CHAPTER 1

1.1INTRODUCTION
The financial service industry has made significant changes after liberalization and
globalization. Among all, insurance sector is also one of the important sectors in India.
Insurance is an upcoming, in India the year 2000 was a landmark year for life insurance
industry. The Private and Public Players in insurance industry in India as insurance
companies are mushrooming after liberalization. Life Insurance Industry was liberalized after
50 years.
Insurance was once a monopoly with LIC as the only company a public sector enterprise. But
nowadays the market opened up and there are many private players competing in the market.
There are many life insurance companies has entered. With the entry of private players, the
competition is becoming intense. In order to satisfy the customers, there is competition
between the public and private companies to implement new creations and innovative product
characteristics to attract customers.
After the entry of these private players, the market share of LIC has been considerably
reduced. In the last 5 years the private players is able to expand the market and also has
improved their market share. For the past years private players have launched many
innovations in the industry in terms of products, advertisement of product and market channel
agent training and customer service etc.
Some life insurance companies are:
 LIC Life Insurance
 Reliance Life Insurance
 SBI Life Insurance
 Kotak Life Insurance
 ICICI Life Insurance
 AVIVA Life Insurance
 Bajaj Allianz Life Insurance
 HDFC Life Insurance
 Birla Sun life Insurance
 IDBI Federal Life Insurance etc.

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INDIAN INSURANCE – INDUSTRY MARKET SHARE
Company Approximate market share
LIC 50%
ICICI 10%
SBI 5%
BAJAJ 4%
RELIANCE 5%
HDFC 6%
BIRLA 4%
MAX NEW YORK 3%
TATA 2%
MET LIFE 1%
KOTAK 2%
OTHERS 8%

Table 1.1

Through this study, to make an comparative analysis between private and public company
i.e. Life Insurance corporation and ICICI prudential to understand the differences that lies in
terms of demand conditions, competition, product innovations, delivery and distribution
systems, use of technology, wide range of products, innovative bundling of insurance with
other financial services, aggressive marketing, and better customer care and regulation.
Apart from it, in-depth analysis of the performance of insurance business in India is done
with reference to various performance parameters.
This study discusses the overview of the past studies on insurance business, describes the
research methodology, Describes the content analysis of Private and Public Players in
insurance industry in India and outlines the comparison between the two based on various
indicators. This project also shows the results of performance of insurance company in India.

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1.2 INTRODUCTION OF LIC
Life insurance is actually an agreement between the insured and the insurer in which the
policy holder accepts to pay regular premium to the insurer. In return, the insurer guarantees
monetary protection to the insured in case of any accident. If the insured dies in accident,
financial help is provided to his family members. A thriving insurance sector is very
important to every modern economy. Firstly because it encourages the habit of saving,
secondly because it provides a safety net to rural and urban enterprises and productive
individuals. And perhaps most importantly it generates long- term invisible funds for
infrastructure building. The nature of the insurance business is such that the cash inflow of
insurance companies is constant while the payout is deferred and contingency related. This is
the most compelling reason why private sector companies, which will spread the insurance
habit in the societal and consumer interest, are urgently required in this vital sector of the
economy. Opening up of insurance to private sector including foreign participation has
resulted into various opportunities and challenges in India.

1.2.1HISTORY OF LIC:
In India, insurance has a deep-rooted history. It finds mention in the writings of Manu,
(Manusmrithi), Yagnavalkya (Dharmasastra) and Kautilya (Arthasastra). The writings talk in
terms of pooling of resources that could be re-distributed in times of calamities such as fire,
floods, epidemics and famine. Ancient Indian history has preserved the earliest traces of
insurance in the form of marine trade loans and carriers’ contracts. Insurance in India has
evolved 2 over time heavily drawing from other countries, England in particular. The process
of insurance has been evolved to safeguard the interests of people from uncertainty by
providing certainty of payment at a given contingency. Life insurance in its modern form
came to India from England in 1818 with the formation of Oriental Life Insurance Company
(OLIC) in Calcutta mainly by Europeans to help widows of their kin. Later, due to persuasion
by one of its directors, Indians were also covered by the company. By 1868, 285 companies
were doing business of insurance in India. Earlier these companies were governed by Indian
company act 1866. By 1870, 174 companies ceased to exist, when British parliament enacted
insurance Act 1870. These companies were however, insuring European lives. Those Indians
who were offered insurance cover were treated as sub-standard lives and were accepted with
an extra premium of 15% to 20%. First Indian Company -Pioneering efforts of reformers and
social workers like Raja Ram Mohan Ray, Dwarakanath Tagore, RamatamLahiri,

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RustomjiCowasji and other led to entry of Indians in insurance business. First Indian
insurance company under the name “Bombay Life Insurance Society” started its operation in
1870, and started covering Indian lives at standard rates. Later “Oriental Government
Security Life Insurance Company”, was established in 1874, with Sir Phirozshah Mehta as
one of its founder directors and later emerged as a leading Indian insurance company under
the name “Bombay Life Assurance Society” started its operations in 1870. Pre-Independence
Scenario -With the patriotic fervor of Non-Corporation Movement (1919) and Civil
Disobedience Movement (1929), number of Indian companies entered the insurance arena.
Eminent figures in political area like Mahatma Gandhi and Pundit Nehru openly encouraged
Indians to enter the fray. In 1914 there were only 44 companies; by 1940 this number grew to
195. Business in force during this period grew from Rs.22.44 corers to Rs.304.03 corers
(1628381 polices). Life fund steadily grew from Rs.6.36 cores to Rs.62.41 corers. In 1938,
the insurance business was heavily regulated by enactment of insurance Act 1938(based on
draft bill presented 3 by Sir N.N.Sarcar in Legislative Assembly in January 1937). From here
onwards the growth of life insurance was quite steady except for a setback in 1947-48 due to
aftermath of partition of Indian. In 1948, there were 209 insurances, with 712.76 corers
business in force under 3,016, 000 policies. The life fund by then grew to 150.39 cores.
Nationalization of Life Insurance (1956) - Despite the mushroom growth of many insurance
companies per capita insurance in Indian was merely Rs.8.00 in 1944(against Rs.2, 000 in US
and Rs.600 in UK), besides some companies were indulging in malpractices, and a number of
companies went into liquidation. Big industry houses were controlling the insurance and
banking business resulting in inters looking of funds between banks and insurance
companies. This shook the faith of insuring public in insurance companies as custodians of
their savings and security. The Government of India nationalized the life insurance industry
in January, 1956 by merging about 250 life insurance companies and forming Life Insurance
Corporation of India (LIC), which started functioning from 01.09.1956. Some of the
important milestones in the life insurance business in India are: 1818: Oriental Life Insurance
Company, the first life insurance company on Indian soil started functioning. 1870: Bombay
Mutual Life Assurance Society, the first Indian life insurance company started its business.
1912: The Indian Life Assurance Companies Act legislated as the first statute to regulate the
life insurance business. 1928: The Indian Insurance Companies Act legislated to enable the
government to collect statistical information about both life and non-life insurance
businesses. 1938: Earlier legislation merged and modified to by the Insurance Act with the
objective of protecting the interests of the insuring public. 1956: 245 Indian and foreign
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insurer and provident societies are taken over 4 by the central government and nationalized.
LIC formed by an Act of Parliament. LIC Act, 1956, with a capital contribution of Rs. 5 corer
from the Government of India. Post Nationalization Trend - After completing the arduous
task of integration of about 250 life insurance companies, the LIC of India gave an exemplary
performance in achieving various objectives of nationalization.
Today LIC functions with 2048 fully computerized branch offices, 113 divisional offices, 8
zonal offices, 992 satellite offices and the corporate office. 2,048 branches and 1381 satellite
offices and corporate offices; it also has 54 customer zones and 25 metro-area service hubs
located in different cities and towns of India. LIC also has a network of around 13,37,064
individual agents, 242 Corporate Agents, 79 Referral Agents, 98 Brokers and 42 Banks (as on
31.3.2011) for soliciting life insurance business from the public. The slogan of LIC is
"Zindagikesaathbhi, Zindagikebaadbhi".Its main asset is its staff strength of 1.15 lakh
employees and including about 21,000 class-I officers. Meanwhile, LIC is also planning to
expand its overseas presence by setting up a subsidiary in Singapore. LIC already has
presence in countries like the UK, Mauritius, Kenya, Nepal and Sri Lanka. In the Middle
East, LIC is present in Saudi Arabia, Kuwait, Dubai, Abu Dhabi, Oman and Qatar business in
overseas and has regional offices in Fuji, Mauritius and the UK. LIC’s Wide Area Network
covers 113 divisional offices and connects all the branches through a Metro Area Network.
LIC has tied up with some banks and service providers to offer on-line premium collection
facility in selected cities. LIC’s ECS and ATM premium payment facility is an addition to
customer convenience. Apart from on-line Kiosks and IVRS, Info Centre have been
commissioned at Mumbai, Ahmadabad, Bangalore, Chennai, 6 Hyderabad, Kolkata, New
Delhi, Pune and many other cities with a vision of providing easy access to its policyholders.
LIC has launched its SATELLITE SAMPARK offices. The satellite offices are smaller,
leaner and closer to the customer. The digitalized records of the satellite offices will facilitate
anywhere servicing and many other conveniences in the future.

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1.3 INTRODUCTION OF ICICI PRUDENTIAL INSURANCE
COMPANY
ICICI Prudential Life Insurance Company Ltd. (ICICI Prudential Life) is a joint venture
between ICICI Bank Ltd., one of India's largest private sector banks, and Prudential
Corporation Holdings Limited.
ICICI Prudential Life began its operations in fiscal year 2001 and has consistently been the
market leader amongst private players in the Indian life insurance sector. ICICI’s Assets
under Management (AUM) as on 31st March 2017 were `1,229.19 billion. ICICI Prudential
Life is the first private life insurer to attain assets under management of `1 trillion and In-
force sum assured of over `3 trillion. ICICI Prudential Life is also the first insurance company
in India to be listed on NSE and BSE.
ICICI Prudential Life Insurance Company has setup a large dispersal network of almost 1900
branches with an army of 2,10,000 advisors selling their life insurance policies. This along
with the reach of ICICI bank and 7 other ban assurance partners make it difficult players in
the life insurance sector in India. It is also among the earliest private life insurance companies
to start operations in India. Currently it is among the largest life insurance players in the
country and among the few private life insurance companies which are profitable.
ICICI Prudential is the first life insurer in India to receive a National Insurer Financial
Strength rating of AAA from Fitch ratings. For three years in a row, ICICI Prudential has
been voted as India's Most Trusted Private Life Insurer, by The Economic Times - AC
Nielsen ORG Marge survey of 'Most Trusted Brands'. As they grow our distribution, product
range and customer base, they continue to tirelessly uphold our commitment to deliver world-
class financial solutions to customers all over India.

1.3.1HISTORY:
ICICI Prudential Life Insurance Company is a joint venture joint venture between ICICI
Bank and Prudential place leading international financial services group headquartered in
the United Kingdom. ICICI Prudential was amongst the first private sector insurance
companies to begin operations in December 2000 after receiving approval from Insurance
Regulatory and Development Authority of India (IRDAI). As of 2010, the managing director
and CEO was Sandeep Bakhshi.
ICICI Bank is India’s largest private sector bank with total assets of 7,206.95 billion (US$
109 billion) at March 31, 2016 and profit after tax 97.26 billion (US$ 1,468) for the year

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ended March 31,2016. ICICI Bank currently has a network of 4450 branches and 14,925
ATM’s across India. ICOICI bank was originally promoted in 1994 by ICICI Limited, an
Indian financial institution, and was its wholly-owned subsidiary.
Prudential Corporation Holdings Limited is a part of prudential plc which was founded in
London in 1848. Prudential plc is an international financial services group with significant
operations in Asia, the US and the UK. Prudential plc serves around 24 million insurance
customers and has £562 billion of assets under management.

1.4 WHAT IS INSURANCE?

Life is full of risks. Being a social animal and risk reverse, man always tries to reduce risk.
An age- old method of sharing of risk through economic cooperation led to the development
of the concept of “insurance”.
Insurance may be described as a social device to reduce or eliminate risk of loss to life and
property. Insurance is collective bearing of risk. The risks, which can be insured against,
include fire, perils of sea, death, accidents and burglary. Insurance is a concept which means
of protection from a financial loss. It is form of a risk management primarily used
to secured against the contingent risk, uncertain loss. Life is full of risks. Being a social
animal and risk reverse, man always tries to reduce risk. An age- old method of sharing of
risk through economic cooperation led to the development of the concept of “insurance”.
Insurance can be defined as a legal contract between two parties where one party called
insurer undertakes to pay a fixed amount of money on the happening of a particular event
which may be certain or uncertain. The other party called insured pays in exchange a fixed
sum known as premium. The insurer and the insured are also known as “Assuror and
Assured”.
The transaction of insurance involves the insured that assuming a guaranteed and relatively
small loss in the form of payment to the insurer in exchange for the insurer's promise to
compensate the insured in the event of a covered loss. The loss may not or may be financial,
but it should be reducible to financial terms, and must involve something in which the insured
has an interest of insurance established by ownership, possession, or preexisting relationship.
The amount charged by the insurer to the insured for the coverage set forth in the insurance
policy is known the premium. If the insured faced a loss which is covered by the insurance
policy, then the insured submits a claim to the insurer for processing by claim adjuster.

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1.4.1Insurability
Risks which can be insured by private companies have some characteristics
1 .Large number of same exposure units: Though insurance operates through pooling
resources, many insurance policies are provided for the individual members of large classes,
allowing insurers to benefit from the law of large numbers in which predicted losses are
similar to the actual losses. Exceptions include Lloyd's of London; it is famous for insuring
the life or health of actors, sports figures, and other famous individuals.
2. Definite loss: The loss takes place at a known time, in a known place, and from a known
cause. The classic example is death of an insured person on a life insurance
policy. Fire, automobile accidents, and worker injuries may all easily meet this criterion.
Other types of losses may only be definite in theory. Ideally, the time, place, and cause of a
loss should be clear enough that a reasonable person, with sufficient information, could
objectively verify all three elements.
3. Accidental loss: The event that organizes the trigger of a claim should be accidental, or at
least outside the control of the beneficiary of the insurance. The loss should be pure, in the
sense that it results from an event for which there is only the opportunity for cost. Events that
contain theoretical elements such as ordinary business risks or even purchasing a lottery
ticket are generally not considered insurable.
4. Large loss: The size of the loss must be meaningful from the perspective of the insured.
Insurance premiums need to cover both the expected cost of losses, plus the cost of issuing
and administering the policy, adjusting losses, and supplying the capital needed to reasonably
assure that the insurer will be able to pay claims. There is hardly any point in paying such
costs unless the protection offered has real value to a buyer.
5.Affordable premium: If the likelihood of an insured event is so high, or the cost of the
event so large, that the resulting premium is large relative to the amount of protection offered,
then it is not likely that the insurance will be purchased, even if on offer. As the accounting
profession formally recognizes in financial accounting standards, the premium cannot be so
large that there is not a reasonable chance of a significant loss to the insurer. If there is no
such chance of loss, then the transaction may have the form of insurance, but not the
substance.
6. Calculable loss: There are two elements that must be at least estimable, if not formally
calculable: the probability of loss, and the attendant cost. Probability of loss is generally an
experimental exercise, while cost has more to do with the ability of a reasonable person in
possession of a copy of the insurance policy and a proof of loss associated with a claim
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presented under that policy to make a reasonably definite and objective evaluation of the
amount of the loss recoverable as a result of the claim.
8. Limited risk of catastrophically large losses: Insurable losses are
ideally independent and non-catastrophic, meaning that the losses do not happen all at once
and individual losses are not severe enough to bankrupt the insurer; insurers may prefer to
limit their exposure to a loss from a single event to some small portion of their capital
base. Capital constrains insurers' ability to sell earthquake insurance as well as wind
insurance in hurricane zones. In the United States, flood risk is insured by the federal
government. In commercial fire insurance, it is possible to find single properties whose total
exposed value is well in excess of any individual insurer's capital constraint. Such properties
are generally shared among several insurers, or are insured by a single insurer who syndicates
the risk into the reinsurance market.

1.4.2 Functions of Insurance

Functions of insurance can be divided into parts;
I Primary functions.
II Secondary functions

I Primary Functions

1. Inevitability of compensation of loss: Insurance provides inevitability of payment at the

uncertainty of loss. The elements of insecurity are reduced by better planning and
administration. The insurer charges premium for providing inevitability.
2. Insurance provides protection: The main function of insurance is to provide protection
against risk of loss. The insurance policy covers the risk of loss. The insured person is
guaranteed for the actual loss suffered by him. Insurance thus provide financial protection to
the insured. Life insurance policies may also be used as guarantee security for raising loans.
3. Risk sharing: All business concerns face the problem of risk. Risk and insurance are
intertwined with each other. Insurance, as a device is the outcome of the existence of various
risks in our day to day life. It does not eliminate risks but it reduces the financial loss caused
by risks. Insurance spreads the whole loss over the large number of persons who are exposed
by a particular risk.

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II Secondary Functions

1. Prevention of losses: The insurance companies help in prevention of losses as they join
hands with those institutions which are engaged in loss prevention measures. The reduction in
losses means that the insurance companies would be required to pay lesser compensations to
the assured and manage to accumulate more savings, which in turn, will assist in reducing the
premiums
2. Providing funds for investment: Insurance provides capital for society. Accumulated
funds through savings in the form of insurance premium are invested in economic
development plans or productivity projects.
3. Insurance increases efficiency: The insurance eliminates the worries and miseries of
losses. Businessman feel more motivated and encouraged to take risks to enhance their profit
earning. This also helps in improving their efficiencies.lll
4. Solution to social problems: Insurance take care of many social problems. We have
insurance against industrial injuries, road accident, old age, disability or death etc.
5. Encouragement of savings: Insurance not only provides protection against risks but also
a number of other incentives which encourages people to insure. Since regularity and
punctuality of payment of premium is a perquisite for keeping the policy in force, the insured
feels compelled to save.

1.4.3Principles of Insurance
The basic principles which govern the insurance are -
(1) Utmost good faith
(2) Insurable interest
(3) Indemnity
(4) Contribution
(5) Subrogation
(6) Causaproxima
(7) Mitigation of loss

1.4.4 PRACTICE OF INSURANCE IN INDIA: 1818-1956

It is claimed that insurance was practiced in India even in Vedic times. The Sanskrit word
“Yogakshema” in the Rigveda means some type of insurance, which was practiced by the

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Aryans in India nearly 3000 years ago. During the Mughal period insurance took from roots.
Loses due to passageway of royal throngs through farms were compensated by the states as a
gesture of goodwill.
The year 1818is an epoch making year in the history of our country. The first life insurance
company on India dirt appears to have been started in this year. A group of Europeans
pioneered the establishment of Oriental life insurance society but the company was reformed
in 1829.
Prince Dwarakanath Tagore was the only flush partner & the sole responsibility for carrying
on the organization developed on him. Meanwhile, early in Janury1834, the Government
made up its mind to establish a Public Insurance Company & a Committee was set up for this
purpose. They set up Committees of their own enquire into their individual affairs.
Dwarakanath Tagore, too, had a Committee appointed to look into the affairs of the Oriental.
As a result, another company was born out of the previous one in the name of "New Oriental
Company".
In the reorganization of the "Oriental" in the year 1834, two other gentlemen were associate
.One was RamatamLahiri and the other RustamjeeCowasjee. The latter was another
prominent figure of the business world. Rustamjee entered insurance business in 1828, he
was already known to the community and the Government as a wealthy Parsi merchant.
Rustamjee connection with insurance also started with "Laudable Societies", but he was later
on associated with Companies like "Sun Life Office (1834) ", New Oriental(1835),Universal
Life (1835) , New Laudable (1840) , and Indian Laudable (1841) .He was intimately
connected with the Committee of Insurance Offices in Calcutta.
RustamjeeCowasjee&Dwarkanath Tagore was probably the first Indians to join in partnership
business with the Europeans & in the field of insurance they were pioneers on this side of the
country.
Apart from Calcutta, several enterprising people in Bombay started in 1823 the "Bombay
Life" Assurance Company. The company went into insolvency soon and could not revive.
In1829, the "Madras Equitable "was made. It finally stopped to function in 1921 due to
financial difficulties after the First World War.
The effort to set up a public insurance company at the government level also departed in vain,
mainly from opposition of private operators. Majority of the early efforts to form insurance
offices were in the province of Bengal. This was due to its political & economic importance
at that time.

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The involvement of Raja Ram Mohan Roy, one of the greatest social improvers of India, to
the development of life insurance is very great. He was deeply worried about the sad dilemma
of desperate widows and helpless orphans.

OVERSEAS INSURERS
Initially, when Life Offices were established in large numbers in Britain, some of the
ventured to issue sterling policies to the British residents in India. Premiums collected here
were credited to England largely for British beneficiaries. Insurance mortality tables and
insufficient mortality data of Englishmen in India made the premiums heavy-heavier than at
home. Insurance was denied to the "natives" even if they wanted it- for their lives were
always considered risky and sometimes valueless. When Indian lives were accepted as a very
special case, the extras charged were still heavier.
Prominent amongst the companies which came to India around this period was the "Medical
Invalid and General" incorporated in London in 1841. As more areas were annexed and the
ruling power, with vested interests in developing trade, took charge , the "Medical" extended
its area of operation, established large connections, absorbed the" Agra Life" and in
1835,took over the "New Oriental". With W.F. Ferguson, who was the manager of the "New
Oriental" before amalgamation, he commenced very active operations which were
temporarily affected by the 1857 "Mutiny".
The Universal Life Insurance Company established in England in 1836 opened its Indian
Branch in 1840 and enjoyed a long period of successful operations until it was taken over by
the "North British" in May 1901. Insurance exceeding Rs. 10 corers were issued in India
during this period. Another English Company operating in India at that time was the Colonia
Life Assurance Company. The original prospectus of this company declared its purpose as
"extending to the Colonies of Great Britain and to Indian the full benefit of Life Assurance"
.It appointed agents with local boards which were first established on Calcutta, Bombay,
Madras and Colombo. Later on this company was taken over by the "Standard Life" and
made valuable contribution to investigations into the mortality experience of assured lives in
India. Eventually it ceased its operations in India in 1938.

It is difficult to say which was the oldest Life Policy in India, but the oldest known appears to
be one sold by the Royal Insurance (which commenced business in India in 1845) on the life
was to Cursetjee Furdonjee on 6th January 1848, no reference to any earlier policy being

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available. In the year 1853, the Liver pool and London and Globe Insurance Company
established in England in 1836, commenced business in India. It accepted only European
lives and commenced insuring Indian lives only after 1929.This too, was mainly to oblige
good agents of the Company for classes other than life business. The North British and
Mercantile was the next company to appear on the Indian scene.
It started a fire insurance business in the year 1861 and life business in 1864. The London
Assurance started a life business in 1864, limited principally to European lives and closed
down its life department when the Life Assurance Companies Act 1912 made submission
of returns compulsory.
On 3rd December, 1870, seven solemn men of Bombay with just seven rupees for primary
expenses gave form to a plan of offering insurance to the public without the risk of
devastation and the "Bombay Mutual Life Assurance Society" came into existence. This was
followed by the Oriental Life Assurance Company in1874, the Bharat in 1896 and the Empire
of India in1897.

1.4.5 THE BIRTH OF INDIAN INSURERS

With the advent of the 20th century, the glorious revitalization of swadeshi days appeared. At
the same time, well- to do Indians realized the potentiality of Indian Insurance business .The
Swadeshi movement of 1905-1907 gave rise to more insurance companies. The United Indian
Madras, National Indian and National Insurance in Calcutta and the Co-operative.
With the advent of the 20th century, the glorious renaissance of swadeshi days dawned. At
the same time, well- to do Indians realized the potentiality of Indian Insurance business .The
Swadeshi movement of 1905-1907 gave rise to more insurance companies. The United Indian
Madras, National Indian and National Insurance in Calcutta and the Co-operative Assurance
at Lahore were established in 1906. In 1907, Hindustan Co-operative Insurance Company
took its birth in one of the rooms of the Jorasanko House of the great poetRabindranath
Tagore, in Calcutta. The Indian Mercantile (1907) was started in Bombay, General Assurance
(1908) at Ajmer and the Swadeshi Life in Bombay in 1908.
The end of the First World War (1914-18) witnessed an influx of insurance companies in
India. Famous Indian business houses started new insurance companies. Industrial and
Prudential Bombay, Western India, Satara, were floated before the war, but by 1919,
companies like Jupiter General, New India, Vulcan Insurance Company etc. came into

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Being .From political platforms also, national leaders support this cause. It is duty to every
Indian to support only Indian Insurance .The keynote of our Swaraj is in placing all our
insurance with our Indian companies", said Mahatma Gandhi in his message. "I hope Indians
will realize the importance of patriotism only through Indian insurance institution", stated
Pundit Jawaharlal Nehru. Thus, the cause of Indian insurance became a national issue. The
pursuit to boost Indian insurance represented a crusade to extricate the Indian economy
from foreign domination.

1.4.6 PROGRESS IN INSURANCE BUSINESS

The growth of Life Insurance in concrete terms could be said to being during the first two
decades of twentieth century when most of the major companies were founded. They grew in
terms of rise in the number of companies, in terms of number of policies and sum assured as
well as total life fund. Indian Insurance Year Book, published for the first time in 1914, gives
the figure of the total business-in -force as 22.44 corers which grew to Rs. 298 cores in
1938.In 1914, there were only 44companies transacting insurance business in India, and
during the next 25 years their number rose to 176. The total progress on all the primary
heads, viz. life fund, premium income and new business indicate that Indian Insurance
Business had been making a definite headway during this year’s.
The promotion of new life insurance companies continued to be almost a craze and insurance
companies mushroomed. In this period, 176 insurance companies were formed and many
of them failed. Feeling concerned about it, the All India Life Assurance Offices Association
urged upon the Government in 1932 to undertake the insurance legislation to
(a) Compulsorily register all Life Insurance companies.
(b) Secure a deposit of Rs.2 lakh from all Life Insurance companies.
(c) Compel foreign companies doing business in India to keep sufficient funds in India
securities to meet their liabilities under all policies issued in India.

1.4.7 INSURANCE ACT, 1938

The Insurance Act, 1938, was the first comprehensive legislation governing not only life but
also non- life branches of insurance to provide strict state control over insurance business. In
sub- sections to dealt with provident companies, mutual offices and co-operative societies as
well.

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The silent features of the Act were as follows:

(A) Constitution of a Department of Insurance under a superintendent vested with wide

powers of supervision and control over all kinds of insurance companies.
(B) Regulation for the compulsory registration of insurance companies and for filing of
returns of investment and financial conditions.
(C) Provisions for deposit, to prevent insurers of inadequate financial resources of speculative
concerns for commencing business.
(D) Provisions that 55% of the net life fund of an Indian or non- Indian insurer should
invested in Indian Government and approved securities with at least 25% in Indian
Government Rupee securities. All other companies, i.e., foreign companies must invest 100%
of their Indian liabilities in Indian Government and approved securities, with at least 33.3%
Indian Government securities.
(E) Prohibition of rebating, restriction of commission, licensing of agents etc .Maximum rates
of commission were fixed at 40% of the first premiums and 5% of there newel premium in
respect of life assurance business.
(F) Periodical valuation of Indian Insurance business of foreign companies and the business
of Indian companies.
(G) Provision for policyholders' directors, making it possible for the representatives
of policyholders to be on the Board of directors.
(H) Standardization of policy conditions required all companies to file standard forms and
tables of premium approved by an Actuary. Under this requirement, the personalize deposit
for life insurance business was raised from Rs. 25000 in Government securities to Rs. 50000
in cash approved securities, which was successively to braised by installments to Rs. 2 lakh
within a specified time limit.

1.4.8 Nationalization
THE LIFE INSURANCE CORPORATION OF INDIA: 1956
This was the first step taken towards the nationalization of life insurance business in India
.On 20th January, 1956 all life insurance companies were taken over by 43 nominated
custodians. From the word go, the complex task of running the industry on a permanent basis
and continuing the services to policy holders without interruption were their major concerns.
The actual work of integration had await legislation. The custodians managed the insurance

15
Companies till 1-09-1956, when Life Insurance Corporation was established under the
general direction and control of the Ministry of Finance.
The Ordinance provided for the transfer of the control of 154 Indian insurers, 16 non Indian
insurers and 75 provident societies. With the Government take over the management aimed
towards the evolution of a common uniform premium rate, policy conditions and service and
working procedures and above all to help promote team spirit.
The corporation, a body corporate shall consist of not more than 15 members appointed by
the Central Government, one of them being appointed by the government as chairman .The
capital of the corporation was at Rs 5 cores provided by the central government.

INSURANCE SECTOR REFORMS

In 1993, Malhotra Committee, headed by former Finance Secretary and RBI Governor
R.N.Malhotra was formed to evaluate the Indian Insurance industry and recommended its
future direction .The reforms were aimed at "creating a more efficient and competitive
financial system suitable for the requirements of the economy keeping in mind the structural
changes currently underway and recognizing that insurance is an important part of the overall
financial system where it was necessary to address the need for similar reforms...".
In 1994, the committee submitted the report and some of the key recommendations included:

(1) STRUCTURE
 Government stake in the Insurance Companies to be carried down to 50%.
 Government should take over the subsidiaries of GIC and its holdings so that these
subsidiaries can act as independent corporations.
 All the insurance companies should be given freedom to operate
(2) COMPETETION
 Private Companies with minimum paid up capital of Rs.1 bn should be allowed to enter
the industry.
 Postal Life Insurance should be allowed to operate in the rural market.
 Only one State Level Life Insurance Company should be allowed to operate in each state.
 No Company should deal in both Life and General Insurance through a single entry.
 Foreign Companies may be allowed to enter the industry in collaboration with the
domestic companies.

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(3) REGULATORY BODY
 The Insurance Act should be changed.
 Controller of Insurance should be made independent.
 An Insurance Regulatory Body should be set up.
(4) INVESMENTS
 Obligatory Investments of LIC Life Fund in government securities to be decreased
from75% to 50%.
 GIC and its subsidiaries are not to hold more than 5% in any company.
(5) CUSTOMER SERVICE
 Insurance Companies must be encouraged to set up unit linked pension plans
 LIC should pay interest on delay on payments beyond 30 days.
 Computerization of operations and apprising of technology to be carried out in the
insurance industry.

The committee accentuated that in order to improve the customer service and increase the
coverage of insurance industry should opened up to competition. But at the same time, the
committee felt the need to exercise caution as any failure on the part of new players could
devastation the public confidence in the industry.
Hence, it was decided to permit competition in a limited way by instructing the minimum
capital requirement of Rs. 100 cores. The committee felt the need to offer greater sovereignty
to insurance companies in order to improve their performance and allow them toast as
independent companies with economic motives. For this purpose, it had proposed setting up
an independent regulatory body.

Liberalization:
OPENING UP OF INSURANCE SECTOR – 1999 THE INSURANCEREGULATORY
AND DEVELOPMENT AUTHORITY
Reforms in the Insurance sector were introduced with the passage of the IRDA Bill in
Parliament in December 1999. The IRDA since its combination as a statutory body in April
2000 has demandingly stuck to its schedule of framing regulations and registering the private
sector insurance companies. The other decision taken simultaneously to provide the
supporting systems to the insurance sector and in particular the life insurance companies was
the launch of the IRDA's online service for issue and renewal of licenses to agents. Since

17
being set up as an independent statutory body the IRDA has put in framework of globally
compatible regulations. In the private sector 14 life insurance companies have been
registered.

ENTRY OF PRIVATE COMPANIES

Under the IRDA Act, private companies can now work in India's insurance industry.
However, they must get a license from the IRDA previously being permitted to write
business.
To have its license application considered, a domestic private company must be registered in
according to the Companies Act of 1956 and have approximately US$ 20 million of
investment capital. The precise licensing requirements that Private Indian Companies must
fulfill are set forth in the Registration on Indian Insurance Companies Regulations, published
by the IRDA 2000.

LIFTING OF BARRIERS TO FOREIGN INVESTMENT

The IRDA Act also lifts certain barriers to foreign direct investment in Indian insurance
industry. However, regulations stipulate that they have capital base of at least US $ 20
million, and their investment in such company is capped at 26 percent. Thus, to participate in
the market, they must form a joint venture with an Indian partner that is able to invest the
remaining funds. The equity investments limit is the same for global reinsures seeking to
write business in India, but they are required to put up a capital of approximately US$
45million in order to establish a domestic company.
On the other hand, no global reinsurer has recognized a domestic company. Instead, most of
the top international reinsurance companies work from their overseas offices by sharing the
reinsurance risks picked up by the GIC. A recent proposal has been put forward to increase
foreign direct investment to 49 percent. In addition, global companies are pushing for the
right to establish branch offices in India. These changes are likely to substantially increase
the presence of international insurers, reinsurers, and brokers in India.
The IRDA Insurance Brokers Act in India 2002 permitted overseas insurance and reinsurance
brokers to enter the market, but with the same equity cap as that governing the operations of
foreign insurers and reinsurers. Thus, foreign brokers must also form a joint venture with an
Indian partner in order to establish an Indian broking house.

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OVERVIEW OF THE CURRENT INSURANCE MARKET
In the years since the IRDA Act initiated market improvements, the insurance sector has
experienced some extraordinary changes. The entry of a large number of Indian and Foreign
private companies in life insurance business has to lead greater choice in terms of products
and services. Increased consumer awareness of the benefits and importance of insurance and
reinsurance has generated many more buyers and new distribution channels among them
brokers, bank assurance, the Internet, and corporate agents_ have provided additional ways of
getting products and services to customers.
Private insurance companies have to date written a small percentage of business in this sector
during the last three years, but they have escorted in a competitive environment that has
enhanced market growth.
State retained insurers still write the majority of insurance business, and they have the net
worth required to underwrite large corporate risks without depending almost completely on
reinsurance support. However, their emphasis on reconstructing is opening to put them at a
disadvantage against private competitors.
Over the next few years, the share of market held by the public insurers is to expected to drop
substantially, with the private companies assuming growing percentage of the business.

1.5 OBJECTIVES

1. To identify the most preferences life insurance company.

There is a large competition between the insurance company in Indian market. This study is
based on comparative study between the LIC and ICICI Prudential Insurance Company.
Therefore its first objective is to identify the preferences of life insurance company among
the customers. It helps us to know the most selectable company between public insurance
company and private company.

2. To know the scheme of insurance policy.

There is number of insurance policy available in the market. There is variety of insurance
policy schemes. For instance life insurance policy, money back policy, pension fund, health
insurance, etc. This objective helps to know the scheme of insurance policy has been taken
by the customers.

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3. To know the awareness about policy.
Insurance helps to cover the risk and losses. Insurance is an agreement between insurers. An
agreement contain terms and condition. Customer should aware about all the terms and
condition signed by them. Insurance too have many types of policies so consumers needs to
be aware about all the policies related to the insurance policy which they have taken. This
objective helps to know the awareness about the policy among the customers.
4. To know the reason for choosing the insurance company.
Today’s market is competitive market. There is a tough competition between insurance
companies. Company’s performance influences to the customers. This objective helps to
know the reason for choosing and selecting the particular company. Reason may be less
premium, better terms, better servicer or something else.
5. To know the premium rate among LIC and ICICI Prudential Insurance Company.
This comparative study based on certain objectives which compare two different insurance
companies. This objective helps to know comparative statement of premium rate of insurance
of LIC and ICICI prudential insurance company. In insurance a fixed amount has to pay to
insure particular event or something else. A fixed amount which pays it is known as
premium. Premium rate may be very cheap, cheap, at par or expensive.
6. To know the agents of insurance company provides the correct information.
Agents are middleman who connects the consumers with the insurance company. Agents
need to provide correct and true information regarding the insurance policies. This study may
help to know the agents of the insurance company provide correct information of the policies
may or may not be.
7. To know the rating of the services of premium deposits mode.
Premiums are the subsequent premiums which are paid by the insured to the insurer in order
to keep the policy in operation and avail the benefits of the policy accordingly. Premium of
deposit is differing by each company to another company. Due to this objective we receive
the ratings to the services of premium of deposits mode. It may be excellent, very good,
average or bad.
8. To know the satisfaction level towards services.
Customer servicing today has become the focal point of insurance companies. However, there
is absolutely no exaggeration in mentioning that the amount of customer grievances in the
insurance domain has gone up steeply. Satisfaction of consumers is must. Customer
satisfaction gives raise to the company. This study helps to identify the satisfaction level
20
towards the services offered by the company. Satisfaction level may be very satisfied,
satisfied, neutral or dissatisfied.
9. To know the treatment of customers.
All firms must be able to show consistently that fair treatment of customers is at the heart of
their business model. Firms are responsible for making sure customers are treated fairly. All
consumers are equal. Consumers can be businessman, rich, doctor, worker, and poor etc. but
at the company’s point of view all consumers should be equal and they should treat equally to
each consumer. This study may help to know the treatment of consumers.
10. To know the future preferences.
In present Indian market, the investment habits of Indian consumers are changing very
frequently. The individuals have their own perception towards various types of investment
plans. The study of this research work was focused over consumer’s perception on
investment towards Life Insurance Services. This objective helps to know the future
preferences of consumers between LIC, ICICI Prudential Insurance Company and others.

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 CHAPTER 2

2.1RESEARCH METHODOLOGY
Methodology is the systematic analysis of the methods applied to a field of study. It
comprises the theoretical analysis of the body of methods and principles with a branch of
knowledge. Methodology describes the research direction to be followed, the gadgets to be
used universe and sample of the study for the data to be composed, the tools of analysis used
and pattern of deducing inferences. Under this the comparison study has been done between
public insurance company and private insurance company i.e. LIC and ICICI Prudential
Insurance Company.
According to J.W.B. est., “Research is considered to be formal, systematic, intensive process
of carrying on the scientific method of analysis. It involves a more systematic structure of
investigation usually resulting in some sort of formal record of procedures and report of result
or conclusions.”
According to P.M.Cook, “Research is an honest, exhaustive, intelligent searching for facts
and their meanings or implications with reference to a given problem. It is the process of
arriving at dependable solutions to problem through planned and systematic collection,
analysis and interpretation of data. The best research is that which is reliable, verifiable and
exhaustive so that it provides information in which we have confidence.”

2.2 RESEARCH STATEMENT

The research statement studied is entitled, “A comparative study of Life Insurance
Corporation of India and ICICI Prudential Insurance Company”. The present study focuses
on the analysis of the performance of LIC and all ICICI prudential life insurance company in
India with the help of mean, percentage, ratios, ANOVA and graphs.

2.3 RESEARCH DESIGN

A Research design is a plan of action to be carried out in connection with a research project.
It is the conceptual structure within which research is conducted measurement and analysis of
data. It is the specification of methods and procedures for acquiring the information needed
for solving the problem. Decisions regarding what, where, when, how much, by what means
concerning an inquiry or a research study constitute a research design.
The study covers a period of five years starting from 2013 to 2017.

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2.3.1OBJECTIVES OF THE STUDY
1. To know where Life Insurance Corporation & ICICI Prudential Insurance Company stands
in Indian market.
Nowadays there is a large competition in the insurance market. Insurance plays an important
role in today’s life. There are numbers of private companies are available who provide
insurance facilities. So this study helps to know the performance of two different insurance
company as well as where these company stands in Indian market.
2. To understand the concept and mechanism of insurance
Insurance quite different and difficult term which needs to be very clear in the minds of
customers them consumers will become more confident. This study helps to know about
insurance, insurance policy and its principles etc.
3. To extend the knowledge.
This stuff the customary helps to extend the knowledge related to insurance and different
insurance companies. It also increase the knowledge related LIC (public company) and ICICI
prudential company (private company). This study gives the information of comparative
analysis of LIC and ICICI prudential company.
4. Comparative study of their products & services.
This study is based on comparative study so its main objective is comparative study of LIC
Company and ICICI prudential insurance company. This study gives the comparison data of
products and services of public and private company i.e. LIC and ICICI prudential insurance
company.
5. Making comparative analysis of profit & loss statement, Balance sheet & annual reports
between LIC & ICICI Prudential insurance company.
This study based on last 5 years which gives the comparison analysis of profit and loss
statements, balance sheet and annual reports of LIC and ICICI Prudential insurance company.

2.3.2SIGNIFICANCE OF THE STUDY

Consumers’ satisfaction is the major focus of any marketer, whether marketing tangible
products or intangible services. Life insurance, as a service and intangible in nature could be
sold, only if the buyers are satisfied with the service. How far the customers are satisfied or to
what extent customers can be delighted? These are the concerns of the insurance providers.
By understanding the level of consumer’s satisfaction, the marketer can take measures, to
retain the existing ones and to secure fresh customers, Hence this study in detail way, to find

23
out the extent of satisfaction of Life Insurance Corporation and ICICI prudential Insurance
Company. The Indian insurance industry is passing through a period of consumers market.
The customers have more selections in choosing their insurance company. With stiff rivalry
and advance technology, the services provided by the company have become more easy and
appropriate. This Study will give a base to the further research in this field.

2.3.4 Nature of data and sources of data

Collection of the data is an important part of research. The nature of data which is collected
and used for this research is secondary and primary in nature. The related and required data
has been collected from journals, dailies, annual reports, magazines, government
publications, literature and websites of selected companies and through various search
engines. Different scales are used for data analysis. Various financial ratios, bar charts are
used to know the comparison analysis of LIC and ICICI Prudential Company.

2.3.5 SAMPLE SELECTION

Private and public sector life insurance companies in India from 2012-13 to 2016-17 were
selected for the study.
The companies selected for the research work are as follows:
a) Public Sector:
Life Insurance Corporation of India.
(b) Private Sector:
ICICI Prudential Insurance Company

2.4 HYPOTHESIS
The formulation of hypothesis is an important step in the formulation of the research
Problem. The hypothesis is a tentative proposition formulated to determine its
Validity. The hypothesis may prove to be correct or incorrect. In any event, it leads to
An empirical test. Whatever the outcome the hypothesis is a question put in such a
Way that an answer of some kind can be forthcoming. It is an example of the
Organized skepticism of science, the refusal to accept any statement without empirical
Verification.
G.A.Lundberg defines hypothesis as “a tentative generalization, the validity of which
Remains to be tested.”

24
The research problem or question is converted into a null hypothesis and an
Alternative hypothesis. The hypotheses are stated in such a way that they are mutually
Exclusive. That is if one is true, the other must be false.
(A) NULL HYPOTHESIS:
It is a statement that declares the observed difference is due to chance. It is the
Hypothesis the researcher hopes to reject or disprove.
(B) ALTERNATIVE HYPOTHESIS:
The alternative hypothesis proposes a relationship between two or more variables,
Symbolized as H1.
For the above research,
1. The Alternative hypothesis will be,
H1: LIC Company is more preferable as compare to ICICI Prudential Insurance
Company from the year 2013 to 2017.
H1 refers the LIC Company is More preferable as compare to LIC Company i.e. LIC is
more profitable and more trustable by consumers in insurance market in India.
2. The Null Hypothesis will be,
H0: LIC Company is less preferable as compare to ICICI Prudential Insurance
Company from the year 2013-2017.
H0 refers that LIC is less preferable as compare to ICICI Prudential Insurance Company i.e.
LIC is more preferable and trustable by consumers in insurance market in India.

2.5LIMITATIONS OF THE STUDY

1. The comparative study is carried out for only two insurance companies which is LIC &
ICICI prudential insurance company and therefore the outcomes of the same cannot be
applied to any other insurance company as the facts and figures may differ consequently.
2. This study is limited to Mumbai only.
3. This study consumes lots of time.
4. The study considers data of only restricted duration of time i.e. 2013-2017.
5. It is based only on monetary aspects and non-monetary factors are not taken into
Account.
6. This analysis is carried on certain assumptions and theories hence the assumptions
Would be influenced to a certain extent.
7. This study considers limited respondents which could not appropriate to whole country.

25
8. The respondents may not give proper response.
9. Since the part of the study is based on their perception, the findings may change
Over the years in keeping with changes in environmental factor.

2.6 TOOLS AND METHODS OF DATA ANALYSIS

The present study involves calculation of different ratios to evaluate the financial
performance of life insurance companies in India from 2012-13 to 2016-17. It also compares
the cost efficiency of all life insurance companies in India during the same period. Prediction
of new business and total premium of the life insurance companies has also been done.
Various statistical measures like percentage, mean, ANOVA, Data Envelopment Analysis
and Linear trend are used in this study.

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 CHAPTER 3

LITERATURE REVIEW
In this chapter the researcher has discussed various book reviews undertaken. Different
websites were surfed in order to do a background study for the topic and relevant information
is taken into account for further research work. Insurance companies are an important mover
in the economic development of a nation and research is so essential to improve its working
results. This chapter deals with review of empirical studies related to perceptions towards
distribution channels. This review has been undertaken to observe the areas of distribution
channels which has been explored and which need further investigation in order to formulate
objectives and undertake productive research. This review also has been undertaken to unveil
the problem areas related to perceptions towards distribution channels as well as to study
current status of life insurers and challenges faced by them. Besides, studies would provide
an insight into the various efforts directed towards better understanding of the complexities of
framing distribution strategies of life insurance companies. The main theme and essence of
few relevant studies are presented below
Gupta (1977) analyzed in his study titled “Investment Policy of Life Insurance
Corporation of India” that how LIC is working with its policies, cans it provides quality
And variety of products to its customers and lastly, is there any scope for private
Participation in coming few years. It was found that presently, the only captain of ship
Insurance is Life Insurance Corporation of India but scenario will change when the
Doors will be opened for private sector. No doubt, LIC is working well with its policies
But still it will have to be ready for entry of private sector.
Mishap (1986) in his study titled “Analysis of working of Life Insurance
Corporation of India” has worked on objective to study the effect of working of LIC,
How this affects the financial aspect and the impact of LIC’s working on the customer
satisfaction. It was concluded that being the only company providing best services to the
customers by satisfying their needs, is running successfully by earning sufficient
Revenues and by providing extended services to the customers. The study examined theatric
is managing its customer base basically with agency channel. With the wide spread work
force of LIC in every part of the country, the customers are provided with variety of life
insurance products at their door steps according to their requirements.

27
Chaudhary (2000) in the study entitled “Indian Insurance Industry and Privatization” made
an attempt on the roles which private companies can play. The objectives of the paper were to
find out whether private insurance companies can serve as one stop shop covering all
insurance needs, to know whether private companies can offer value added services beyond
premium collection and claim settlement or not. It was concluded that for the first time in the
history of Indian Insurance, the concept of intermediary is being upgraded on a full scale. The
reach of intermediaries will become deeper and their impact on the conduct of insurance
business will be wider than before. The insurance companies can become one stop shop for
providing all insurance products and services to the customers.
Basu and Hollway (2002) in their study titled “Distribution of Insurance” indicated the
background of new entrants, their business strategies and various developments that are likely
to influence the market. After the opening of insurance sector in India, many insurance
companies have entered the market with new distribution strategies. These companies are
offering different saving plans, term benefits, riders and a wider range of products. From the
study, it is evident that private life insurers will have to concentrate on their distribution
strategies in order to capture the untapped insurance market.
Dumm and Hoyt (2002) discussed in their research titled “Insurance distribution channels:
Markets in transitions” that after privatization how life insurers are changing their distribution
network. They described some of the factors that are impacting the adoption of different
distribution channels. They provided an overview of the literature on different channels
adoption and the near term future for distribution of life insurance products. It was concluded
in the study that insurers are continuing to experiment with different distribution channels.
Different life insurers are utilizing multiple distribution channels as they continue to balance
the needs of different groups of consumers against the cost of distributing their products and
services because when it comes to insurance distribution channels, one size does not fit for
all.
Kendo (2003) in his article titled “What’s next in India’s insurance market” discussed the
changes in various issues of insurance industry after the entry of private players. Despite of
having huge population, India still has a low insurance penetration today, people are
increasingly looking not just at products but at integrated financial solutions that can offer
stability of returns along with total protection. The study concluded that the role of
technology cannot be ignored as technology will play an important role in aiding design,
administration of products and to build long term customer relationships.

28
RaoVenkatesware (2004) in his study titled “Alternative distribution channels in India”
presented the objective that insurance industry must review customer needs in a holistic
manner, considering the market as a whole. The industry must target overall financial
management of the population. The another objective was to review the structuring of
consumer education and dealing with consumer. It was concluded in the study that customers
still rely on agency channel. It is apparent that multiple channels have given competitive edge
to the Insurers. It is examined that these distribution channels will help an insurance company
to offer a range of products to the customer, thereby increasing the chances of success. The
individual agent explains all options to sell the policies of the company, he is representing.
Brokers are in major cities and the concept is yet to take a place. With these channels the
costs may not come down but the customer coverage may go up. Along with these
distribution channels come various challenges. Effective management of channel conflict and
curtailing the costs of distribution will be of utmost importance. The importance not only
remains on how many channels a company currently has, but on how those channels work
and interact with each other in a cost effective manner giving a single view of the
Organization and Unified experience to the customer.
Krishnamurthy (2005) in the study “Banc assurance is the most cost effective channel to
make insurance products available to masses” that how the development of banc assurance
has taken place in India. The study examined the current training programmed for bank
employees. He further indicated those four years ago, bancassurance in India was a concept
but today it is a reality. Indian Life insurance players including LIC have a specialized
marketing team for this channel and premiums income collected represents 25% to 70% of
gross total premium income. The study revealed that in SBI Life, banc assurance business
represents about 70% of total business and more than 2 million bank customers took
insurance through this channel, banc assurance is believed to be the most cost effective
channel to make insurance products available to masses through widespread bank branches
network.
Krishnamurthy and Jhaveri (2005) in the paper titled “Insurance industry in India-
Structure, Performance and future challenges” has clearly explained the status and growth of
Indian insurance industry after liberalization and also presents future challenges and
opportunities linked with the insurance. Insurance is the backbone of country’s risk
management system and influence growth of an economy in several ways. Penetration of
insurance largely depends on availability of insurance products, insurance awareness and
quality of services. The future growth of this sector will depend on how effectively the
29
insurers are meeting the expectations of their customers and able to change the perceptions of
the Indian consumers and make them aware of the insurable risks. The study indicated that on
demand side, the rise in income will trigger the growth of insurance. The process of reforms
has enhanced competition, provided a choice to the customers and improved the efficiency
level of the industry. LIC continues to remain strong in rural areas while in urban areas and
metros, the private life insurers have made their presence.
Aggarwal (2005) in his study “Distributing Insurance in India” has explained his research
experience about location and channels used to supply services to target customers. Place and
environment in which service is delivered also plays an important role. Traditionally,
insurance service providers have been going to the customer through their direct selling
agents. In India, the selling model is basically dependent upon agency sales force. Even in
U.S, most of the insurance policies are sold through direct contact, as insurance is a
complicated product and it needs personal guidance, suggestions and options to analyze
before making investment in life insurance policies.
Subramaniam (2005) examined in his study titled “Banc assurance model has a potential to
mobilize” that the average collection of insurance companies would rise by 50% in 5 years
from now, if the companies take up to banc assurance model. Even in US, the largest life
market in the world is opening up the banc assurance. Success of bancassurance model in
other parts of the world has shown us that banks and insurance companies have taken focused
steps in developing this model. There is an established marketing and distribution network
and a huge data base which both can harness for their benefits. Although banc assurance was
slow in picking up pace, it has finally taken off as a successful distribution channel.
Bansal (2005) in his article, “Is Insurance Sector privatization on the right track” discussed
the recommendations for changes in the structure of the industry and policy framework. The
study was conducted to examine the improvement in the functioning of LIC and to examine
the role of intermediaries in strengthening the position of life insurance industry. Since 1991
Indian economy has been going through financial reforms. The study further revealed that
consequent to the important landmark reforms in the financial sector, the insurance sector in
India is going to witness a sea change. It was concluded that liberalization entails on
modernizing industrial system by removing unproductive controls, encouraging private and
foreign investment and integrating Indian economy with the global economy.
Xharbrahimi (2006) in his study titled “Technology and Life Insurance Distribution”
discussed the effect of technology on life insurance distribution, whether life insurers and
insured are aggressively seeking to make use of internet or not. Technology in the insurance
30
industry has evolved from providing enhanced operation processing to facilitating corporate
strategy. More recently, technology is becoming an important part of corporate life insurance
strategy and is increasingly employed in achieving a competition edge. This article examines
some of the opportunities that technology solutions offer to life insurance. Thus, it may be
safely assumed that the most significant innovations in product distribution by far will be the
direct result of the extent to which technology is embraced. Insurers with well conceived
technology solutions, will get competitive advantage. It is evidenced from the study that
those who try to resist the flow of internet technologies will be no more successful.
Karunagaran (2006), discussed in the paper titled, “Banc assurance- A Feasible Strategy for
Banks in India”, the objective to explore the scope for banc assurance models as feasible
source of sustainable income to banking sector by exploiting the synergy in context of India
having the largest banking network on one hand and lower insurance penetration and density
on the other hand. It was concluded in the study that going by the present pace, banc
assurance would turn out to be common phenomena rather than an exception in future in
India. It would be a ‘win-win situation’ for all the parties involved i.e. the customer, the
insurance companies and the banks.
Lakhmikutty and Baskar (2006), discussed in the paper titled, “Insurance distribution in
India-A perspective.” It is examined in the study, the perspective of thesocio -cultural ethos
of the market and how these channels fit into it, along with where the various companies face
challenges and bottlenecks. However, the authors believe that the basic existing problems
faced by the channels in this market needs to be looked into first and then the question of
technology, tools, training and learning is to be taken up. It was concluded in the study that
the current state of insurance distribution in India is still in flux. On one hand insurers are
awaiting regulations to be approved for brokerages and banc assurance to be truly launched.
On the other hand they are trying the corporate model of intermediaries in addition to the
traditional models in the market. The success of marketing insurance depends on
understanding the social and cultural needs of the target population, and matching the market
segment with the suitable intermediary segment. In addition a major segment of the Indian
population has low disposable income, meaning that every penny won will be obtained after a
lot of persuasion and the expected value for money is high. All intermediaries can’t sell all
lines of business profitably in all markets. There should be clear demarcation in the
marketing strategies of the company from this perspective. Clients should also receive price
differentials for using different channels.

31
Aggarwal (2007) discussed in his paper titled “Distribution of life insurance products in
India” focused on the change in the existing distribution channels and to study whether they
are technology oriented or not. The study pointed out the objective to analyze whether there
is a potential for new companies or not after privatization. The companies are giving an
opportunity to direct selling agents to market their polices while many are adopting banc
assurance channel for distribution. The other channel which is already established is agency.
Bancassurance able to penetrate the market more successfully because banking and insurance
industry shares a common target of providing financial services to the customers. In
conclusion of the study, Aggarwalemphasized that private life insurers are exploring new
techniques of distribution. The study further pointed out that technology advancement is
resulting in more awareness and sophistication. On the other hand, web is exclusively used
for getting information and offline mode is followed while taking the policy.
Chawla (2007) in her study titled “Privatization of life insurance-A study of customer
satisfaction in northern India.” examined the level of customer satisfaction after privatization
of life insurance industry. The study was carried out with the objective to analyze the
progress and trends in life insurance industry in India after privatization, to compare the plans
and policies of different life insurance companies and to seek opinions of customers
regarding amount of annual premium paid by them. The study concluded that there was a
shift in insurance industry in year 2000 with privatization of life insurance sector as private
players made entry with variety of products, quality services and increased efficiency than
public sector insurer. LIC being the dominant market player, it’s not so easy for private life
insurance players to threaten the position of LIC. The customers have faith in policies of LIC.
Their satisfaction level is more in case of public sector insurer LIC than private life insurance
companies.
Tripathi. S (2009) in his dissertation titled “A comparative analysis of LIC and private life
insurance companies” reported the objective to compare the performance of LIC and private
life insurance companies. Comparison between LIC and private life insurers has been done
on the basis of size, growth, productivity and grievances handling mechanism. Private
companies are giving direct competition to LIC. LIC is a dominating player even after
privatization and at present there is an abundance scope of insurance expansion in the Indian
market. LIC is having a huge customer base being an old giant findings of this study. He
concluded that LIC is a most popular and leading brand but with aggressive marketing
approach. It was also examined in the study that private companies are giving direct
competition to LIC.
32
Singh & Jain (2010), in their study titled “Acceptability of Life Insurance by Indian
Customers” evaluated the objective of determination of role of insurance services in the
process of growth of insurance industry. The ongoing developments in the insurance industry
after the opening up of the sector to private companies have also been studied. The study has
been undertaken to identify the association between demographics of individual investors,
their investment behavior and analyzing the acceptance of insurance by them. It was
concluded in the study that financial security consists of saving factor, investment factor,
income protection and tax benefit. It was evaluated in the study that:
 Mishappenings include protection from illness and unforeseen circumstances.
 Demographic factors highly influence the preference of investment options.
 Majority of people go for annual investments.
 The most important purpose for which insurance is taken are family security, financial
security and uncontrollable factors. There is less awareness about insurance needs and
plans offered by various companies among the people, so efforts should be made to
increase the awareness among the general masses.
Thakur (2010) in the study titled “Competition in life insurance sector in India” examined
the present scenario of life insurance sector in India and issues relating to competition in this
sector. As it is a growing sector, it is important that life insurers get a level playing field to
encourage competition in market. Through this study she concluded that LIC as a State
owned enterprise enjoys a dominant position in two market. The life insurance sector is
highly lucrative and as a result increasing FDI cap would be a step to enhance competition in
this sector, Exclusive networking, sovereign guarantee and entry barriers like limited FDI
creates an anti-competitive environment in market.
Singh and Chakraborty (2011) in the study titled “Contemporary Issues in marketing of life
insurance services in India” worked on the objective to analyze the important aspects of life
insurance marketing activity from a services’ perspective and highlights the contemporary
issues and challenges faced by life insurance companies in product marketing. The study also
exhibits a direct positive correlation on the growth path of insurance companies. The study
concluded that all these players are actively introducing innovative products to meet the
specific needs of the prospective customers. However, life insurance companies, particularly
private sector players give more attention to selling unit linked plans. On the other hand,
among various distribution channels, agency is still dominating and successful one. Exploring
more distribution channels of micro-insurance for untapped rural market is extremely

33
important. Lastly, the study revealed that life insurance companies should concentrate equally
on pre-sale services and post-sale services.
Kulkarni and Sagar (2011) discussed in their study titled “Recent trends in marketing
strategy of Life Insurance Corporation of India” that the adoption of marketing strategies
affected the working of LIC. The study analyzed the objective to know the market share LIC
in insurance industry and the new marketing strategies adopted by it to increase business
volume. It was concluded in the study that at present, it is needful to take review of the
demands of customers. It should be for the benefit of policyholder i.e. common man not only
rich class segment. The insurance company should not only be a race winner in the
competitive environment but it should aim at diverting public saving towards socio-welfare
and infrastructural development. LIC aims to fulfill dual objectives i.e. protection of
policyholders trust and contribution in economic development. It was concluded in the study
that public sector insurer LIC has framed its strategies keeping in view IRDA regulations as
well as keeping in view the demands of customers to fulfill its socio-economic objective
effectively. It is evident from the study that LIC has proved to be highly obligatory towards
these objectives.
Ghosh (2011) in his study titled “Impact of reforms on Indian life insurance” analyzed the
relationship between life insurance sector reforms in India and the growth of life business in
post reform period. The study was carried out with the objective of examining the impact of
reforms on Indian life insurance sector. It was concluded in the study that life insurance
sector reforms improved the overall development in the life insurance sector in India. This
may be due huge potentiality of life insurance market which is still under-served. It was
indicated in the study that untapped market itself works as a catalyst in improving the
performance of the sector.
Chaudhary and Kiran (2011) in their study entitled “Life insurance industry in India-
Current scenario” tried to make an attempt to study the recent life insurance scenario in the
light of the changes mentioned above. For this purpose, various indicators like growth in total
number of offices of life insurers, growth in number of individual agents working in life
insurance industry, number of products and riders, growth of life insurance business and
premium income, lapse /forfeiture ratio and settlement of death claims in Indian life
insurance industry have been analyzed. From the above discussion it is evident that life
insurance industry has expanded tremendously from year 2000 onwards in terms of number
of offices, number of agents, new business policies, premium income etc. Further, many new
products (like ULIPs, pension plans etc.) and riders were provided by the life insurers to suit
34
the requirements of various customers. However, the new business of such companies was
more skewed in favor of selected states and union territories. Private life insurers used the
new business channels of marketing to a great extent when compared with LIC. Investment
pattern of LIC and private insurers also showed some differences. Lapsation ratio of private
insurers was higher than LIC and servicing of death claim was better in case of LIC as
compared to private life insurers.\
Manocha and Chitkara (2012) in their study titled “The choice of customerstowards
distribution channels of life insurance industry “evaluated the factors affecting the choice of
customers. The objective was to study the concept of insurance, distribution channels of life
insurance and know the preferences of customers towards the choice of distribution channels
like advisors, banc assurance, brokers and corporate agents etc. for buying insurance plans. It
was concluded in the study that Indian insurance industry relies heavily on the traditional
agency distribution channel, there is need to develop alternative distribution channels of
independent intermediaries, banc assurance, direct marketing and Tele-Marketing etc.
Dickinson Gerry (2012), discussed in his paper titled, “Encouraging a dynamic life
insurance industry- Its economic benefits and policy issues” that life insurance has been an
important tool through which individuals with relatively low incomes have been able to save
and invest effectively for the longer term. By designing relatively simple life insurance and
saving contracts, which can be purchased in small amounts on regular basis, insurance
companies have been able to accumulate large amounts of funds from large proportion of
population. It was concluded in the study that the efforts of insurance companies in creating
effective sales and marketing techniques have played a key role in the growth of the life
insurance business and hence indirectly stimulated the level of long term savings within the
economy as a whole. Finally, the government can stimulate the growth of the life insurance
sector by encouraging better understanding of personal saving and financial planning through
education. The local life insurance industry itself will have to convince the government that it
can deliver the best according to the needs of the customers.
Kumar and Priyan (2012) state the objective to compare the performance of public and
private life insurance companies in their study titled “A Comparative Study of public and
private life insurance companies in India”. It was further examined in the paper that insurance
sector along with the other elements of marketing influenced the process of liberalization and
globalization in India. It was concluded in the study that life insurance has today become a
main story of any market economy since it offers plenty of scope for garnering large sums of
money for long periods of time. Though privatization of the insurance sector is feared to
35
affect the prospects of Life Insurance Corporation of India, the study shows that LIC
continues to dominate the sector. Private sector insurance companies are also trying to
increase their market share with their unending efforts, variety in products and sound
distribution network.
Tiwari and Yadav (2012) in their paper titled “Analytical study on Indian life insurance
industry in post liberalization” pointed out that private insurance companies are expanding
their business and giving tough competition to LIC. The study found that in the post
liberalization period, the life insurance industry of India witnessed a tremendous growth in
terms of total premium income, market share and number of policies. The study was
undertaken with different objectives to examine the need of liberalization in Indian life
insurance industry, to analyze the condition of life insurance business in post liberalization
period, to analyze the impact of liberalization and to compare the performance of LIC and
private life insurers. It was clearly pointed out that life insurance is completely a customer
oriented business. Therefore it is important to create trust among policy holders, understand
their needs, sell appropriate products and provide complete information to the customers so
that they can make a suitable choice. The survey revealed that to achieve great insurance
penetration, healthier competition has to be intensified by both the sectors and they should
come up with innovative products to offer great choice to the customers and also make
improvements in the quality of services. The overall study revealed that business of life
insurance has been significantly increased after privatization but still a huge Indian
population is uninsured. Although LIC is a giant player in life insurance industry but private
insurance companies are moving at a fast pace. Though the income, size and penetration of
private insurance companies is less as compared to LIC but the pace at which they are
increasing their market share is tremendous. The above discussion supports that liberalization
has an overall positive impact on the growth and performance of life insurance industry in
India.
Mohamed and Murthy (2012) provided an overview of marketing strategies of life
insurance players in India in their study titled “Life assurance industry in India-A study on
marketing strategies of Indian insurance companies.” The objectives undertaken in the study
were to understand the various strategies adopted by life assurance industry in India and to
find out the market share of life insurance companies in India and suggest suitable measures
to meet competition. The study has illustrated that market strategies adopted by life insurance
companies are undergoing changes. private players have started to pull up the market share
from LIC and it is evident from IRDA annual report 2011-12 that market share of LIC has
36
come down from 81.92% to 69.78%. It was recommended in the study that the marketing
strategy should have to be adopted cautiously after studying various parameters such as
customer expectations, perceptions and affordability of company.
Vidhya (2012) identified and discussed the need for life insurance differs according to age
and family size and other related requirements. The study was conducted on the topic “Life
insurance policy holdings-A study on motivating factors of LIC.” The objectives of the study
were to ascertain the factors which influenced the policyholders to select a policy, to measure
the satisfaction of policyholders concerning LIC services and to offer valuable suggestions to
improve the performance of LIC. Lastly, it was concluded that the study was of great help to
the policyholders, as it was aimed at finding the awareness and satisfaction towards the
services of LIC policyholders. Hence the prospective customers, who propose to buy the
insurance products and avail the services of an insurance company for the first time, can get
benefited if they select the best service provider that can provide all these factors in the most
comprehensive way. The result of all these studies appears to be similar though approaches
were different due to the use of different statistical tools and techniques. The empirical
evidence from the studies conducted in India have yielded to findings on the perception
towards distribution channels. From the findings of literature review, it was noticed that most
of the studies were conducted on privatization of life insurance industry whereas the
performance of distribution channels has been analyzed comparatively to a small extent. This
indicated that additional studies need to be conducted to shed more light on, particularly the
issue of distribution strategies, distribution of life insurance products and role of technology.
Any study was hardly found which empirically tests the perception of intermediaries.

37
 CHAPTER 4

DATA Analysis, INTERPRETATION AND PRESENTATION

This chapter deals with the description of the sample of 60 policyholders focused on
demographic factors (gender, age, religion, residence) data analysis and its interpretation. The
chapter has been divided into three major sections. It deals with important descriptive
statistics, demographic profile of the policyholders, and frequency distribution. This study
deals with designing of the constructs with respect to objective and hypotheses of the study,
analyzing the validity of various constructs related to the study. The construct validity
includes convergent, discriminate as well as face validity. After analyzing the constructs
validity the structural model was tested and explained. The study provides associations with
the variables with respect to various demographic characteristics of the policyholders. In this
section comparison of mean values, p-values, z-statistics and t-statistics is also provided for
the purpose of testing various hypotheses.
The determination of analyzing data is to obtain operational and useful information. The
analysis, irrespective of whether the data is qualitative or quantitative, may:
• describe and summaries the data
• identify relationships between variables
• identify the difference between variables.
• compare variables
• forecast outcomes
Data analysis is the course of developing answers to question through the examination and
interpretation of data. The elementary steps in the analytic process contain of identifying
issues, determining the availability of appropriate data, deciding on which methods are
suitable for answering the question of interest, applying the methods and evaluating,
summarizing and collaborating the results. Data analysis also plays a key role in data quality
assessment by pointing to data quality problems in a given survey. Analysis can thus
influence future improvement to the process.

WHEN THE COMPANY STARTED?

38
LIC:
Life Insurance Corporation (LIC) is an Indian state-owned insurance group and
investment company headquartered in Mumbai.
The Life Insurance Corporation of India was founded in 1956 when the Parliament of
India passed the Life Insurance of India Act that nationalized the private insurance
industry in India. Over 245 insurance companies and provident societies were merged
to create the state owned Life Insurance Corporation. Eventually, the Parliament of India
passed the Life Insurance of India Act on June 19, 1956 creating the Life Insurance
Corporation of India, which started operating in September of that year.

ICICI PRUDENTIAL INSURANCE COMPANY:

ICICI Prudential Life Insurance Company Ltd. It is a joint venture between ICICI Bank Ltd.
one of India's largest private sector banks, and Prudential Corporation Holdings Limited.
ICICI Prudential Insurance Company has been founded in December year 2000.
ICICI Prudential Life began its operations in fiscal year 2001 and has consistently been the
market leader* amongst private players in the Indian life insurance sector. AUM as on
31st March 2017 was `1,229.19 billion.
As observed LIC is oldest and firstly organized insurance company nearly in 1956 while
ICICI Prudential Insurance Company is recently formed in 2000 year.

39
NUMBERS OF BRANCHES:

Numbers of Branches In India

Company’s name Numbers of branches
LIC 2048
ICICI 1900
Table 4.1

2050

2000

1950
No. of branches

1900

1850

1800
LIC ICICI

Fig 4.1

When the matter of total numbers of branches comes its very much obvious that LIC, being
the oldest existing insurance company in India has the large numbers of offices in the country
by any single insurance company. Since the ICICI Prudential Insurance company increasing
with continuous expansion in their business.

40
INDIAN INSURANCE – INDUSTRY MARKET SHARES OF LEADING COMPANY:

Company’s Name Approximate market share

LIC 50%
ICICI 10%
Others 40%
Table 4.2

Market shares

LIC
ICICI
Others

Fig 4.2

LIC is an undoubted leading the market shares in India. Even after the lots of the competition
from private sectors of insurance company LIC is still holding 50% of market shares. Private
insurance companies are trying to defeat LIC in case of market shares. There is a very high
competition between public sector insurance company and private sector insurance company
because both the sectors holding 50% of share markets. The ratio of market shares in India
LIC and ICICI prudential Insurance company is 5.1 only.

41
POLICIES:

Total Numbers of Policies

Company’s name No. of Policies
LIC 36782000
ICICI 210000
Table 4.3

Policies

40000000

30000000
20000000
Policies
10000000
0
Policies
LIC
ICICI

Fig 4.3

LIC is undoubted leader in the field of numbers of policies. There is a huge gap between LIC
and ICICI Prudential Insurance Company. Main reason behind LIC being a large number of
policy is the trust of a common man LIC being a government agency has got faith of Indian
mass people are not yet prepared to give their saving in the hands of private company.

42
LIFE INSURANCE PREMIUM:

Life insurance premium

(Rs. In cores)
company’s name Rupees
LIC 55934.69
private company 19471.83
Total 75406.52
Table 4.4

Life insurance premium

LIC
Private company

Fig4.4

India’s total life insurance premium is rs.75406.52 crores in the year 2017. In the year 2017
industrial growth is 36.36% . LIC contributes more than 70% of life insurance premium of
the country. While all private insurance company contributes just only 25% of their life
insurance premium.

43
CLAIMS RATIO:

Claim ratio
FY2011-12 FY2012-13 FY2013-14 FY2014-15 FY2015-16
LIC 98% 98% 98% 98% 98%
ICICI 97% 96% 94% 94% 96%
Table 4.5
99

98

97

96
LIC
95 ICICI

94

93

92
2011-12 2012-13 2013-14 2014-15 2015-16

Fig 4.5

The loss ratio is the difference between the ratios of premiums paid to an insurance company
and the claims settled by the company. The loss ratio is the total losses paid by an insurance
company in the form of claims. LIC’s claim ratio is stable from last five years it does not
change while ICICI prudential insurance company changes up and down.

44
TOTAL NET SALES:
Net sales
(Rs. In cores)
FY 2012-13 FY 2013-14 FY 2014-15 FY 2015-16 FY 2016-17
LIC 7575.92 9181.38 10669.35 12396.15 13986.94
ICICI 2188.84 1648.27 1674.18 1809.87 1796.87
Table 4.6

16000

14000

12000

10000

8000 LIC
ICICI
6000

4000

2000

0
2012-13 2013-14 2014-15 2015-16 2016-17

Fig 4.6

There is a large difference between LIC and ICICI Prudential Insurance company. Net sales
of LIC increases year by year. While net sales of ICICI Prudential Insurance company
decreasing. LIC covers larger market area then ICICI Prudential Insurance.

45
NET INCOME:
Net Income
(Rs. In cores)
FY 2012-13 FY 2013-14 FY 2014-15 FY 2015-16 FY 2016-17
LIC 1023.21 1317.19 1386.19 1660.79 1931.05
ICICI 1515.52 1562.44 1640.22 1653.04 1682.23
Table 4.7

2000
1800

1600

1400

1200
LIC
1000
ICICI
800

600

400

200

0
2012-13 2013-14 2014-15 2015-16 2016-17

Fig4.7

Both company’s profit increases year by year. In the beginning of last five years ICICI
Prudential insurance company has greater profit than LIC. 2012-13, 2013-14 and 2014-15
ICICI performs better than LIC in terms of net profit. But in the year 2015-16 both
companies are almost equal. In the last years LIC has greater profit than ICICI Prudential
Insurance Company.

46
Size of Balance Sheet:
Size of balance sheet
( Rs in cores)
2012-13 2013-14 2014-15 2015-16 2016-17
LIC 65186.47 78983.34 91035.00 105244.56 1120403.13
ICICI 73203.39 79505.56 99058.42 102656.13 8194.70
Table 4.8
140000

120000

100000

80000
LIC
60000 ICICI

40000

20000

0
2012-13 2013-14 2014-15 2015-16 2016-17

Fig4.8

Total size of balance sheet of LIC in last five years certainly higher than that of ICICI
prudential insurance company. There is a huge gap in the insurance field for a quite large
time. LIC balance sheet is consistently increasing year by yearly. At the same time ICICI
increases but after three it started to diminishes from last two years. But in the last year there
is a large gap between size of balance sheet of LIC and ICICI prudential insurance company.

47
1 Preferences of insurance company.
Responses Actual number percentage
LIC 30 50%
ICICI 11 18.3%
Others 19 31.7%
Total 60 100%
Table 4.9

preferenses of insurance company

LIC
ICICI
Others

Fig 4.9

LIC is more preferable by the customers in the market in India. It is due to the fact that LIC
being a government agency and oldest company therefore it is trusted by large numbers of
customers. Other private company has lower ratios than LIC Company. ICICI has very much
lower ratio than LIC insurance company.

48
2 Scheme of insurance policy taken by the customers.
Responses Actual Number Percentage
Whole life 23 38.4%
Money back 17 28.3%
Pension fund 9 15%
Others 11 18.3%
Total 60 100%
Table 4.10

Scheme of insurance policy

Wholelife
Money back
Pension fund
others

Fig 4.10

Majority of people have whole life insurance as compare to other types of insurance schemes.
Whole life insurance has greater ratio in all types of insurance schemes. Second top insurance
policy has taken by customers is Money back policy. And 15% people have taken pension
fund scheme. Except this many other schemes also are there which has been there in market.

49
3 Awareness of details of policies.
Responses Actual Number Percentage
Yes 23 38.3%
No 12 20%
May be 25 41.7%
Total 60 100%
Table 4.11

Awareness of policy

Yes
No
May be

Fig4.11

Majority of People who have taken insurance policies are not sure about knowing full detail
of insurance policy. But many of customers have full information related to their insurance
schemes.

50
4 Reason for choosing insurance company.
Responses Actual numbers Percentage
Less premium 14 23.7%
Better terms 16 27.1%
Better services 11 18.7%
All of the above 19 30.5%
Total 60 100%
Table 4.12

Reasons for choosing insurance company

Less premium
Better terms
Better services
All of the above

Fig 4.12

Many reasons are there behind the choosing a good company from number of insurance
companies available in the market. Customers are satisfied with their respective company
which they have chosen. Company provides less premium, better terms and better services
too.

51
5 Premium rate among LIC and ICICI Prudential Insurance Company.
Responses Actual number Percentage
Very cheap 12 20.3%
Cheap 13 22%
At par 26 42.4%
Expensive 9 15.3%
Total 60 100%
Table 4.13

Premium rate

Very cheap
Cheap
At par
Expensive

Fig 4.13

According to the survey there is no large difference of premium rate of insurance between
public company and private company that is LIC and ICICI Prudential Insurance company.
But some of people have said that there is a difference between premium rate of insurance
company it may be very cheap, cheap or it could be expensive.

52
6 Agents of insurance company provide the correct information.
Responses Actual number Percentage
Yes 29 48.4%
No 14 23.3%
May be 17 28.3%
Total 60 100%

information provided by agents

Yes
No
May be

Fig4.14

Many of customers say that information provided by agents of their respective company is
correct. But at the same time many customers are not sure about information provided by an
agents. Few consumers also say that an agents does not provide correct information about
insurance policy of their insurance company.

53
7 Rating to the service of premium deposits mode.
Responses Actual number Percentage
Excellent 13 21.7%
Very good 20 33.3%
Average 23 38.3%
Bad 4 6.7
Total 60 100%
Table 4.15

Rating

Excellent
Very good
Average
Bad

Fig 4.15

People are happy with the services provided by the company related to the premium deposit
mode. They may have some problem but overall they are satisfied with the public company
as well as private insurance company.

54
8 Satisfaction level towards services offered by company.
Response Actual number percentage
Very satisfied 14 23.3%
Satisfied 27 45%
Neutral 14 23.4%
Dissatisfied 5 8.3%
Total 60 100%
Table 4.16

Satisfaction level

Very satisfied
Satisfied
Neutral
4th Qtr

Fig 4.16

According to the survey some customers are very satisfied from the performance offered by
the respective company. But many of consumers are satisfied with the services what they
received from the company. Average people are partly satisfied with services rendered by
company. Few consumers are not satisfied with the services.

55
9 Company provide same treatment to all customers.
Responses actual number Percentage
Yes 28 46.7%
No 12 20%
May be 20 33.3%
Total 60 100%
Table 4.17

Same Treatment to customers

Yes
No
May be

Fig 4.17

Customers could be a rich man, business man, doctor, political leader, teacher or poor man it
could be any one. But at the company’s point of view all customers should be equal and
therefore all consumers need to get same treatment. Company should not differentiate
between the customers. Approximately 50% people says that company treat same manners to
the all types of customers. But some people feels that company doesn’t treat all customers
equally.

56
 1. Future preferences.
Responses Actual number Percentage
LIC 31 51.7%
ICICI 16 26.7%
Others 13 21.7%
Total 60 100%
Table 4.18

Future preferences

LIC
ICICI
Others

Fig 4.18

LIC is undoubted market leader in Indian market. LIC is a public company and is oldest
company in India therefore people have more trust on LIC. More than 50% of people have
future preferences is LIC rather than private company. Customers of LIC are satisfies with
the services provided by the company.

57
 CHAPTER 5

CONCLUSION AND SUGGESTION

This thesis contains about the models with static income elasticity of life insurance demand
that is illusory in the logic and which do not take into account of different limitations in
insurance saturation growth. The author studied about the limitations for insurance
penetration. This chapter concludes the research work by emphasizing some important
findings emerging from the study. The present study was considered important to the
researcher because life insurance is prime and basic need in today's human life. To achieve
the predetermined objectives of the study, the primary data was collected with a view to
throw light upon the important aspects of the new plans of insurance. On the basis of the
analysis and interpretation of data, some important findings are stated and suggestions are
made for consideration.

5.1 CONCLUSION
 The insurance industry in India has changed swiftly in the challenging economic
environment throughout the world. In the current situation, Indian insurance companies
have become competitive in nature and are providing appropriate distribution channels to
get the maximum benefit and serve customers in various ways.
 Indian Insurance industry has huge opportunity to enlarge, given the huge population and
unused probable. The insurance market in India has viewed dynamic changes including
entry of a number of global insurers. Most of the private insurance companies are joint
ventures with predictable foreign institutions across the globe. Capacity of markets in
many developed economies has made the Indian market even more attractive for global
insurance majors.
 The number of lives covered under Health Insurance policies during 2015-16 was 36
crores which is approximately 30 per cent of India's total population. The number has
seen an increase every subsequent year as 28.80 crores people had the policy in the
previous fiscal.
 During June 2016 to May 2017 period, the life insurance industry recorded a new
premium income of Rs 1.87 trillion (US$ 29.03 billion).The life insurance industry
reported 9 per cent increase in overall annual premium equivalent in April-November
2016. In the period, overall annual premium equivalent (APE)- a measure to normalize

58
 policy premium into the equivalent of regular annual premium- including individual and
group business for private players was up 16 per cent to Rs 1,25,563 crores (US$ 18.76
billion) and Life Insurance Corporation up 4 per cent to Rs 1,50,456 crores (US$ 22.48).
 New India Assurance filed the prospectus for initial public offering (IPO) in which it will
sale a total stake of 14.56 per cent to raise around Rs 7000 crores ($1.07 Billion) and it
plans to use the capital raised for supporting growth of its business and maintaining
solvency levels.
 The insurance industry is expected to increase and spread USD280 billion in 2020. In
2015, the industry encompassed of 24 private players while Life Insurance Corporation
constituted 71% of the insurance market in the country. In 2016, Individual single
premiums received totaled to around USD1.02 billion, increasing from USD0.16 billion
in 2015.
 As of March 2016, rising contribution by private players managed to increase in their
market share in the life insurance market, with the market share reaching 29.6% in FY16
from 2% in FY03.
 The life insurance market raised from USD10.5 billion in FY02 to USD56.05 billion in
FY16 Over FY02–FY16, life insurance premiums extended at a CAGR of 13.10% The
life insurance industry has the probable to grow 2-2.5 times by 2020 in spite of numerous
challenges supported by long-term trends and fundamentals original household savings.
The life insurance premium market expanded at a CAGR of 11.93%, from USD14.5
billion in FY04 to USD56.05 billion in FY16.During the first half of financial year 2016-
17, Life Insurance industry stated a 20 per cent growth in overall APE.
 Insurance industry is becoming highly competitive with 52 players operating in the
industry. Companies are competing on price and also using low price and high returns
strategy for customers to lure them.
 LIC the innovator life insurance company has been ranked high by its policy holders for
its appreciated services rendered in providing life insurance cover for all sections of
people specially to the rural masses. But it is still observed as a conventional insurance
organization. It should be restored and given a modern focus and attitude that is adaptable
to the present societal needs.
 LIC can concentrate more on Unit linked products which appear to give more returns in a
short distance of time.

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 More short term policies or policies that would raise the policyholders, financial returns at
regular intermissions for children’s educational needs and medical drives as in the case of
money back policies.
 In this competitive scenario technology plays a vigorous role in promoting the sale of any
product. LIC by creating effective use of the technological advancement can capture a
wide market through facilitating on line payments, on line tracking, on line delivery and
so on. The pamphlets of LIC should provide detailed information about the policy to the
policy holders.
 LIC should improve upon its infrastructure facilities. Improved physical ambience of the
LIC would result in more customer satisfaction.
 The physical indication practices of ICICI have been appreciated by majority of the
policy holders. But the other scopes of marketing mix have been considered less
effective. But recent developments that have taken place in the company disclose that the
defects have been remedied.
 To create a more dynamic and lasting impact advertisements through posters could be
more impressive using the advanced technology.
 The company should introduce more products for the rural masses and the low income
group prospects at minimum affordable prices.
 The company should try to focus on the add on riders more.
 Loan facilities are not offered by the company directly to the policyholders. It is
suggested that the company should directly grant loans to the policyholders on the
strength of the policy for, it would attract more policy holders.
 According to the survey LIC is more trustable among the consumers. Many of
respondents have taken Life Insurance Company. LIC is better performer as compare to
the ICICI Prudential Insurance Company.
5.2 TESTING OF HYPOTHESIS
The basic logic of hypothesis testing is to prove or disprove the research question. One
method of evaluating this research question via a process called hypothesis testing, which
something is also referred to as significant testing.
5.2.1TYPES OF TESTING HYPOTHESIS:
The types of hypothesis testing can be broadly divided into two groups;
 Parametric test
 Non Parametric test

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1. Parametric Test
It is a statistical test that depends on assumptions about the distribution of the data , that
the data are normally distributed. When considering a normal distribution of population
these features are known as parameters. Parametric analysis relies on the data being
normally distributed so that an estimation of the underline population’s parameters can be
made. These can then be used to test the null hypothesis. As only quantitative data can
have a normal distribution, it follows that parametric analysis can only be used on
quantitative data.
Provided they are appropriately used, parametric tests derive more information about the
whole population than non-parametric ones.
2. Non Parametric Tests
The non-parametric tests of null hypothesis do not assume any particular distribution of
the data. Consequently non parametric analysis is used on nominal and ordinal data as
well as quantitative data that are not normally distributed.
Non parametric analysis can be used on any data but parametric analysis can only data
but parametric can only be used when the data are normally distributed.
3. Z-Test:
A Z-test is any statistical test for which the distribution of the test statistic under the null
hypothesis can be approximated by a normal distribution. Because of the central limit
theorem, many test statistics are approximately normally distributed for large samples.
For each significance level, the Z-test has a single critical value (for example, 1.96 for 5%
two tailed) which makes it more convenient than the Student's t-test which has separate
critical values for each sample size. Therefore, many statistical tests can be conveniently
performed as approximate Z-tests if the sample size is large or the population variance is
known. If the population variance is unknown and the sample size is not large n (< 30),
the Student's t-test may be more appropriate.

Z = (X − μ0) / s
4. T-TEST:
A t- test is used for testing the mean of one population against a standard or comparing
the means of two populations if you do not know the population’ standard deviation and
when you have a limited sample (n< 30). If you know the population standard deviation
you may use a z- test.

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 Null Hypothesis H0: μ = μ0
 Alternate Hypothesis HA: μ > μ0
where μ0 = 2 ppm is the allowable limit and μ is the population mean of the measured
soil.
The calculation of the t-statistic for one mean, using the formula:

where s is the standard deviation of the sample, not the population standard deviation.
The method for comparing two sample means is very similar. The only two differences
are the equation used to compute the t-statistic, and the degrees of freedom for choosing
the tabulate t-value. The formula is given by

5. F-TEST:
An f-test is any statistical test in which the test statistic has an f- distribution under the
null hypothesis. It is most often used when comparing statistical models have been fitted
to a data set, in order to identify the model that best fits the population from which the
data were sampled. Exact f-test mainly arise when the models have been fitted to the data
using least squares. This used to compare the variance of two independent samples used
in the context of ANOVA (Analysis of Variance) for more than two sample means.
The test statistic for testing H0: μ1 = μ2 = ... = μk is:

6. CHI SQUARE TEST

Chi square is the measure which evaluates extent to which a set of the observed
frequencies of a sample deviates from the corresponding set of expected frequencies of
the samples. It is the measure of aggregate discrepancies between actual and expected

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 frequencies. It is used for comparing a sample variance to a theoretical population
variance.
The chi-square test statistic is calculated by using the formula:
χ2=∑(O−E)2/E
5.2.2 TESTING OF HYPOTHESIS USED UNDER THIS STUDY:
As N is less than 30. The research study is based on last 5 years. Hence t test is used for
testing of hypothesis.
t-test formula:
𝑋1¯ − 𝑋2¯
𝑡=
√∑(𝑋1−𝑋1)2+(𝑋2−𝑋2)2 × ⎷ 1 + 1
𝑛1+𝑛2−2 𝑛1 𝑛2

-147.004/249.4829193x 0.632455532
t=-0.9316619077
t> -2.132
Hence H0 rejected.
H1: LIC is more preferable as compare to ICICI Prudential Insurance Company.
H0: LIC is less preferable as compare to ICICI Prudential Insurance Company.
From the above testing we can conclude that the data collected states that LIC is more
preferable as compare to ICICI.

5.3 SUGGESTION
 There is welcome shift in the product proposing of the life insurance companies.
Traditional products which have a long-term commitment and raise returns after a
extensive time have been swapped by unit linked policies with short period obligation and
guaranteed returns within a short period of time. However, it is recommended that due
care should be exercised by the life insurance companies to provide products with assured
safety of funds as well as returns.
 With the failure of joint family system in the present social set up, there is growth in the
nuclear families giving rise to demands for children’s plan. With increase in the cost of
education, expenses incurred in settling the children, it is expected that there would be
huge potential for children’s plans. Hence it is recommended that the insurance
companies should come up with a variability of children’s policies which would be of use
for their future education, marriage and other requirements. The companies could come
out with inspired short-term policies for children that if taken at the time of child’s birth,

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 would yield financial benefit every four or five years which would provision the child’s
education even at the initial stages.
The statistical report released by the IRDA discloses that the policy taking is focused
mainly to the last two or three months of the financial year. Therefore it is suggested that
policy taking should be done in a phased-out manner throughout the year and not just in
one or two months towards the close of the financial year. Inducements in the form of
refunds may be announced by the companies for the policy holders who invest their
money in the life insurance policies during the initial months in the year.
 If a life insurance company has the several essential factors such as product mix, price
mix, promotion mix, distribution mix, people and process mix and physical evidence mix
in a highly promising manner for the policy takers such a company is sure to be in the
fore front because it has also the extremely effective marketing strategies. The company
should in the product and pricing give top priority to security and risk cover along with
affordable premium with good bonus. With regard to promotion the dominant factor of
the company should be on motivation through effective and highly informative
advertisements. The company should, with respect to distribution, especially focus on
effective agents with thorough knowledge of policies and willingness to provide valuable
support to the customers while purchasing the policies. In connection with customer
service – process and people – a company that strives to be on top should provide
customer friendly employees, along with maintenance of accurate records. A company
which desires to excel should also give importance to physical evidence by providing
appropriate location and convenience time for transaction.
 A merger of all these essential factors in the motor satisfactory proportion will definitely
result in the life insurance company being rated the first and the best.

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 6 LIST OF TABLES

Sr. no. Topics Page no.

1.1 Insurance market shares 02
4.1 No. of branches 40
4.2 Insurance market shares 41
4.3 No. of policies 42
4.4 Life insurance premium 43
4.5 claim ratio 44
4.6 Net sales 45
4.7 Net income 46
4.8 Size of balance sheet 47
4.9 Preferences of insurance company 48
4.10 scheme of insurance policy 49
4.11 Awareness of policy 50
4.12 Reason for choosing insurance company 51
4.13 Premium rate 52
4.14 Agents of insurance company provide correct information 53
4.15 Rating to the services of premium deposit mode 54
4.16 Satisfaction level 55
4.17 Treatment to the customers 56
4.18 Future preferences 57

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 7. LIST OF GRAPHS

Sr. no. Topics Page no.

4.1 No. of branches 40
4.2 Insurance market shares 41
4.3 No. of policies 42
4.4 Life insurance premium 43
4.5 Claim ratios 44
4.6 Net sales 45
4.7 Net income 46
4.8 Size of balance sheet 47
4.9 Preferences of insurance company 48
4.10 Scheme of insurance policy 49
4.11 Awareness of policy 50
4.12 Reason for choosing insurance company 51
4.13 Premium rate 52
4.14 Agents of insurance company provide correct information 53
4.15 Rating to the services of premium deposit mode 54
4.16 Satisfaction level 55
4.17 Treatment to customers 56
4.18 Future preferences 57

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 8. ABBRIVIATIONS

LIC – Life Insurance Corporation

ICICI – Industrial Credit and Investment Corporation of India
GIC – General Insurance Corporation of India
IRDA – Insurance Regulatory and Development Authority
NSE – National Stock Exchange
BSE – Bombay Stock Exchange
AAA – Authentication, Authorization, and
USD – United States Dollar
ORG - Organization
CAGR – Compound Annual Growth Rate
APE – Annual Premium Equivalent
RWRP – Retail Weighted Received Premium
AUM – Assets Under Management
OLIC – Oriental Life Insurance Company
ECS – Electronic Clearing Services
IRDAI – Insurance Regulatory and Development Authority of India
ANOVA – Analysis Of Variance

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 9. BIBLIOGRAPHY

REPORTS
Annual Report of LIC 2012-13

 Annual Report of LIC 2013-14

 Annual Report of LIC 2014-15
 Annual Report of LIC 2015-16
 Annual Report of LIC 2016-17
 Annual Report of ICICI Prudential Insurance Company 2012-13
 Annual Report of ICICI Prudential Insurance Company 2013-14
 Annual Report of ICICI Prudential Insurance Company 2014-15
 Annual Report of ICICI Prudential Insurance Company 2015-16
 Annual Report of ICICI Prudential Insurance Company 2016-17

BOOKS
 Inside the insurance industry by Kevin Glaser.
 Agarwala, A .N. Life Insurance in India: A Historical and Analytical Study.
Allahabad: Allahabad Law Journal Press.
ARTICLE
Business Line newspaper dated 1st September 2016.
WEBSITES:
http://rbi.org.in
http://www.wikipedia.com
http://www.licindia.in/
http://www.icicibank.com

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