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ON
DECLARATION
I, Ms.Varsha Disodiya hereby declare that this summer
training report is the record of authentic work carried out by
me during the period from ---------- to --------and has not
been submitted to any other University or Institute for the
award of any degree / diploma etc.
(Signature)
Varsha
Date:
BONAFIDE CERTIFICATE
(Signature)
Ms Vineeta Agrawal
Assistant Professor, BBA Department
Project Guide (Internal)
Date:
Counter signed by
(Signature)
Mr. Ravi Bakshi
Department Coordinator (BBA Department)
Date:
ACKNOWLEDGEMENT
It has been a matter of great privilege and pleasure for me to be associated with
MAPPING MINDS VENTURE (consultancy firm), FARIDABAD for my
summer training. I hereby acknowledge with due courtesy the sources consulted
in the completion of my project.
First of all I would like to thanks Mr. AMIT VIRMANI who allowed me to
undergo training program at MAPPING MINDS VENTURE., (consultancy firm)
FARIDABAD.
Further I pay my sincere regards to Ms. NISHA DHILON and Mr. J.P. Sharma
for their valuable guidance, continuous encouragement and enthusiasm in
inspiring me throughout the project.
Last but not the least, I would like to thank to my project guide Ms. VINEETA
AGARWAL and faculty members of SATYUG DARSHAN TECGNICAL
CAMPUS and whole hearted co-operation in drafting this report.
VARSHA
PREFACE
The study of expectations and perceptions of consumers towards a
professional service like life insurance in the post liberalization period is
considered to be one of the most challenging problems in the insurance sector.
Expectations and perceptions form the basis for the determination of customer
satisfaction. The main problem of the study is to examine the consumers
opinion and attitude towards the characteristic features exhibited, the reasons for
loyalty, persistency and withdrawal from existing life insurance company. The
entry of private players has made the entire scenario complicated and satisfying
the customers is the major problem faced by insurers in the light of the severe
competition. To solve this problem, it is imperative for the insurance companies
to keep a track of the customers through continuous feed back mechanism to
understand customers changing expectations to develop strategies for the future.
Hence, this study is undertaken to examine expectations, perceptions and
customer satisfaction, to provide useful information to the industry and the
policyholders for their useful and fruitful relationship.
TABLE OF CONTENT
S.NO
PARTICULARS
Review of Literature
Research Methodology
Objectives of the Study
Scope of the Study
Research Design
Method of Data Collection
Limitations of the Study
Annexure
CHAPTER I
INTRODUCTION
CHAPTER I
INTRODUCTION
Indian economy is in transition over the last ten years owing to the major
economic reforms affecting almost all sectors. Insurance business is the most
significant in the financial services sector. Life insurance Corporation (LIC) of
India is a financial intermediary which mobilizes peoples savings and invests
large amounts of premiums. Life insurance meets the contingencies of physical
death and economic loss.
In India the insurance business is going on for more than 150 years. Life
Insurance was brought in for the first time by the British. The business of life
insurance in India in its existing form started in the year 1818 with the
establishment of the Oriental Life Insurance Company in Calcutta. The Indian
Life Assurance Companies were the first to regulate the Life Insurance business
in 1912. The Insurance Act of 1938 was passed and the Department of Insurance
under the authority of Superintendent of Insurance was established for the
administration of the Act. The study of insurance companies between 1939-55
reveal the lack of trust which is the corner stone of life business and thus
whole industries. The adequate service expectation level, on the other hand, may
vary
for different firms within a category or subcategory.1
Six major areas of customers expectations from the life insurance companies are:
1.
2.
3.
companies, are not able to honour the predefined service standards in the
normal course. However, if a service provider is responsive to customer
needs, and goes out of its way to make up for the failure in services
offered, the customers enjoy the special treatment meted out by the
service provider during the post-complaint stage and this builds loyalty.
4.
5.
6.
Effective cost of service. This includes not only direct cost e.g.,
premium, but also the hidden costs such as cost of follow-up, delay in
settlement of claims, long waiting time etc.,
Perceptions
Perception can be described as how we see the world around us.
Perception is the process by which an individual selects, organizes and interprets
information to create a meaningful picture of the world. Individuals act and react
on the basis of their perceptions and not on the basis of objective reality.
Perception is the process by which an individual selects, organizes and
interprets stimuli into a meaningful and coherent picture of the world. Leon G.
Schiffman(2000).2
Philip Kotler 3 is of the view that people can form different perceptions of
the same stimulus because of three perceptional processes selective exposure,
selective distortion and selective retention.
Customer Preferences
There are four unique elements to services. Intangibility, Inconsistency,
Inseparability and Inventory. These four elements are referred to as the 4 Is of
services. When customers decide to purchase a service to meet an unfilled
need, they go through what is often a complex purchase process. This process
has three identifiable stages: the pre-purchase stage, the service encounter
stage, and the post-purchase stage.
The primary objective of service producers and marketers is identical to
that of all marketers: to develop and provide offers that satisfy consumer needs
and expectations, thereby ensuring their own economic survival. In other words
service marketers need to be able to close the customer gap between expectations
and perceptions. To achieve this objective, service providers need to understand
how consumers choose and evaluate their service offerings. Unfortunately, most
of what is known about consumer evaluation processes pertains specifically to
goods. The assumption appears to be that of services, if not identical to goods,
are at least similar enough in the consumers mind thereby chosen and evaluated
Thus increase in number of insurance companies has led to a wider choice for
Indian consumers.
The rising customer awareness and aspiration of quality service and
availability of alternative service providers in the Indian market has made
customers more demanding. Thus, an insurance companys ability to attract and
retain the customers is a function of not only what it offers but also how it serves
its existing customers.
A large number of studies have been carried out in US and other Western
countries to identify the important factors that guide the consumers while
selecting life insurance products. Insurance products are a dime a dozen.
Choosing an insurer over another is not easy with little track record of
performance to compare. Moreover, while choosing an insurance product, it is
important for an individual to identify the core need. While most seek a
combination of financial protection as well as investment needs to achieve longterm goals like childs education, buying a house etc., there are customers who
require only financial protection. Such individuals have already taken care of
their investment needs and have identified a need to protect his/her family
financially from undesirable eventualities like mortgage liability or degradation
of lifestyle, in the unfortunate event of his death. The need for buying an
insurance not only differs among individuals, but also varies with the persons
age. The insurance needs of an unmarried working executive when he is in his
early days of employment is different from his needs when he is middle aged and
married with children. It is thus important that the individual evaluates his
insurance need, considering his age, following which he can arrive at a suitable
protection and investment mix and tenure.
CHAPTER II
THE INDIAN LIFE INSURANCE MARKET
AN OVERVIEW
Marketing in India, with its economic and social contrasts, with a
population of more than 1 billion differing enormously with 15 different
languages, social customs and living under varying states of economic
development from the vastly affluent to the destitute, necessitates the need to
deal with several markets at the same time. The life insurance market, hitherto
dominated by a governmental monopolistic monolith LIC, had to make way
for a slew of private players who paired with local financial institutions to
revolutionize the insurance market in India. At the time of entry of the private
players, several demographic and psychographic mega trends augured well for
the growth of financial services in general and insurance in particular.
The essence of insurance is to share losses and substitute certainty by uncertainty.
Human life is also an income generating asset, albeit, intangible. This asset can be lost
through an unexpectedly premature death due to some accident or disease or the asset can
also become non-functional through some disability. In case of such unforeseen mishaps,
life insurance becomes essential to help the dependents to maintain their life in a normal and
regular manner. In this context, it becomes essential to mention that living too long can be
equally or sometimes more problematic than dying too young. Hence, very old age can be
considered a risk, and insurance takes care of all such risks which need to be safe guarded
against. Insurance can minimize the impact of the risk on the owner of the asset and those
who
depend upon the asset, but only in terms of economy or finance, not in terms of
emotions.
Insurance and Economic Development
Investments form the base for the economic development of the country. Investments are the result of mobilization
of the savings. An insurance company is a major instrument for the mobilization of the savings of the people. Most of the
money collected from public are invested in Government through the IRDA Act, which has made it compulsory that a life
insurance company has to invest at least 15% of its controlled fund in the infrastructure and social sector of the country.
To meet the obligation of WTO to open up the finance sector for international
players and competition as a part of liberalization of trade and services.
The private insurance companies in their zeal to cut cost and to improve
profitability, can ignore the basic interest of people.
Bharati,
Shriram,
Future
including
Ergo
of
30
32
India is, however, ahead of China where insurance accounts for just
1.7% of the GDP. In other developed markets such as the UK and Japan,
insurance penetration stands much higher at 13.1% and 8.3% of the GDP
respectively. India constitutes 16% of the world population, but accounts for
only 1.68% of the world insurance market. But favourable demographic
profile, rising incomes and growing investments in insurance and pensions
should see this number go up. According to the data collected by the Life
Insurance Council, the life insurance industry has made a huge leap across
several other parameters in the liberalized era.
Insurance Penetration
14
12
10
8
6
4
2
0
K
APAN
J
KOREA
INDIA
IL
ASI
HINA
C
AZ
BR
MALA
COUNTRIES
34
potential for private companies is greater as the Indians are of the opinion that private
companies would be able to perform well. The insurance company should concentrate
on the areas like loss prevention, assured returns, long term investment etc.
Conduct business with utmost economy and with the full realization
that the moneys belong to the policyholders.
Act as trustees of the insured public in their individual and collective
capacities.
Meet the various life insurance needs of the community that would
arise in the changing social and economic environment.
th
Limited, which along with its associates has acquired 100% shares in AMP
Sanmar Life Insurance Company Limited. RLI has a pan presence and a range
of products catering to individuals as well as corporate needs. A total of 16
products covering savings, protection and investment requirements.
Life Insurance Statistics
(Source India Insurance Research and Consultants)
Premiums collected by LIC, for the period April to October, 2007 has
gone down by 10.4% as compared to the corresponding period during the
previous year. Premiums collected by the private insurers, on the other hand
increased by 67.7%. The share of private players has consequently increased
from 17.4% to 28.3%.
Figure 3.2
Premium Collections and Number of Policies
Figure 3.4
Premium Collections and Number of Policies
Total amount Rs 10,398 Cr, up 66.9% from the same period in 2006
Figure 3.5
Premium Collections Private Players
CHAPTER III
Review of Literature
(T S Ramakrishna Rao )
27
Prior to the entry of the private sector players, the insurance market in India grew at
the average rate of 10-15%. In the last five years, (2005) the growth has been of the
order of 20%. There has been a quantum jump in the first year of the life insurance
premium in the post 2000 period. The growth has been of the order of 260% in the
last five years. Most of the new growth in the last five years has been coming from
private sector companies. The private players in the last five years were able to
make a significant dent in the kitty that has been exclusively enjoyed by the LIC. As
in December 2005, their market share in the life insurance segment was over 20%.
The insurance penetration level, which has always stuck near an average of 1.5%,
has in the post liberalization period crossed the 2% mark and stands perched at
2.6%. The insurance industry has become another success story of the positive
benefits of the competition and allowing entry of private and foreign players.
The Indian life insurance market has been a mixed bag of rapid growth in some areas and lagging
behind in several other areas. Rectification of the imbalance has been attempted by liberalizing the industry and
opening it up to private participation.
The Post-Liberalization Scenario
31
considered as the sixth largest market in the globe. Being the worlds seventh
largest country and the second most populous one, the type of opportunity, the
countrys hold of insurance business can be envisioned. Besides this, the country
has one of the youngest population segments in the entire world and a burgeoning
middle class population of around 30%. The global penetration levels are around
4.7% as against our Indias 2.6%, there is tremendous potential to be tapped.
The private players, have contributed significantly to the fast spread of insurance business in the country, and they
have silenced the critics who were very pessimistic about their making any dent in the industry which was totally dominated
by the state owned player like LIC. In terms of incremental business private players and foreign joint ventures continued to
grab a larger piece of the pie. Although premiums and the asset pools have soared, there is still scope for growth. The
opening up of the insurance sector to the private insurers has definitely been a positive development. Impressed by their
performance, there is a serious thought that the regulators should have allowed their entry much earlier.
28
(U Jawaharlal ) The growth of the life insurance business during the post-
liberalization period in India presents some very interesting features. When one looks at
it on a progressive basis, it can be observed that the year-on-year growth has been
steady. Similarly, private players have steadily consolidated their strengths and
consistently increased their overall market share. In a market which has a monolithic player
like the Life Insurance Corporation of India operating for more than four decades and thereby
making its position rock-solid, the realignment of forces has been very gratifying. It not only
indicates that competition keeps the new players on their feet, but also that the incumbent is
being made to be inventive and open to new ideas
The National Council of Applied Economic Research, New Delhi conducted two
surveys in 1988 and 198913 on Appraisal of Quality Service in Service
Organizations and Quality Services in Life Insurance Company respectively.
These two studies were sponsored by the Life Insurance Company. The
policyholders general feeling is that the demand notice must be sent in time.
Some policyholders rated the quality of services was excellent. Hence, by
providing prompt services, the customer relationship is maintained for a long
period of time. Patki, V.V. (1989)14 in his article Rural Marketing discussed
the problems of selling the life insurance in the rural areas and gave many
suggestions to penetrate into the rural market. The suggestions are participation
in village fairs, using audiovisual methods and explaining the merits of the life
insurance to the villagers etc. Shejwalker, P.C. (1989)15 in his article Training
in life Insurance discussed the importance of trained agent force to develop the
life insurance business. He stressed that present selection pattern of the agent
should be changed. He expressed his opinion that private or independent institute
should be invited to impart training to the agents. Krirubashni, B. (1991)16 in her
study attempts to know the level of awareness, preference and influencing factor
pertaining to policy holdings and to test the relationship between the influencing
factors and policy holdings. The study reveals that the majority of the
respondents aware of the endowment assurance policy and considered to rank it
as number one. The study also revealed that there was a significant relationship
between personal factors and policy holdings.
CHAPTER III
RESEARCH METHODOLOGY
2.
3.
To compare LIC and PLIC on the basis of the role of service quality
relating to customer satisfaction.
4.
5.
6.
Research Design
This study is based on both primary data as well as secondary data.
The primary data is collected from the policyholders of life insurance through
a well framed questionnaire consisting of 10 prominent questions. The
questions are constructed in Likerts Five Point Scale. The optional type is
aimed at ascertaining Life Insurance Companies corporate image,
information search and other policy details of the customers. It is also used
to obtain Demographic details of the customers.
Data Collection
The primary data is collected from the policy holders of the selected
companies. The secondary data is collected from reports, journals,
newspapers, magazines and websites.
The primary data is collected through the questionnaire with suitable scales
as mentioned above from the customers of life insurance policies in Gurgaon.
Area of Study.
Gurgaon is selected for conducting the survey as it is one among the
four Metros in India, where people from all walks of life are located. The LIC
of India has been the leader for the past 51 years and has been the only
Public Sector Undertaking and thus is chosen. From the private sector, five
companies viz., Bajaj Allianz Life, ICICI Prudential Life Insurance, HDFC
Standard Life, SBI Life and Reliance Insurance are chosen because their
volume of the business occupies the first five places.
Sample Size.
In order to obtain different perceptions of customers of LIC and PLIC, totally
80 well framed questionnaires are circulated in different parts of Gurgaon city on a
random basis. Out of 80, only 75 are returned. Among 75 questionnaires it is found
that 70 as suitable for primary data analysis. Out of 700, it is found that 45 are
customers of LIC and 25 are from selected PLICs. The top five private life insurance
companies were chosen on the basis of the number of policies and premium
collected. Since LIC is in life insurance business for the past 51 years and is
considered as a big giant, top 5 PLICs are chosen for comparison.
Data Analysis.
CHAPTER IV
DATA ANALYSIS &
INTERPRETATION
DATA ANALYSIS
Keeping in mind the objectives of the study, the survey was being done and
following interpretation were being drawn.
1.
Interpretation
The evident from above finding showed that out of 100 respondents, 78
respondents are aware of private companies present in the insurance sector
and rest of the respondents i.e., 22 is not aware of private insurance
companies.
Interpretation
The above figure depicts that out of 70 respondents, 65 respondents are
aware Reliance life insurance and rests of the respondents i.e., 5 are not
aware of Reliance life insurance.
Interpretation
According to above data Electronic Media plays a vital role in the
promotion of Reliance Life Insurance. As 56 of the respondents are
aware through Electronic Media, 20 through Agents, 10 through Print
Media and 14 through other like friends and relatives.
Interpretation
The above figure depicts that 68 of the total respondents agree that private
sector was providing better services as compared to the public sector.
Interpretation
The above evident shows that as most of 62 of the total respondents have
insurance policy to cover the risk of the life and tax. This shows that most
peoples are interested in buying insurance policy.
Interpretation
The above evident shows that out of the total respondents 62 dealing with
LIC, which is a public sector insurance company, 18 respondents were
dealing with ICICI Pru and HDFC Std. Life respectively, 03 respondents
are dealing with Reliance Insurance company.
Interpretation
As the above figure showed that most of the respondents buy insurance
policy for the purpose of saving tax, 42 respondents are in favour of this,
22 respondents gave preference to secure investment, 30 and 06 are with
life cover and liquidity respectively.
Interpretation
As the above figure depicts that mostly respondents are interested to buy
insurance policy in the future. 40 of the total respondents are in favour
of this and rest 42 respondents want any insurance.
Interpretation
As the above evident shows that as most as 32 of the total respondents
prefer to invest in endowment plan, 26 prefer to have child plan, 24
prefer to Spl. Endowment Plan and rest 18 cash flow plan.
10.
If you are not taking any insurance policy, please tell us the
reasons why?
Objective: - To know the reasons not to buy any insurance plan by the
respondents.
Reasons not to buy any insurance plan
Interpretation
In view of the review of literature on the various elements of customer satisfaction, this
study aims at determining the expectations and perceptions of the consumers and the measure of
satisfaction as the degree of discrepancy between customers service perceptions and
expectations. This study also examines loyalty, persistency, withdrawal of policies, repurchase
decision, best practices and conduct of business and emotional factors leading to purchase of life
insurance policies as elements of customer satisfaction. It also identifies the nature of complaining
behaviour of the life insurance customers. Finally, a comparison is made between the consumers
of LIC and PLIC on the above mentioned elements of customer satisfaction.
SUGGESTION
a)
b)
c)
d)
e)
This clearly comes out of the survey conducted that most of the
people comes to know about Reliance life Insurance company
through print media.
f)
It has clearly comes out that most of the people like to go in for a
policy, which gives them tax.
CHAPTER 7
BIBLIOGRAPHY
BIBLIOGRAPGHY
Website of the bank: www.citibank.com
Various articles of :
BUSINESS TIMES
ECONOMIC TIMES
AUTHORS
PRASANNA CHANDRA
PUNITHARVATHY PANDIAN
FISCHER JORDAN
Magazines/Newspaper
QUESTIONNAIRE
1.
2.
b) No
Insurance ?
a) Yes
3.
4.
b) No
From where did you come to know about Reliance Life Insurance ?
a) Electronic Media
b) Print Media
c) Agents
d) Others
Public
Sector companies ?
a) Yes
b) No
If yes, Remarks___________________________________________
If no, Why_______________________________________________
5.
6.
b) No
b) Life cover
c) Liquidity
d) Secure Investment
b) No
9. If you have any plan to buy an Insurance Policy, which Policy would
you prefer ?
a) Saving Plan
b) Protection Plan
c) Pension Plan
d) Childrens Plan
10. If you are not taking any Insurance Policy, please tell us the reasons
why ?
a) We could not afford
b) We dont see any benefit with the system
c) We dont want insurance
d) We dont understand how system works
BACKGROUND DATA
1. Name__________________________
2. Sex :
3. Age :
a) Male
a) Below 18
b) Female
b) 18-35
c) 35-50
d) Above 50
4. Education :
4. Education :
a) Under Graduate
b) Profession
c) Business
d) Others
5. Occupation:
a) Service
b) Profession
c) Business
d) Others
6. Income:
a) Less than Rs. 50,000
b) Rs. 50,000 to Rs. 1,50,000
c) Rs. 1,50,000 to 3,00,000
d) Rs. 3,00,000 & above
7. Address________________________ __________________
_________________________________________
8. Phone No. ____________________________________