.
R (he other se!ments' )hich have attracted almost all the players' are the )omen and the
children se!ments. (hou!h the State insurer has had a chun# of products sufficiently for a lon!er
time' it faces stiff competition from the private players in these se!ments.
R (ata A+5 has offered a speciali?ed life insurance pac#a!e )here the insured and the employers
of the insured have a say in it. (ermed as .or#site Mar#etin!' A+5' )hich has adopted this
practice in different places across the )orld' is spreadin! the concept in +ndia too. .or#site
Mar#etin! is a distri&ution method used to offer voluntary insurance
products (employee &enefits to employees at their place of )or# )ith the sponsorship or &ac#in!
of their employer' traditionally done on a deduction from the payroll. (he policyholder carries
the policy )ith himself throu!hout his life' even if it happens to chan!e the or!ani?ations.
R Any other )ay to promote non%smo#in!P 3r to re)ard those )ho !ive up smo#in!P "ota# $ife
has ta#en an initiative &y offerin! a term insurance plan % a pure protection product % to non%
smo#ers at much cheaper price. As a!ainst an annual premium of Rs.6B:: on an Rs.4: lacs
policy for a 4: year term for a =: year old under the preferred term plan' the re!ular term
premium )or#s out to Rs.=B:: for a similar cover. (hou!h there are apprehensions in the
industry circle a&out the success of the policy' the intention of the company is *uite appreciated.
41
R 2ven the un&orn childNs future can &e safe!uarded no). (he offsprin! can &e insured a!ainst
unfortunate con!enital defects. State o)ned 5eneral +nsurers have started a!!ressively mar#etin!
these #inds of products.
IC4 T'R3ST TO T'E R3RA2 +ARKETS
(han#s to the norms stipulated &y the re!ulator +RDA' all the players have turned their eyes
to)ards the rural mar#et. (o)ards ensurin! e*uita&le distri&ution of insurance policies in every
noo# and cranny of the country' +RDA stipulates the rural o&li!ations to &e met &y the players
over the years.
(he rural o&li!ation on part of the ne) private insurance companies is incremental in nature. +t
!oes from A7 to 4A7 over the period of A years for life insurance and from 67 to A7 in case of
!eneral insurance.
(ata%A+5 entered into micro%insurance as a condition for ac*uirin! a license to sell insurance in
+ndia. Unli#e many other insurance companies' the company immediately sa) the many &enefits
of micro%insurance includin! fulfillment of corporate social responsi&ility/ use of micro%
insurance to !et the &rand into a ne) mar#et/ and a means of developin! a !ood relationship )ith
the insurance re!ulator.
"ota# $ife +nsurance is loo#in! at ropin! in co%operative &an#s' primary a!ricultural cooperative
societies (PA-S' <53s and self%help !roups to sell its products in the rural areas. O.e are
plannin! to have rural tie%ups for distri&utin! our policies'O Mr 5auran! Shah' Mana!in!
Director' said.
.
42
C4 TAPPIN) 3N"ONCENTIONA2 (ISTRIB3TION "'ANNE2S
<evertheless all the players depend heavily on their a!ents force to reach out they are tryin! out
other distri&ution channels also li#e &an#s and corporate a!encies in addition to the channels
mentioned a&ove. (ata%A+5 has a tie up )ith Punja& <ational Ban# and -ity Financial for
sellin! their products.
CI4 "A3SE RE2ATE( +ARKETIN)
-ause Related Mar#etin! has &ecome the order of the day in +nsurance industry. By creatin!
!ood)ill a&out the or!ani?ations' the insurers are ma#in! an attempt to chan!e the ne!ative
attitude of the people to)ards insurance products. For instance'
R (o)ards servin! the society in a &etter )ay' $+- has adopted a novel )ay throu!h its Bima
5rams policy. Accordin!ly' $+- pays 6A7 of the premium collected from the villa!ers or
Rs.6A::: )hichever is lesser for underta#in! developmental )or# in the villa!es.
R Birla Sun $ife +nsurance has adopted C:: villa!es around Renu#oot and actively involved in
improvin! the lives of the residents
CII4 IN*3SION O* "APITA2
Players in the +nsurance sector are very confident that their pace of !ro)th )ill accelerate
tremendously and the infusion of capital )ill ena&le them to continue )ith their e,pansion plans
and achieve sustained !ro)th.
$+- )ill ma#e a total investment of Rs ;:'::: crore in e*uity' de&t and other instruments durin!
the current fiscal' said Mr (.S. Iijayan' -hairman. $ast year' the corporation had invested Rs
8:'::: crore.
CIII4 EJPAN(IN) T'E (ISTRIB3TION NET9ORK
43
"ota# $ife has already declared its e,tension plans' )hich include the openin! of A:: full service
&ranches across the country &y March' 6:46. (he stren!thenin! of its distri&ution
net)or# )ill ena&le the company to cater to a )ider !roup of customers and provide them )ith
efficient customer service and enhanced support. <et)or# e,pansion' entry into the pension
se!ment' and ne) products are some of the strate!ies chal#ed out &y private insurer Aviva $ife
+nsurance. Mr Bert Paterson' Mana!in! Director' Aviva $ife +nsurance told ne)spersons that the
company plans to add G; &ranches in 6:46' ta#in! the total to 4;4 in the country. (he sales force
)ould &e increased from 4='A:: to =4':::' he said' addin! that the &an# is also partnerin! )ith
cooperative and re!ional rural &an#s in different parts of the country.
(he companies !enerally adopt t)o types of mar#etin! strate!ies one is *uantity &ased and other
is *uality &ased. (he *uantity is driven &y volume and this is done throu!h reachin! ma,imum
num&er of customers. +-+-+ Prudential and Bajaj Allian? are the leadin! private players in the
+nsurance sector they are infusin! lar!e capital to open up various &ranches across +ndia and
!oin! for the advertisements. (hou!h they are leadin! in terms of mar#et share their profita&ility
is very lo) &ecause of hi!h claim payout ratio. 3n the other hand "ota# $ife is *uantity driven
and their profita&ility is hi!h as compared to the leadin! players thou!h their mar#et share is less.
0<4 SA2ES PRO"ESS
A sales process is a Lroadmap0 that identifies a lo!ical se*uence of activities that are
44
consistently implemented from prospectin! throu!h to closin! to address and satisfy the
customer0s needs.
STEP 0& PROSPE"TIN)
Prospectin! is a conscious' directed and continuous activity of see#in!' identifyin! and
*ualifyin! potential customers.
STEP <& TE2EP'ONE APPOINT+ENT
(he telephone is used only to !et an appointment i.e. an opportunity to meet the prospect.
STEP =& PRESENTATION
+n order to !et in the door or )in &usiness' sales presentation is an important part of the
sales process.
S 3penin! a call effectively helps to create the first favora&le impression.
S +t is important to create a !ood rapport )ith te customer.
S (he advisor introduces self and his company and states the purpose of the visit.
4
STEP ?& )OA2 *IN(IN)
(he !oal findin! process is &ased on the need analysis. (a#in! into consideration the client0s
present financial position' his needs and shortfall are identified ascertainin! and understandin!
the financial needs of the client.
STEP A& PRESENTIN) A SO23TION
A solution is then )or#ed out after understandin! the needs of the client and the amount of
money heFshe is ready to commit.
STEP >& OB6E"TION 'AN(2IN)
3&jection is the prospects statements a&out )hy they don0t plan to &uy your product or service.
>An o&jection is an opportunity and not a rejection.@
4!
STEP @& "2OSIN)
After a &uyin! si!nal from the customer' the advisor moves in to close the sale.
STEP ;& RE*ERRA2S
Referrals are an e,cellent source of ne) &usiness. Beauty of referral% a much more receptive
person at the end.
0=4 ANA25SIS O* "ONS3+ER BE'ACIOR
A survey )as conducted to understand the consumer perception to)ards $ife +nsurance. As
every person has his o)n vie)s' so it is very important to understand the mind of the customer.
Details of the survey' methodolo!y' sample si?e and results are mentioned &elo)E
K3ESTIONNAIRE *OR "3STO+ERS
4 Have you ta#en any life insurance policyP
S 9es
S <o
6 5iven a choice' )hom )ould you prefer to &uy a policy fromP
S $+-
S Any private player
= .hat ma#es you to insure )ith $+- (if you prefer itP
S A !overnment firm
S Performance
S (rust
S 3ther reason
4"
B Ho) much premium you pay for your insurance policy per yearP
S :%4::::
S 4::::%=::::
S =::::%A::::
S More than A::::
A .hat is the main reason for ta#in! life insurance policiesP
S (a, &enefits
S Ris# hed!in!
S Mode of investment
S $i*uidity
C Have you heard of U$+P plansP
S 9es
S <o
G .ould you &e investin! more if insurance policies !ive !ood returnsP
S 9es
S <o
8 .hat accordin! to you is the &est place to put your moneyP
S Stoc# mar#et
S Mutual fund
S 5overnment &ond and securities
S +nsurance policies
S Any other
; .hat are your investment o&jectivesP
S Short term dividend
S $on! term appreciation
4#
S Security
S $i*uidity
S Any other
4: Are you a)are that "3(A" !roup as a company operates in the field of life
insurance and investmentsP
S 9es
S <o
44 +f yes' ho) did you come to #no) a&out itP
S Friends
S <e)spaper
S (I Sho)s
S Any other (please specify
46 .hat influences your investment plansP
S Family need
S Future
S Advice from friends and relatives
S Advertisements and promotions
4= .hich mode of interactionFcommunication from the company )ould you appreciate
mostP
S Personal
S (elephonic
S 3nline
S $etters
4$
4B Ho) often )ould you li#e to &e intimated &y the company re!ardin! the state of your
life insurance policies li#e U$+PP
S Iery fre*uently
S Fre*uently
S Tuarterly
S Annually
4A .hich one is the &est place to !et a policy fromP
S +-+-+ $ife
S "3(A" $ife
S Bajaj Allian? $ife
S AI+IA $ife
S Birla Sun $ife
S (A(A A+5
S Ma, <e)yor# $ife
4C .hat influenced your choice in the last *uestionP
S Brand <ame
S Performance
S .ord to mouth effect
S Advertisements and promotions
S (rust
S 3ther
<AM2E A52E
(han# you for your valua&le time.
%
K3ESTIONNAIRE *OR EJPERTS
(<oteE investment in insurance refers to U$+P policies
4 Do you a!ree that this is the ri!ht time for insurance companies to accept investment
as a part of their &usiness
S 9es
S <o
6 Privati?ation has helped the in reco!ni?in! investment a feature in insurance
S Stron!ly a!ree
S A!ree
S Disa!ree
S -an0t say
= Sellin! investment policies is easier than sellin! conventional life policies no)adays
S 9es
S <o
S -an0t say
B More competition from increased num&er of players often lead to unethical practices
to creep in
S Mostly
S Sometimes
S <ever
S <o unethical practice e,ist
A +nvestment in insurance is the &est place to put in your money
S 9es
S <o
1
C +f no' rate the follo)in! investment options in preference.
S Mutual funds
S -onventional life insurance policies
S 5overnment &onds and securities
S U$+P
S Stoc# mar#et
S Any other
G +n your opinion' )hat is the most important factor for people to &uy insurance
policiesP
S (a, savin! tool
S Ris# hed!in!
S +nvestment tool
S $i*uidity
S Any other
8 .hy do people refrain from &uyin! insurance policiesP
S $ac# of a)areness
S $ac# of proper after sales services
S +nsurance is lon! term investment
S Unavaila&ility of customi?ed products
S $ac# of transparency
S Any other
; Despite similar product features of different companies' )hat sells the productP
S (rust
S Brand
S Advertisements
S $ife advisors
S Distri&ution channel
S Any other
2
4: .hich a!e !roup &uys ma,imum num&er of life insurance policiesP (Preference
order
S 64%6A
S 6C%=:
S =4%B:
S B:%A:
S A&ove A:
44 Ho) often does a customer !o' for another policy' to the company )ith )hom he has
already ta#en a policyP
S Almost every time
S 3ften
S Rarely
S <ever
S -an0t say
46 Ho) )ould you rate the performance of #ota# life till no)P
S 2,ceptional
S 5ood
S Satisfactory
S Belo) par
4= Do you feel "ota# has enou!h products to satisfy the needs of the customersP
S 9es
S <o
<AM2E A52E
(HA<"S F3R 93UR IA$UAB$2 (+M2
3
ANA25SIS O* S3RCE5
A survey )as carried out to chec# the mindset of the people a&out insurance. $ife insurance has
&een considered as ta, savin! tool' investment option and ris# hed!in! device. (o support these
assumptions a survey )as carried out.
+ET'O( O* S3RCE5
()o separate *uestionnaires )ere prepared. 3ne *uestionnaire )as for industry e,pertand other
)as for customers. Both *uestionnaires are put into appendices.
IN(3STR5 EJPERT S3RCE5
Sample ta#en U =6
Important resuts from sur#ey&
4. (he entry of private players in insurance sector has helped in reco!ni?in! investment as
an important feature of insurance.
4
6. U$+P is considered the &est place to put money &y industry e,pert
=. $ife insurance policy is still considered as ta, savin! tool than any other device. People still
&uy it for its ta, savin! &enefits.

B. $ac# of a)areness and &elieve that insurance is lon! term investment refrain people from
&uyin! insurance product.
A. $ife insurance a!ents are still the most important vehicle in sellin! of life insurance products.
!
"3STO+ER S3RCE5
Sample ta#en% A8
Important resuts from sur#ey&
4. Most of the clients &uy life insurance &ecause it provides a very !ood ta, savin! advanta!e
rather considerin! it as a ris#%hed!in! tool.
6..ith mar#et doin! )ell and mutual fund !ivin! hu!e return in short term' most people are
interested in ma#in! investment in mutual fund follo)ed &y U$+P product
=. Majority of people )ants security on their investment. (hey don0t )ant to put their money in
un#no)n hands. $on! term and short tern !ain has e*ual influence on their investment choice
"
B. Family remains sin!le most important influencer on the investment decision of an individual
follo)ed &y secure future
#
Purpose and o%8ecti#es of undertaking primary data coection&
+t helped us to e,plore the mar#et on a &roader &asis. Sellin! mi!ht &e a difficult issue &ut
!ettin! the *uestionnaire &ein! filled )as not a difficult issue. +n this )ay' )e !ot a chance to
interact )ith a num&er of people.
S+P is meant to !ive the students a first hand understandin! of ho) the actual )or# !oes on.
Ma#in! an analysis from already availa&le data mi!ht &e any&ody0s cup of tea &ut !eneratin!
primary data is somethin! )hat )as e,pected from us.
(he !round realities mi!ht &e at times very different from our perception and #no)led!e. A
primary survey is the &est )ay to !et a conclusion here.
.e !ot to #no) as to )hat is the perception of customers and e,perts of the industry and the
company as )ell. (he learnin! )as vital and much more than )hat is depicted in the
*uestionnaire
A survey ma#es you &etter prepared to face the same challen!e if !iven to you
A!ain
+t helps to sharpen one0s analysis s#ill as )ell
(he survey al)ays helps to chec# the pro,imity &et)een )hatever )hich has &een read and
)hat the !round realities are
(he people )e interacted )ere &roadly &ased from Hydera&ad as far as customers are concerned.
+ had the responsi&ility of !ettin! the *uestionnaire filled up. After havin! e,hausted all our
connections' + !ot a num&er of *uestionnaires filled &y the people livin! in my apartment in
)hich most of them are )or#in!. Most of the people )e interacted had &een very ne) to jo& li#e
my friends )ho have &een )or#in! in Bhu&anes)ar mostly in soft)are firms. (he list also
$
included people )or#in! as life a!ents in "ota# life insurance. .e also *uestioned some of the
people )hom )e meant to meet for sales purpose. (he e,pert mainly included employees of
"ota# life insurance.
2earning from the EGercise
People are still reluctant to invest in private players )hen compared to $+-. +nterestin!ly' it
hardly matters for them that a certain private players are )or#in! in colla&oration )ith certain
firms )hich are much &i!!er than $+-.
.e mi!ht perceive $+- as an inefficient company )hich is not very !ood at deliverin!
services &ut people )hich includes even the educated youth thin# differently( the opposite +
mean
+n most of the cases' it )as very clear that the &rand name matters and $+- happens to &e the
&i!!est &rand in +ndia. People mi!ht &e interested in a similar plan if offered &y $+-.
People still do not consider insurance as a need and thus do not hold this industry in very hi!h
terms.
Private players still have a lon! )ay to !o to compete )ith $+- as their presence is most of the
areas is ne!li!i&le
!%
0?4 "ON"23SION
3ver the past decade there has &een stron! consolidation trend in the 5lo&al +nsurance +ndustry.
+n 6::;' )orld)ide insurance premium volume !re) &y =.;7. .hile $ife premiums increased
&y B.47' non%$ife premium increased &y 6.:47.
.ith lar!est num&er of life insurance policies in force in the )orld' +nsurance happens to &e a
me!a opportunity in +ndia. +t0s a &usiness !ro)in! at the rate of 4A%6: per cent annually and
presently is of the order of Rs BA: &illion. +mprovin! economic scenario' increasin! disposa&le
incomes' and risin! product demands are the reasons &ehind the !ro)th. (he compound annual
!ro)th rate of mar#et in the period 6:4:%6:4A is predicted to &e 4:7
+ndian $ife +nsurance sector !re) B47 to nearly D46 &n in the financial year up to march 6::; in
terms of premium collected. . +n +ndia $ife is rou!hly three to four times &i!!er than non%$ife.
And there is potential )ithin $ife since most consumers see insurance as a ta,%savin!%cum%
investment vehicle rather as then a pure cover.
Up (o January 6:4: $+-0s mar#et share increased to 8:7 recordin! a !ro)th of 46=7 as
compared to last year. .hereas private players li#e "ota# are strivin! to increase its mar#et
share and !ro)th to &e amon! the top players in the $ife +nsurance sector.
Amon! the private players only some private players have dominated the scene. +n terms of ne)
&usiness premium Bajaj Allian? and +-+-+ Prudential are the top t)o private players )hereas
"ota# $ife is at the <inth position. $+- has pan +ndia presence havin! 6:B8 &ranches. "ota# $ife
has presence only in 4BC cities havin! 64= &ranches. "ota# $ife scores very hi!h in terms of
customer satisfaction. As it has almost ;67 persistency rate' )hich is hi!hest in the mar#et.
Finally it can &e said that thou!h it is very tou!h to compete )ith $+-' &ut still private players
have a lot of scope in +ndian $ife +nsurance +ndustry.
!1
Bi%iography&
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