A STUDY ON

CUSTOMER RELATIONSHIP MANAGEMENT

(CRM)
WITH REFERENCE TO

LIFE INSURANCE CORPORATION (LIC)

ELURU
A Project Report Submitted in the partial fulfillment for the
Award of the
Degree of
Submitted by
RAMA KRISHNA KORSA
(Reg No: 20854100015)

Under the guidance of

Mr.K.L. CHANDU, MBA

Faculty in management studies

MASTER OF BUSINESS ADMINISTRATION

ADITYA INSTITUTE OF PG STUDIES,

ADB road, surampalem, E.G.,
2008 - 10.
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December 4“, 2009

CERTIFICATE

This is to certify that K.RamaKrishna, Roll No 20854100015

MBA (Marketing) student of Aditya Institute of P.G.Studies, Aditya
Nagar Surampalem has pursued his project work on “ASTUDY ON
CUSTOMER RELATIONSBIP MANAGEMENT” in our
Organization between 5 May 2009 and 4“ July 2009.

BE HANKAR
DEVELOPMENT
OFFICER

g•gg / Grams we :Bima Sakha Two, oasg / /TeI : STD (08812) 232179, 230333, E-mail :bo6091BIicindia.com
 ADITYA INSTITUTE OFP.G.STUDIES
DEPARTMENT OF BUSINESS
MANAGEMENT
(Approved By Aicte, Affiliated To AU)
Aditya
Nagar, ADB Road,
SURAMPALEM-533437

BONAFIDE CERTIFICATE

This is to certify that the project entitled “CUSTOMER

RELATIONSHIP MANAGEMENT” is the bonafide work done by Mr.K.L.

CHANDU, MBA during the period 2008-10 in partial fulfillment of the

requirement for the award of the Degree of MASTER OF BUSINESS

ADMINISTRATION IN ADITYA INSTITUTE OF P.G. STUDIES affiliated

to AU.

PROJECT GUIDE: HEAD OF THE DEPARTMENT of MBA

Mr . K.L . CHANDU Mr. J.NAGENDRA KUMAR
Assistant Professor,
Department of MBA
 DECLARATION

I hereby declare that this project report entitled A STUDY ON

“CUSTOMER RELATIONSHIP MANAGEMENT (CRM)” with

reference to. LIFE INSURANCE CORPORATION(LIC), at ELURU,

submitted by me in partial fulfillment of master of business administration to the

department of M.B.A., A.U., Aditya institute of P.G. studies, Surampalem, in

genuine and bonafied work done by me and it is not previously submitted by me

for the award any degree or diploma in any other Institute or University.

Place: (RAMA KRISHNA KORSA)

Regd. No. 20854100015

Date:
 ACKNOWLEDGEMENT

I would like to take this opportunity to express my deep and profound

gratitude to the people concerned who have helped me directly or indirectly in

successful completion of this project.

I express my sincere gratitude to Mr. J. NAGENDRA KUMAR,

MBA, and head of the department for giving us the opportunity to do the project

work.

I am thankful to Mr.K.L.CHANDU, MBA, for being my faculty guide

and grateful to his direction and inspiration.

I am thankful to Sri BHIMASHANKAR marketing development

officer Life Insurance Corporation(LIC),Eluru for providing me all the

necessary information in carrying out my project study.

Last but not least my sincere thanks to my parents and also friends who

helped me directly or indirectly during our project work.

Place: (RAMA KRISHNA KORSA)

Date: Regd.No.20854100015
 CONTENTS

CHAPTER-I

 INTRODUCTION
 NEED FOR THE STUDY
 OBJECTIVES
 METHODOLOGY
 LIMITAIONS

CHAPTER-II

THE SCENARIO OF INSURANCE INDUSTRY

CHAPTER-III

COMPANY PROFILE

CHAPTER-IV
THEORETICAL FRAMEWORK

CHAPYER-V

ANALYSIS AND INTERPRETATION

CHAPTER-VI

 FINDINGS
 SUGGESTIONS
 CONCLUSION

QUESTIONNAIRE

BIBLIOGRAPHY
 CHAPTER-1
 INTRODUCTION
 NEED FOR THE STUDY
 OBJECTIVES
 METHODOLOGY
 LIMITATIONS
 INTRODUCTION
Life insurance in India was nationalized in 1956 by incorporating Life Insurance

Corporation of India and all private life insurance companies were taken over by

LIC. Again in 2000 Govt. of India passed a new insurance bill Insurance

Regulatory and Development Authority Act and appointed a new insurance

regulator – Insurance Regulatory and Development Authority to issue license to

private insurance companies. This again opened door to private players and major

Indian financial companies tied up with global insurance giants to get more share

in Indian life insurance market.

Life insurance is a contract between the insurer and policy owner. Insurer is

agreed to pay an amount to the person insured or his nominee either at the date or

maturity or a periodic intervals or unfortunate death of the policy owner. Policy

owner has to pay a fixed amount called premium in periodic intervals. This can be

monthly, quarterly, half yearly or yearly. Policy owner is allowed to choose the

type of payment and payment cycle. There are many life insurance schemes

availability today in India. Premium amount varies depends on many factors like

age of the policy owner, scheme, type of the policy, sum assured etc.

The business of insurance is related to the production of the economic

values of assets. Every asset has a value. The asset would have been created

through the efforts of the owner. Every asset is expected to last for a certain period

of time during which it will perform. After that, the benefit may not be available.

There is a life time for machine in a factory or a cow or a motor car. None of them

will last for ever.

 LIFE INSURANCE COMPANIES IN INDIA

LIFE INSURER IN PUBLIC SECTOR

1. Life Insurance Corporation of India

LIFE INSURER IN PRIVATE SECTOR

 ICICI Prudential Life Insurance

 Bajaj Allianz Life

 Birla Sun life

 SBI Life Insurance

 Kotak Mahindra Old Mutual Life Insurance

 Aviva Life Insurance

 Reliance Life Insurance Company Limited.

 Tata AIG Life

 MetLife India Life Insurance

 ING Vysya Life Insurance

 Max New York Life Insurance

The present study” A STUDY ON MARKET SHARE OF PRIVATE AND PUBLIC

LIFE INSURANCE COMPANY WITH REFERENCE TO LIC ELURU ”, is chosen in

consultation with the company guide and faculty guide. The main objective of

the study is to know the present market share and to study the market and

create awareness about the Insurence in the market.

 NEED FOR THE STUDY

In present scenario insurance sector is booming and competition becoming very

intense because, different insurance companies introducing different products in

the markets. Competition .is providing better access for customer

Customer retention is vital in now –a-days competitive markets. My project

focuses on how the customers are served by LICians.My study on customer

relationship management focuses on different customer retention programmes

adopted by LIC.
 OBJECTIVES

To know the services offered by LIC to retain its customer in ELURU town

 To know the customer perception on LIC products in ELURU.

 To know where does LIC stands in terms of market share in ELURU

 To know the percentage of the insured population in ELURU.

 To know which of the factors influence in taking a life insurance policy.

 To know the awareness level about LIC in ELURU.

 METHODOLOGY

Sources of Data

 Primary data: Primary data is the data collected by market survey through

which data is collected from the customers directly through questionnaires.

 Secondary Data: Journals, past record of the company, Internet etc.

Sample size: 250

Sampling technique: Probability sampling-Simple random sampling

Questionnaire Design: Structured questionnaire

Method of analysis:

For the analysis the collected data was tabulated into one way frequency tables.

These tables helped in reaching to some inferences.

 LIMITATIONS

 The survey was limited to 250 units of the population

 Services to policyholder some of the respondents did not have that

much idea about products and their service. Some of the respondents

due to time constraint could not express their views completely.

 Some of the respondents were hesitate to reveal the accurate

information required for the survey Time constraint

 CHAPTER-II

THE SCENARIO OF INSURANCE INDUSTRY

 THE SCENARIO OF INSURANCE INDUSTRY

WHAT IS INSURANCE?

The basics of insurance are related to the protection of the economics

values of assets. Every asset has a value. The asset would have been created

through the effect of the owner. The asset is valuable to the owner, because he

expect to get some benefits, from it. The benefit because it meets some of it needs.

In the case of a factory or a cow, the product generated by is sold and income

generated. In the case of a motor car, it profiles comfort and convinces in

transportation. There is no direct income.

Every asset is expected to last for a certain period of time during which it

will perform. After that, the benefit may not be available. There is life-time for a

machine in a factory or a cow or a motor car. None of them will last for ever. The

owner is aware of this and he can so manage his affairs that by the end of that

period or life-time, a substitute is made available. Thus, he makes sure that the

value or incomes are not lost. However, the asset may get lost earlier. An accident

or some other unfortunate event may destroy it or make it non-functional, would be

deprived of the benefit and the planned substitute would not have been ready.

There is an adverse or unpleasant situation. Insurance is a mechanism that helps to

reduce the effect of such adverse situation.

 THE HISTORY OF INSURANCE

The business of insurance started with marine business traders, who used

to gather in the Lloyd’s coffee house in London agreed to share the losses to their

goods while being carried by ships. The losses used to occur because of pirates

who robbed on the high seas or because the ship. The first insurance policy was

issued in 1583 in England. In India, insurance began in 1870 with life insurance

being transacted by an English company, the European and the Albert. The first

Indian insurance company was the Bombay mutual assurance society ltd, formed

in 1870. This was followed by the oriental life assurance co. in 1874, the bharat in

1896 and the empire of India in 1897.

Later the Hindustan cooperative was formed in Calcutta. The United

India in madras, the Bombay life in Bombay, the national in Calcutta, the new

India in Bombay, the Jupiter in Bombay and the Lakshmi in Delhi. These were all

Indian companies, started as result of the swadeshi movement in early 1900s. By

the year 1956, when the life insurance business was nationalized and the life

insurance corporation of India (LIC) was formed on 1ST September 1956, there

were 170 companies and 75 provident fund societies transacting life insurance

business in India. After the amendments to be relevant laws in 1999, the L.I.C.

did not have the exclusive privilege of doing life insurance had been registered and

had begun to transact life insurance business in India.

 PURPOSE & NEED OF INSURANCE

Assets are insured, because they are likely to be destroyed, through

accidental occurrences. Such possible occurrences are called perils. Fire, floods,

breakdowns, lightning etc. are perils. If such perils can cause damage to the asset,

we say that the asset is exposed to that risk. Perils are the events. Risks are the

consequential losses or damages. The risks are the consequential losses or

damages. The risks to a owner of a building, because of the peril of an earthquake,

may be a few lakhs or a few crores of rupees, depending on the cost of the building

and contents.

The risk only means that there is a possibility of loss or

damage. The damage may or may not happen. Insurance is done against the

contingency that it may happen. There has to be an uncertainty about the risk.

Insurance is relevant about occurrence of an event, it cannot be insured against. In

the case of human being, death is certain, but the time of death is uncertain. In the

case of a person, who is terminally ill, the time of death is not uncertain, though

not exactly known. He cannot be insured.

Insurance does not protect the asset. It does not prevent its loss due to the

peril cannot be avoided through insurance. The peril can some times be avoided,

through better safety and damage control management. Insurance only tries to

reduce the impact of the risk on the owner of the asset and those who depend on

the asset. It only compensates the losses and that too, the fully.

Only economic consequences can be insured. If the loss is not financial,

insurance may not be possible.

 HOW INSURANCE WORKS

The mechanism of insurance is very simple. People who are exposed to the

same risks come together and agree that, if any one of them suffers a loss, the

others will share the loss and make good to the person who lost. All people who

send goods by ship are exposed to the same risks. Which are related to water

damages, ship sinking, piracy, etc.those owning factories are not exposed to these

risks, but they are expected to different kinds of risks like, fire, hailstorms,

earthquakes, lighting, burglary, etc.like fire different kinds or risks can be

identified and separate groups made, including those exposed to such risks, by this

method, the heavy loss that any one of them may suffer is divided into bearable,

small losses by all. In other words, the risk is spread among the community and the

likely big impact on one is reduced to smaller manageable impacts on all.

Example

In a village there are 400 houses. Each valued at Rs.2, 00, 000. Every on

the average 4 houses get burnt, resulting into a total loss. If all the 400 owners

come together and contribute Rs.200 each, the common fund would be Rs.80, 000.

This is enough to pay Rs.20, 000 to each of the 4 owners whose house got burnt.

Thus the risk of 4 owners is spread over 400 house owners of the village.
 THE HUMAN ASSET

A human being is an income generating asset. One’s manual labor, professional

skills and business acumen is the asset. This asset also can be lost through

unexpectedly early death caused by accidents. Accidents may or may not happen

death but the timing is uncertain. But if it happens much earlier when the alternate

arrangements not in place, there can be losses to the person and dependents.

Insurance is necessary to help those dependent on the income.

The person, who may have made arrangements for his needs after his

retirement, also would need insurance. This is because the arrangements would

have been made on the basis of some expectations.

INSURANCE OF INTANGIBLES

The concept of insurance has been extended beyond the coverage of tangible

assets. Exporters run at the risk of losses if the importers in the other country

default in payments or in collecting the goods. They will also suffer heavily due to

sudden changes in currency exchange rates, economics policies or political

disturbances in the other country. These risks are insured; doctors run the risk of

being charged with negligence and subsequent liability for damages. The amount
in question can be fairly large, beyond the capacity of individuals to bear. These

are insured. Thus insurance is extended to intangibles.

THE BUSINESS OF INSURANCE

Insurance companies are called insures. The business of insurance is to

bring together persons with common insurance interests, collect share from all of

them and pay out compensation to those who suffer. The premium is determined

on the same lines as indicated in examples above, but with some further

refinements.

INSURANCE AS A SOCIAL SECURITY TOOL

The United National Declaration of human rights 1984 provides that

every one has a right to a standard of living adequate for the health and well being

of him self and his family include food clothing housing and medical care and

necessary social services and the right to security in the event of unemployment.

ROLE OF INRANCE IN ECONOMIC DEVELOPMENTNS

For economic development, investments are necessary. Investments are

made at savings. A life insurance company is a major instrument for the

mobilization of saving of people, particularly from the middle and lower income

groups. These savings are channeled into investments for economic growth.

As on 31.3.2002, the total investments of the LIC exceeded Rs.245000

crores, of which more than Rs.130000 crores were directly securities, more then
Rs. 12000 corers in the state electricity boards, nearly Rs.20000 corers in housing

loans and Rs.4000 crores in water supply and sewerage systems.

PRINCIPLES OF INSURANCE

LIFE INSURANCE CONTRACTS

A life insurance policy is a contract, in terms of the Indian Contract Act,

1872. A contract is an agreement between two or more parties to do, or not to do,

so as to create a legally binding relation ship. A simple contact must have the

following essentials.

1. Offer and acceptance

2. Consideration

3. Capacity of contract

4. Consensus ‘ad idem’ (genuine meeting of minds)

5. Legally of object or purpose

6. Capability of performance

7. Intention to create legal relationship

Insurance is a specialized type of contact. A part from the usual

essentials of a valid contract, insurance contract are subject to two additional

principles viz. principle of utmost good faith & principle of insurance of insurable

interest. These apply to all insurance, both life and non-life.

 PRINCIPLE OF UTMOST GOOD FAITH

Commercial contracts are normally subject to the principle of caveat

emptor i.e. let the buyer beware. It is assumed the each party to the contract can

examine the item or service, which is the subject matter of the contract. Each party

can verify the correctness of the statements of the other party. There is no need to

take the statement on trust. Proof can be asked for.

In the case of insurance contract, this principle does not apply. Most

of the relating to health, habits, personal history. Family history, etc., which form

the basis of the life insurance contract, are known only to the proposer. The insurer

cannot know them, if the proposer does not disclose them. The underwriter can ask

for a medical report. Yet there may be certain aspects, which may not be brought

out even by the best medical examination. For example, a person suffering from

blood pressure or diabetes can, through appropriate medication, hide these facts

from the examination doctor. History of past sickness, operations, injuries can be

suppressed. Some of these constitute material information from the underwriter’s

point of view. Similarly, in general insurance, an inspection of the go down has

been temporarily relocated. Non-disclosure of such facts would put the insurer as

well as the community of policyholders, at a disadvantage. There is what is called

‘adverse selection’. The contract is unfair because one of the parties to the

contracts is INS amore advantageous position.

 A summary of the doctrine of utmost good faith was given in the

case of Rozanes vs. Bowen in 1928 as follows “As the underwrite known nothing

and the man who comes to him to ask for insurance knowns every thing, it is the

due of the assured to make a full disclosure to the underwriter without being asked,

of all material circumstances. This is expressed by saying that it is a contract of

utmost good faith”.

The law imposes a greater duty on the parties to an insurance

contract than in the case of other commercial contracts, to disclose relevant

information. This duty is one of utmost good faith or Uberrimae Fides. It is the

duty of the proposer to make a full disclosure to the underwriter. The implication is

that, in how event of failure to disclose material facts, the contract can be held to

be void ab-initio.

Every circumstance that would have a bearing on the judgment of a

prudent insurer in fixing the premium or determining the acceptability of the

proposal for insurance is a material fact. Therefore, facts regarding age, height,

build, nature of occupation, smoking/drinking habits, medical history, surgeries,

earlier insurances, etc., must be disclosed. The proposer cannot defend non-

disclosure by contending that he did not think that the fact was not material…

There are certain circumstances, which need not be disclosed.

They are

1. Facts of common knowledge, which every one is supposed to know.

2. Facts of law

3. Facts which a survey would have revealed.

 4. Facts which could be reasonably discovered, by reference to previous

policies and records available with the insurer.

However in the case of sima Sarkar vs Western India life insurance co.

ltd. (1942). The Calcutta appeal court held that the fact that the previous declined

card was available with the insurer, would not by itself suffice to consideration

The duty of disclosure in life insurance operates till the risk

commences. Circumstances, which may have arisen after the risk has commenced,

o not affect the validity of the contract, make relevant stipulations to that effect.

For example, the policy may be issued with a condition that any change in

occupation must be notified to the insurer. However, if the terms of policy are to be

altered, or if a lapsed / paid up policy is to be revived or a surrendered policy is to

be reinstated, there would be a duty to disclose all material facts at that time; since

what follows is new contract.

The breach of the principle of utmost good faith may arise due to

misrepresentation or non-disclosure. Misrepresentation or non-disclosure should be

1. Substantially false and known to the proposer as false not known to

the second party

2. Concerned with facts which are material to the acceptance or

assessment of the risk or material to the benefits obtained by the

proposer.

3. Calculated to induce the other party to enter into a contract on its

own terms.
INSURABLE INTEREST

All risks are not insurable. Otherwise, an insurance contract would be no

different from a wagering contract. Wagering contract is illegal in terms of sec.30

of the Indian contract act and therefore invalid. What distinguishes an insurance

contract from a wagering contract is that the insured must have an insurable

interest in the subject of insurance. In simple terms, it means that the proposer

must have a stake in the continuance of the subject insured and could suffer loss, if

the risk is not covered through insurance. The insured must be in a relationship

with the subject of insurance.

FEATURES OF INSURABLE INTEREST

In the case of life insurance policy, insurable interest must exist at the inception

of the policy. There is no, requirement for insurable interest at the time of a claim

under the policy. In the case of marine policy, insurable interest must exist at the

time of the claim. In other insurance, insurable interest must exist at the time of

inception as well as at the time of claim.

PRINCIPLE OF INDEMNITY

Insurance is meant to compensate losses. By implication, the mechanism of

insurance cannot be used to make a profit. This is broadly the principle of

indemnity. Insurance should place the insured in the same financial position after a

loss as he enjoyed before it not better.

NEEDS AND INSURANCE

Risks arise because there are needs to be fulfilled. The risks attached to early death

arise because of the need to maintain the family that is left behind. Different plans

are designed with different benefits. While selling life insurance, therefore it is

necessary to be aware of the needs of people.

Broadly the needs of individuals may be classified as follows.

1. Protection of the standards of living of the family, which is at risk on early

death.

2. Future expenses on account of children’s education, marriage, start of some

business and so on, which are ambitions and dreams.

3. Continuance of business when financiers ask for life insurance policies as

collateral security.

4. Substitute’s income when earning capacity ceases due to old age.

5. Modem life style’s subject people to debts on account of car, house,

appliances, and equipments at one obtained on hire purchase arrangements.

6. Wanting to send one’s son to medical college is dream. It is not a need as

essential as being able to provide for food and clothing.

All the above needs have to be met, after meeting the costs of inflation.

People would not be consciously aware of these as formidable problems in the

future. Even if they do, they may not be willing to sacrifice some of the pleasures
of the present in order to provide for the future. This is the difficulty, which life

insurance agents face.

WHAT IS PREMIUM?

Premium is the consideration the holder has to pay in order to secure the

benefits offered by the insurance policy. It can be looked upon the price of the

insurance policy. It may be a one-time payment. That is not common. Often it has

been paid regularly over a period of time.

RISKS, NET AND PURE PREMIUM

The figure of rs 200 mentioned would be the cost of covering the risk of death

of persons at the age of 50 for one year. This cost is for insurance of Rs 20,000

which can be expressed also as Rs 10 per thousand.

LOADINGS

The administrative expenses of the insurer have to be met out of the premium

paid by the policy holders. To this extent the premium to collect will be higher.

Such additions to the pure premium are called loadings

LEVEL PREMIUMS

If it is expected that out of 10000 persons at a specified age, one is likely to die

with in one year, the mortality rate at that age is said to be 0.01%. The risk

premium chargeable for persons at that age would be 0.01 per Rs 1000 sum
assured, if a policy has a term of 20 years, the risk premium and therefore the

premium would vary for each of the 20 years.

OFFICE PREMIUM

The premium figure arrived at after loading the net premium is called the office

premium. They are now ready for use. The premium figures printed in the

promotional literature and brochures are the office premium.

EXTRA PREMIUM

Extra premium may be charged are any particular policy. This may happen

because of the grand of some benefit in addition to the basic benefit under the plan,

like accident benefit, riders provide additional benefits. Extra premium may

become chargeable because of under writing decisions. These are usually stated as

say, Rs per 1000, and will be added to the premium otherwise chargeable.

CALCULATION OF AGE

Age has to be determined has on the date of commencements of the policy. If a

person is born 20th August 1976, the age next birthday on 10th July 2002 would be

26.

PREMIUM CALCULATIONS

Step-1: find out tabular premium for the relevant plan and term. This premium is

1000 sum assured. Assume that the figure is Rs 45.60.

Step-2: deduct adjustment for large sum assured, if applicable

REBATE PER THOUSAND S.A

Rs 25,000- Rs 49,999 Rs.1/-

Rs 50,000-Rs 99,999 Rs. 1.50/-

Rs 1, 00,000 and over Rs. 2/-

If this is a policy for Rs 75,000. S.A, the premium would be Rs. 44.10/-

Step-3: the premium would decrease by 1% of 44.10 making the premium Rs

43.66

Step-4: Assuming that the extras in this case are Rs 1.50 per thousands for

occupational hazard and Rs 2 per thousand for supplementary benefits, the total

premium is Rs 47.16

LIFE FUND

In normal trading business the excess of income over the expenses in any

accounting year would be considered as profit and will be distributed among with

the owners. This is not so in life insurance. The profit, if any, can be determined

only after that contract to an end. The premiums are yet to be paid in full.

ACTUARIAL VALUATION

Premium is calculated taking into account likely future experiences in respect of

mortality, interest and expenses. These are assumptions. The future experience
may or may not conform to these expectations. The insurance act in India requires

that actuarial valuations be done every year.

BONUS

The distribution of the valuation surplus to policy holders is done through the

declaration of bonus. Only policy holders who opt for participating or with profit

policies would be entitled to bonus. Other policy holders who have none

participating or without profit policies would be paying a slightly lesser amount of

premium for the same kind of insurance cover.

If a compound reversionary system, the bonus will be added to existing

S.A.including bonuses attached earlier.

A variety of practices are followed with regard to bonus. Some make the

vesting of bonus conditional on the policy continuing to be in force throughout.

Given below details of the bonus declared by the LIC after the valuation on 31-3-

2002.

TERM ENDOWMENT MONEYBACK

ANTICIPATED
Less than 11 years Rs .49/-
11-15 years Rs. 58/- Rs. 48/-
16- 20 years Rs .65/- Rs. 58/-
More than 20 years Rs. 71/- Rs. 65/-

Whole life policy are allotted simple reversionary bonus at Rs.100 per

thousand S.A. A one time bonus called terminal bonus was declare for policies

which had been in force for 15 years. This was in addition to the usual bonus

already declared.
INTERM BONUS

Bonus is usually declared policies, which are in force on the date of valuation.

The bonus after the valuation as on 31-3-2003 will be declared sometime in

September 2003 and will benefit holders of policies which are in force on 31-3-

2003. In order to overcome such anomalies, actuaries usually declare Interim

bonus payable on such policies, which become claims between two valuations.
 LIFE INSURANCE PRODUCTS

BASIC ELEMENTS

Life insurance products are usually referred to as ‘plans of insurance’.

These plans are have two basic elements. One is the ‘Death cover’ providing for

the benefit being paid on the death of the insured person within a specified period.

The other is the ‘Survival Benefit’ providing for the benefit being paid on survival

of a specified period.

Plans are insurance that provides only death cover are called ‘Term

Assurance’ plans. These that provide only survival benefits are called ‘Pure

Endowment’ plans. If the insured does not die with in the specified period, no

payment is made under a term assurance plan. Similarly, if the insured dies with in

the specified period, no payment is made under a pure endowment plan. Both these

are like fire insurance policies. If the specified contingency does not happen, the

policy holder does not get anything from the insurer.

All insurance plans are combinations of these two basic plans. A term

assurance plan with an unspecified period is called a ‘Whole life policy’ under

which the sum assured is paid on death whenever it may occur. A term assurance

plan along with a pure endowment plan when offered as a single product is called

an endowment assurance plan, under which the S.A. is paid on survival of the

specified period or on earlier death. A term assurance plan with a pure endowment
plan of double the value is called a double endowment assurance plan under

which the amount payable in survival is double the amount payable in death.

A plan of assurance will have the following features. By making changes in

these features or adding and combining some of them.

1. Who can be insured?

The various possibilities are individual adults, children, two or more

persons jointly under one policy.

2. What can be the S.A?

Some plans stipulate a minimum S.A. there are maximum limits also

for certain benefits, like accidents benefits.

3. In what contingency would the S.A be payable?

Could be on death or on survival.

4. When would the S.A be payable?

On the contingency happening or some other dates

5. How would the S.A be payable?

Could be in one lump sum or in installments.

6. What would be the term of the policy?

This determines the period during which the specified event should

occur for the SA to be payable. .

7. When would the premium be payable?

Variation are in the frequency of payment as well as the period

during which it is payable. Some plans provide for premiums to be

paid for period less than the term.

 SOME POPULAR PLANS

The following paragraphs gibe details of various plans of insurance in very

general term. All insurers do not offer all the plans. The plan may be called by

different names by insurers. The variations between insurers are plenty. It is not

possible to give details of all the insurers, mainly because insurers make changes in

their offers orpractices from time to time. Even if a reference is made to a plan of

any particular insurer, the accuracy of the information is not to be taken for

granted.

The cheapest form of assurance is the term assurance plan.

Under this, the SA is payable in the death of the insured during the specified

period. If the death does not occur, there is no payment from the insurer. The SA

may be kept constant through out the period, or be made to assurances would be

appropriate as collateral to cover the outstanding loans in mortgage transactions.

Term assurance is not very popular, as there is no saving content. Surviving policy

holders feel that popular, as they got nothing out of the policy.

Reference has been made in an earlier paragraph to the whole life and the

endowment plans. In a whole life plan, the SA becomes payable only on death

whenever it may occur. But unlike a term assurance plan, some payment will be

made at some time. Although, in the case of whole life policies, the SA is payable

only on death some insurers pay the SA, when the life assured completes say, 100

years. In the endowment plan, the SA is payable on survival to the end of the term

or on earlier death.
 CONVERTIBLE PLANS

Convertible plans of assurance are plans, which provide, in its terms and

conditions, that it can be changed to another plan after, or within, a certain period

after commencement. For example, a convertible term assurance plan can be

converted in to a whole life policy or an endowment policy, within a period

specified in the original plan. This period may be not later than two years before

the expiry of the original term. In other words, if the original term insurance cover

is for 6 years, the option to convert should be exercise before the end of the fourth

year.

WITH PROFIT AND WITHOUT PROFIT POLICIES

With out profit polices are not entitled to bonuses declared after

valuation. With profit policies pay a slightly higher premium for the right to

participate in the progress of the insurer. With profit polices are popular because

the bonuses are expected to be more than extra premium paid.

JOINT LIFE POLICIES

In the case joint life insurance:

A joint life declaration is necessary to create a joint interest in the policy.

In case of partner ship insurance the partner ship deal will be examine the nature of

interest of each partner.

Each life will be under written separately.

Bonuses accrue on the single basic SA only.

 CHILDERN’S PLANS

Insurance can be taken on the lives of children, who are not major’s. The

propose will have to be made by a parents.

In these plans, risk on the life on the insured child will begin only

when that child attains a specified age. Practices vary widely the time gap between

date of commencement of the policy and the commencement of risks called the

deferment period.

There is no insurance cover during the deferment period. If a child dies

during the deferment period, the premiums will be return.

VARIABLE INSURANCE PLANS

The unit trust of India has unit linked insurance plan. This plan is designed

for any resident in India between the age’s of 12 and 55 planning to save between

Rs. 6000/- and Rs. 75,000/- to be contributed in half yearly are annual installments

over a period of 10 or 15 years. Persons over 55 years can go in for a 10 year plan.

No medical examination is necessary.

The money back type policies help the policy holders to some extent. The

lump sums paid periodically with out affecting the amount of insurance over, can

be invested. Regular statement for the insurer would indicate the growth of each of

these funds and the policy holder would have a choice a of shifting from one to

another.
RIDERS

A rider is a clause that is added on to a basic policy providing an additional

benefit, at the choice of the proposer .Valuation surplus also is offered a rider. But

that is not so with regard to all riders.

Some of the riders being offered by insurers in India:

Increased death benefit.

Accident benefit allowing double the SA if death happens

Permanent disability benefits, covering loss of limbs, eye site etc.

Guaranteed increases in cover at specified periods.

Cover to continue beyond maturity age for same.

As per regulation made by the IRDA in April 2002 and amended in October 2002.

PLANS COVERING HANDICAPPED

Physically handicapped persons are insured. Extras are charged in some

cases like loss of both arms; deaf in both ears, blind in both eyes, etc. these details

will have to be gathered from the companies under writing departments

 INSURANCE INDUSTRY SCENARIO IN INDIA

Insurance may be described as a social device to reduce or eliminate risk of

life and property. Under the plan of insurance, a large number of people associate

themselves by sharing risk, attached to individual.

The risk, which can be insured against include fire, the peril of

sea, death, incident, & burglary. Any risk contingent upon these may be insured

against at a premium commensurate with the risk involved.

Insurance is actually a contract between 2 parties whereby one

party called insurer undertakes in exchange for a fixed sum called premium to pay

the other party happening of a certain event.

Insurance is a contract whereby, in return for the payment

of premium by the insured, the insurers pay the financial losses suffered by the

insured as a result of the occurrence of unforeseen events.

With the help of insurance, large number of people exposed to a similar

risk makes contributions to a common fund out of which the losses suffered by the

unfortunate few, due to accidental events, are made good.

 BRIEF HISTORY OF INSURANCE SECTOR IN

INDIA

The insurance sector in India has come a full circle from being an open

competitive market to nationalization and back to a liberalized market

again.Tracing the developments in the Indian insurance sector reveals the 360-

degree turn witnessed over a period of almost 190 years. The business of life

insurance in India in its existing form started in India in the year 1818 with the

establishment of the Oriental Life Insurance Company.

SOME OF THE IMPORTANT MILESTONES IN THE LIFE

INSURANCE BUSINESS IN INDIA ARE:

1912 - The Indian Life Assurance Companies Act enacted as the first statute to

regulate the life insurance business.

1928 - The Indian Insurance Companies Act enacted to enable the government to

collect statistical information about both life and non-life insurance businesses.

1938 - Earlier legislation consolidated and amended to by the Insurance Act with

the objective of protecting the interests of the insuring public.

1956 - 245 Indian and foreign insurers and provident societies taken over by the

central government and nationalized. LIC formed by an Act of Parliament, viz.

LIC Act, 1956, with a capital of Rs. 5 crore from the Government of India.
SOME OF THE IMPORTANT MILESTONES IN THE LIFE

INSURANCE BUSINESS IN INDIA ARE:

1907 - The Indian Mercantile Insurance Ltd. set up, the first company to transact

all classes of general insurance business.

1957 - General Insurance Council, a wing of the Insurance Association of India,

frames a code of conduct for ensuring fair conduct and sound business practices.

1968 - The Insurance Act amended to regulate investments and set minimum

solvency margins and the Tariff Advisory Committee set up.

1972 - The General Insurance Business (Nationalization) Act, 1972 nationalized

the general insurance business in India with effect from 1st January 1973.

insurers amalgamated and grouped into four companies’ viz. the National

Insurance Company Ltd., the New India Assurance Company Ltd., the Oriental

Insurance Company Ltd. and the United India Insurance Company Ltd. GIC

incorporated as a company.
 INDIAN INSURANCE INDUSTRY:

Insurers’

Insurance industry, as on 1.4.2000, comprised mainly two players: the state

insurers:

Life Insurers:

 Life Insurance Corporation of India (LIC)

General Insurers:

 General Insurance Corporation of India (GIC) (with effect from Dec'2000,

a National Reinsure)

GIC had four subsidiary companies, namely (with effect from Dec'2000, these

subsidiaries have been de-linked from the parent company and made as

independent insurance companies.

1. The Oriental Insurance Company Limited

2. The New India Assurance Company Limited,

3. National Insurance Company Limited

4. United India Insurance Company Limited

 LIFE INSURANCE COMPANIES:

S.No. Registration Name of the Company

Number
1 101 HDFC Standard Life Insurance Company Ltd.
2 104 Max New York Life Insurance Co. Ltd.
3 105 ICICI Prudential Life Insurance Company Ltd.
4 107 Kotak Mahindra Old Mutual Life Insurance Limited
5 109 Birla Sun Life Insurance Company Ltd.
6 110 Tata AIG Life Insurance Company Ltd.
7 111 SBI Life Insurance Company Limited
8 114 ING Vysya Life Insurance Company Private Limited
9 116 Bajaj Allianz Life Insurance Company Limited
10 117 MetLife India Insurance Company Pvt. Ltd.
11 121 AMP Sanmar Life Insurance Company Limited.
12 122 Aviva Life Insurance Co. India Pvt. Ltd.
13 127 Sahara India Insurance Company Ltd.

GENERAL INSURANCE COMPNIES:

S.No. Registration Name of the Company

Number
1 102 Royal Sundaram Alliance

Insurance Company Limited

2 103 Reliance General Insurance

Company Limited.
3 106 IFFCO Tokyo General Insurance

Co. Ltd
4 108 TATA AIG General Insurance

Company Ltd.
5 113 Bajaj Allianz General Insurance

Company Limited
6 115 ICICI Lombard General

Insurance Company Limited.

7 123 Cholamandalam General

Insurance Company Ltd.

8 124 Export Credit Guarantee

Corporation Ltd.
BENEFITS OF LIFE INSURANCE`

Apart from the insurance coverage there are many other advantages with a life

insurance policy. Policy owner can avail loans from banks and other financial

institutions with a life insurance policy. Individuals can avail tax benefits as per

Income tax department of India’s rules with an investment in life insurance policy.

It is also a good investment method for future needs. Above all the policy owner

gets life insurance coverage for the insured period.

Risk cover: -Life Insurance contracts allow an individual to have a risk cover
against any unfortunate event of the future.
Tax Deduction: - Under section 80C of the Income Tax Act of 1961 one can
get tax deduction on premiums up to one hundred thousand rupees. Life Insurance

policies thus decrease the total taxable income of an individual.

Loans: - An individual can easily access loans from different financial

institutions by pledging his insurance policies.

Retirement Planning: - What had provided protection against the financial

consequences of premature death may now be used to help them enjoy their

retirement years. Moreover the cash value can be used as an additional income in

the old age.

Educational Needs: - Similar to retirement planning the cash values that flow
from ones life insurance schemes can be utilized for educational needs of the

insurer or his chi

INSURANCE REGULATORY DEVELOPMENT AUTHORITY

(IRDA)

On the recommendation of Malhotra Committee, an Insurance Regulatory

Development Act (IRDA) passed by Indian Parliament in 1993. Its main aim was

to activate an insurance regulatory apparatus essential for proper monitoring and

control of the Insurance industry. Due to this Act several Indian private companies

have entered into the insurance market, and some companies have joined with

foreign partners. In economic reform process, the Insurance Companies has given

boost to the socio-economic development process. The huge amount of funds that
are at the disposal of Insurance Companies are directed as desired avenues like

housing, safe drinking water, electricity, primary education and infrastructure.

Above all the policyholders gets better pricing of products from competitive

insurance companies.

LIBERALISATION

The opening up of Insurance sector was a part of the ongoing liberalization

in the financial sector of India. The domain of State-run insurance companies was

thrown open to private enterprise on December 7, 1999, with the introduction of

the Insurance Regulatory and Development Authority (IRDA) Bill. The opening up

of the sector gave way to the world known names in the industry to enter the

Indian market through tie-ups with the eminent business houses. What was once a

quiet business is becoming one of the hottest businesses today?

POST-LIBERALISATION

The changing face of financial sector and the entry of several companies in the

field of Life Insurance segment are one of the key results of these liberalization

efforts. Insurance business by way of generating premium income adds

significantly to the GDP. Despite the fact that the market is vast in India for the

Insurance business, the coverage is far less compared with the international

standards. Estimates show that a meager 35-40 million, out of a population of 950

million, have come so far under the umbrella of the insurance industry. The

potential market is so huge that it can grow by 15 to 17 per cent per annum. With
the entry of private players, the Indian Insurance Market may finally be able to

make deeper penetration in to newer segments and expand the market size

manifold. The quality of service will also improve and there will be wide The Life

insurance market in India is likely to be risky in the initial stages, but this will

improve in the next three to five years Therefore, it may be advantageous to be a

second-round entrant. In the Life insurance market the need risk assessment

systems and data that are the key to success in the Life insurance market are

significantly underdeveloped in India even today

LIFE INSURANCE COMPANIES IN INDIA

Life Insurer in Public Sector Life

 Life Insurance Corporation of India

Life Insurers in Private Sector

 ICICI Prudential Life Insurance

 Bajaj Allianz Life

 HDFC Standard Life

 Birla Sun life

 SBI Life Insurance

 Kotak Mahindra Old Mutual Life Insurance

 Aviva Life Insurance

 Reliance Life Insurance Company Limited.

 Tata AIG Life

 MetLife India Life Insurance

 ING Vysya Life Insurance

 Max New York Life Insurance

Public and private life insurance companies market share

With a renewed thrust on group covers and success of golden jubilee policy 'Bima

Gold', LIC saw 27 per cent growth in business at over Rs 10,000 crore till October

this fiscal but private players aggressively increased their market share reports

Economic Times. Amid a stiff competition between the state-owned LIC and

private players, the life insurance industry logged a handsome 38 per cent growth

in premium income from fresh policies at Rs 55934 crore in financial year 2007 .
Insurers Amount of contribution % of contribution

Public sector 55934 crores 74.4

Private sector 19279 crore 25.6

TOTAL 75213 crore 100

MARKET SHARE OF PUBLIC AND PRIVATE LIFE INSURANCE IN

INDIA

25.6

74.4
public private

PRIVATE LIFE INSURANCE COMPANIES MARKET SHARE WITH

ACCORDANCE TO PREMIUM

The life insurance industry clocked 49 per cent growth in new businesses,

while general insurance players saw 16 per cent increase in the current financial

year.

Strong performance by Life Insurance Corporation, ICICI Prudential and

SBI Life helped the 16 player-strong life insurance industry to mop up Rs 75,213
crore in 2007 financial year compared with Rs 60,250 crore collected in the last

year, according to data compiled by the Insurance Regulatory and Development

Authority.

However, some life insurers such as Bajaj Allianz, ING Vysya Life and

Reliance Life saw a increase in premium collections during the period under

review.

The country’s largest life insurer, LIC, saw new premiums grow 49 per

cent to

Rs 55,934 crore in 2007l by selling 3,82,29,292 policies

The 15 private players together saw their business grow 32 per cent to Rs

19279 crore with a market share of 25.6 per cent.

Premium Collected By All Private Insurance Companies in FY - 2008

PREMIUM

INSURERS (Rs. in crores)

ICICI Prudential 5254
Bajaj Allianz 4269
SBI Life 2566
HDFC Standard 1624
 Max New York Life 920
Tata AIG 642
Aviva 724
Reliance Life 930
Birla Sun life 882
Kotak Mahindra Old
614
Mutual
ING Vysya 467
Met Life 344
Shriram Life 15
Sahara Life 43
Source: The Indian Council for Market Research (ICMR)

COMPETITION SCENARIO IN INSURANCE SECTOR

Life insurance market to-day in our country is not the same for L I C as it what it

Prior to the year 2000. Because of the appearance of private insurance the

insurance scenario in life insurance market has totally changed. severe competition

in offering new product ,price, return and marketing has opened a wide range of

options amongst the life insurance buyers .Market today is flooded with variety of

rider benefits offered by insurance vying with each other and boasting of serving

the policy holders with updated technology drives .In this competition I C has

never lagged behind and true to its winning sprit exhibited in the past decades

,taken the competition throw up by the private insurance companies in its stride

and has been doing fairly well by reengineering the procedures ,bringing

innovative products ,fine tuning the system ,embarking on structural changes etc.
The monopoly enjoyed by LIC is no longer there since the year 2000.there are 20

private insurance companies in India. IRDA initially allowed foreign partnership

with 26% equity up. To name the few

INDIAN PROMOTOR FOREIGN PARTNER COMPANY NAME

ICICI Bank Prudencial ins.co, U.K. ICICI Prudencial

Bajaj Auto Allianz Germany Bajaj Allianz

SBI Cardiff ,France SBI Life

The competition scenario has given unprecedented opportunity to LIC for

recognize dall its limbs of sales and service.Green channel all times success for

completing new business.due to information technology the LIC based on IT

services.

CHAPTER-III
COMPANY PROFILE
 COMPANY PROFILE OF LIC

ORGANISATIONAL SET-UP OF LIC

On 19th January, 1956, the president of India promulgated “Life insurance

(Emergency provisions) Ordinance” as a result of which the management and

control of Life insurance Business in India including foreign insurance Business of

India insurers

And India Business of foreign insurers were vested in central Govt.thus Life

insurance Business in India passed over form private sector to public sector –a step

never attempted any where in the world on such a large scale.

The Life insurance Corporation Act (Act XXXI of 1956) was passed by the

parliament. In June 1956 which came in force on 1st July, 1956.the LIC of India

came into existence on 1st September, 1956.

Organization of the corporation follows the pattern laid down in the LIC of India

Act, 1956.the Corporation consists of a Board of Directors appointed by the

Central Government .the Chairman and the manger Director/s are Members of the

Board.

The number of Members shall not exceed 16.the LIC of India Act was provided for

5the constitution of an Executive Committee and an Investment committee; the

former is entrusted with the general superintendence and the latter gives advices on

the investment matters.

The Corporation can aloes constitute Advisory committees. In addition, there are

Zonal Advisory Boards for each Zone and policyholder’s councils for each

Divisional office as provided for in the LIC of India Act. These Boards and

councils offer guidance in certain specific areas to the Zonal and Divisional

Managers.

LIC had undertaken a comprehensive program of recognitation in 1980 -81 the

management had to deal fairly in the programme with several issues; what was

the organization set out to achieve? What changes recognize their own strength

weaknesses? The exercise had to include a desire to understand their role changing

system their organization. After the series of studies discussion on working paper

LIC management identified the areas of concentration in the sort run those in the

futer programmes work.

The programmes required decentralizing of work ,our in the

workflow of relationships divisional to branch offices installation of machine

support and phycalmovent of the employees ,in one division along the pre and

post recognition staffposion was as fallows :-

Staff Branch Office Divisional Office

Before 500 1400

After 1500 400

The role of each of the offices each position had to be defined and understood by

the incumbents. The implementation the study war carry out by the operating

managers .special teams called” the orgationsational improvement cell (OIC)”

BRANCH ORGANIZATION:

Under OIC set up profit center LIC Branch office following guidelines was

considered

1. each section in the branch must be responsible for specific task and co-

ordination their work with others

2. each unit must have a budget and the supervisor concerned should

exercise control by exception

3. No section should be normally larger than 10-12 employees that personal

relationships are established between the supervisor and the supervised.

4. To enable them to function effectively larger branches provide better

service to policyholder.

DIVISIONAL ORGANISATION:

The Divisional office in discharging the functions of control and service must

ensure that the subordinate office is performing all and give it the direction

that it may need and take remedial measures in good time so that the planned

result are achieved.

The guidelines for a Divisional Organization would be as follows:-

1. Each Department must be autonomous to the extent technically feasible

and should have discrete area of responsibility.

2. Total supervisory responsibility for Branch performance must be

assigned to a single point of contact in Divisional Office. For this

purpose, sales and service function are put under the charge of

Marketing manager.
 3. Divisional Office must be concerned as much with future growth and

development as with achievement of current results.

4. SSS & G&S functions should be independently handled by Branch

Offices.

The reorganization programme has enhanced the internal capabilities of LIC to

deal with the following:-

In respect to Business:

 Greater market spread to different segment of the population and

geographical dispersal:

 Better market information for product design and development:

 Customer orientation through single window service:

 Supervision of the quality of sale to control overall cost of development,

promotion and sales;

For Internal Management:

 Better forecasting and prediction of performance and surplus.

 Better control of performance data for mid-course correction where

necessary.
  Data for carrier planning and growth of employee roles are more specific

and defined;

NOTE:

Annexure I show the growth of LIC Offices in India form 1.9.1956 to

Annexure II gives brief description of Management committees at Branch and

Divisional Levels.

GROWTH OF LIC OFFICES IN INDIA ANNEXURE-I

period No of Divisions No of Branch Office

1964-65 35 533
1965-66 36 680
1969-70 36 742
1979-80 41 826
1980-81 42 889
1984-85 43 958
1985-86 58 1023
1986-87 59 1107
1987-88 64 1280
1989-90 69 1354
1990-91 71 1427
1991-92 83 1528
1992-93 93 1651
1993-94 100 1774
1994-95 100 1906
1995-96 100 2021
1996-97 100 2024
1997-98 108 2048
 ANNEXERE-II

MANAGEMENT COMMITTEES:-

The management committees will consists of the Head of Office and the designed

heads of departments, where they are officers or Higher Grade Assistants.

Management committee in the branches and divisional offices will have specified

functions.

Function of these committees, comparing of persons right from the cadre of higher

grade assistants.

THE BRANCH MANAGEMENT COMMITTEES:-

The branch management committee consists of the officer-in-charge of the branch

and the heads of the various departments of the branch. These heads of

departments are in various cadres and directly report to the officer-in charge of the

assistants and administrative officers.

Usually there are five sections in the branch, viz: Sales, New Business, Policy

Servicing, Account and Offices Services

 INFRASTRUCTURE

 2048 branches; 373 satellite offices; 108 divisions; 8 zones ;1central office.

 100%Computerisation of all branches and services.

 2048 branches networked through W A N

 IVRS 1251 in India

 Information KIOSKS – 135 on line and 15 off-line computer Touch Screen

Kiosks

 Call Centers at Ahmadabad, Bangalore, Mumbai, Chandigarh, Chennai,

Delhi, Ernakulum

 Ernakulum, Hyderabad, Indore, Jaipur, Calcutta, Pune & Guwahati.

 Premium payment – Any LIC Branch in India

 Premium payment through Internet and ATM of Corporation Bank & UTI

Bank

 Premium payment through ECS (Electronic Clearing System) at Delhi

,Ludhiana, Amritsar, Jalandhar, Chandigarh, Kanpur, Allahabad, Varanasi,

Lucknow, Dehradun, Gorakhpur, Agra, Jaipur, Udaipur, Jodhpur, Rajkot,

Ahmedabad, Vadodara, Surat, Mumbai, Goa, Pune, Kolhapur, Nashik,

Aurangabad, Nagpur, Indore, Bhopal, Gwalior, Jabalpur, Raipur,

Hyderabad, Vijayawada, Vishakhapatnam, Bangalore- I, Mysore, Udupi,

Dharwad(hubli), Chennai I, Vellore, Thanjavur, Madhurai,

Premium payment through SMS

PROUDUCT STRENGTH

 Sovereigns Guarantee by the Central Governmen of India U/S.37 of LIC

of

India Act 1957.

 Lowest premium Rates

 Least premium for AB

 Right form New Born to aged

 Highest Bonus Rates

 50 products as on date.

 Innovative products like table 91(New jana Raksha),149(Jeevan

Anand), 901(Helth plus) etc.

 Insurance for even unborn child,even if born with cleft pallet(Jeevan

Bharathi)
 SERVICE OFFERED BY LIC

GRACE MODES OF PAYMENT OF PREM

Premium, other than single premium, may be paid by policyholder in yearly, half

yearly, quarterly installments. Premium on the due dates.

REVIVAL OF LAPSED POLICY:

If the premium is not paid within the days of grace, the policy lapses. Revived

within a period of five years from the date of unpaid premium during the life-time

of the assured but before date of maturity, if applicable.

NOMINATION /ASSIGNMENT OF POLICY:

When the policy money becomes due for payment on death of the policyholder, it

can be paid only to the person. For quick settlement of claims, it is in the interests

of the policyholder to affect a nopmination in respect of their policy.

CHANGE OF ADDERESS AND TRANSFER OF POLICY

RECORDS:
As and when a policyholder desires changes of his address in the corporation

records, intimation of such change should be given to the branch office servicing

his policy. The correct address and phone no. facilitate better service and quicker

settlement of claims.

CARE OF POLICY DOCUMENT AND LOSS OF POLICY:

The policy document (policy bond) is the evidence of contract between the insurer

and the insured. It has to be submitted to the corporation at the loans /claims.

LOAN:

At present loans are granted onunencumberd policies to the extent of 90%of the

surrender value under policies which are in force for the full sum assured and up

to85%of the surrender value on policies which are paid up for a reduced sum

assured. the minimum amount loan policy is Rs.1000/-

CLAIM BY MATURITY/INSTALLMENT PAYMENT:

The corporation strives to settle maturity claims on or before the due date Survival

benefit payments up to Rs.2,00,000/-

DEATH CLAIM:

In the event of the death of the life assured, the claim should intimate the fact of

such death to the branch office where the policy is being serviced. the original

policy bond , death certificket the required forms should be submitted to the

branch for getting the claim settled

CLAIM REVIEW COMMITTEE:

The corporation settles a large no. of death claims every year. Only in the case of

fraudulent suppression of material information, the liability will be repudiated. The

claims review committee at the central and zonal offices has among other member

s a retired judge of the high court/district court.

GRIEVANCE REDRESSAL MACHINARY:

Policyholders grievance redressal cells exist in all the offices of the corporation,

head by senior officers they are

All divisional offices-Managers (CRM)

All zonal offices-Regional Managers (CRM)

Central office-executive Director (CRM)

Customer grievances can also be registered on our website www.licindia.in

SCHEMES OF OMBUDSMAN:

Insurance ombudsman by the govt.of India at different centers. Complaints

following types in ombudsman consideration

 Repudiation of liberty under claims.

 Delay in settlement of claims

 Any dispute regarding premiums paid

 Any dispute regarding the legal construction of the policies in relation to a

claim.
IVRS

We have 45 IVRS centers providing all types of information on policy servicing.

This facility available 24*7 to available facility from any of these centers just dial

1251

INFORMATION TECHNOLOGY

LIC of India has been at the forefront of IT implementation in India. All the jobs

process are computerized and the all offices of LIC are connecting through WAN.

Time to time latest technology adopted and service to provide the LIC. In its

Electronic Document Management system project LIC of India its in 25 corers

dockets in policy.

Customer Centric Initiatives:

 Portal for our customers has been set up. This portal is single outlet for an

array of services. These services include policy status, bonus caliculation,

loan quotation.

 A similar portal has been started for agents and development officers.

SATELLITE OFFIUCES

With a providing easy access to its policyholder, LIC has launched 340 satellites

offices.
These satellite offices which are attached to the respective parent branches, are

basically an extension of large parent branches for services to policyholder

PEOPLES MONEY FOR PEOPLES WELFARE

The Life Insurance Corporation of India has been a nation builder since its

formation in 1956. True of nationalization, the LIC has mobilized the funds

invested by the people in the life insurance for the benefit of the community at

large.

The total funds invested for the benefit of the community at large accumulated to

Rs.751129 corers as on 31st march 2008. The funds govt. of India and IRDA was

regulated. IRDA controlled funds are invested as follows:-

Not less then 50% is invested in government securities

Not less then 15% is invested in infrastructural and social sector investments.

Not less then 35% in other investments, to be governed by exposure prudential

norms.
 LIC PERFORMANCE WINNING AWARDS

OUT LOOK MONEY-NDTV LOYALTY-2009

NASCOM-IT-AWARD NDTV-PROFIT-2008
 TRUSTEDBRAND

NDTV-PROFIT READER-DIGESTBUSINESS 2009

LEADER

CHAPTER-IV

THEORITICAL FRAMEWORK
 THEORITICAL FRAMEWORK

CUSTOMER RELATIONSHIP MANAGEMENT (CRM)

Introduction:

 Customer Relationship management (CRM) is the latest tool from the

information technology repertoire which enables, promotes and develops

businesses towards better profitability.

 A brief introduction to CRM from the managerial perspective may be in

order and help us to appreciate its utility for the business organizations. The

purpose of business is to create customer.

 The importance of the customer in making breaking a business has led to

greater introspection, conceptual clarity and evolution of customer

relationship management, both as an art and science, and development of

appropriate tools and software for enhancing business and prolonging the
 product and business life cycle. This evolution has seen the shift from the

‘one time’ or “short term transactional’ relationship with a consumer to a

many time (repetitive),’long term relationship’ management and

importance of the ‘life time value’ of the customer.

 CRM helps to seamlessly integrate the product and service to customer

needs in a better, faster and cheaper manner. CRM isn’t a tool for electronic

data. It has to used as a ‘business strategy’ to select and manage the most

valuable customer relationships that give the best results. CRM is thus not a

technology but a strategy based on technology

BENEFITS OFCRM:

 The benefits of customer relationship management are considered are

abounded. It allows organizations not only to retain customers, but enables

more effective marketing, creates intelligent opportunity for cross selling

and opens up the possibility of rapid introduction of new brands and

products.

 The benefits like cost savings, revenue enhancement, and strategic impact.

 Increased sales revenues.

 Increased win rate improve since companies can with draw from unlikely

or bad deals earlier on in the sales process.

 Increased margins.

 Improved customer satisfaction ratings.

 Decreased general sales and marketing administration costs.

TECHNOLOGY ENABLE FOR CRM:

 Development in information technology, data warehousing and data mining

have made it possible for firms to maintain a one above relationship with

their customers.

 CRM is a customer database.

 Top management commitment, personnel motivation, user training and

prototyping the system are the other kef factors for successful

implementation of CRM concept.

IMPLEMENTATION:

 Customer relationship management is accomplishable by following certain

guidelines, they are

 Evaluate and plan.

  Tackling any one competence alone will lead to a

dysfunctional business.

 Successful mass customization is crucial to reducing

customer acquisition costs and improving the cross-

selling capability.

 Channels are delivery mechanisms.

 CRM requires a strategic approach, which

encompasses customer information and knowledge generation, and the ability

to learn from outstanding practices.

Customer focus-an important ingredient:

 Being customer focused also means maintaining constant communication

and dialogue with the customers. Enlightened organizations practice closed

loop communication with their customers.

 Communication must flow both ways, frequently and continuously and be

structured in a way that enables the organization to monitor their

performance from the customer perspective.

 THE RELATIONSHIP CHANGE:

Customer relationship management does not enable a quick win. It is a long-term

approach that has to be adopted as a strategic level. However, the journey of

understanding the strategic benefits of relationship management has just

begun.

 To a greater degree, companies have understood the implications of

customer relationship management and have identified the risk to their

business of not doing so, namely loss of customers and competitive

attack.

 Marketers be it pf goods or services, are constantly reminded to undo

any disappointment to the customers and resolve customer complaints.

 The negative word of mouth mentions emanating from the

complaining customers is far more damaging and widespread than the

recommendations of the satisfied customers

THE GOALS OF CRM:

The idea of CRM is that it helps business use technology and human resources

to gain insight into the behaviors of customers and the value of those

customers. if it works as hoped, a business can:

 Provide better customer service.

  Cross-sell products more effectively.

 Help sales staff close deals faster.

 Simplify marketing and sales processes.

 Discover new customers.

 Increase customer revenues.

 Responses to campaigns.

 Shipping and fulfillment dates.

 Sales and purchase data.

 Account information.

 Web registration data.

 Service and support records

 Demographic data.

 Web sales data.

THE KEYS TO SUCCESSFEL CRM IMPLEMENTATION

 Break your CRM project down into manageable pieces by setting up pilot

programs and short-term milestones. Starting with a pilot project that

incorporates all the necessary departments and groups that gets projects
 rolling quickly but is small enough and flexible enough to allow tinkering

along the way

 Make sure your CRM plans include a scaleable architecture framework.

 Don’t underestimate how much data you might collect (there will be lots)

and make sure that if you need to expand systems you will be able to.

 Be thoughtful about what data is collected and stored. The impulse will be

to grab and then store EVERY piece of the data you can, but there is often

no reason to store data. Storing useless data wastes time and money.

 Recognize the individuality of customers and respond appropriately. A

CRM system should, for example, have built-in pricing flexibility.

WHICH DIVISION SHOULD RUN THE CRM PROJECT?

The bigger returns come from aligning business, CRM and IT strategies across all

departments and not just leaving it for one group to run.

WHAT CAUSES CRM PROJECTS TO FAIL?

From the beginning, lack of communication between everyone in the customer

relationship chain can lead to an incomplete picture of the customer. Poor

communication can lead to technology being implemented without proper support

or buy-in from users.

 What products and services are we offering now and in the future?

 In what markets?

 What customer groups will these products and services appeal to?

 Which of these are of most value to the organization? Interims of

spend? In terms of reliability? In terms of profitability? In terms of

growth potential?

 What additional needs do the most valuable customer groups have?

Additional products additional services?

 What different ways can we be doing business to deliver to our

customers better?

STRATEGIC CRM:

 CRM is about creating a competitive advantage by being the best at

understanding communicating, delivering and developing existing customer

relationships in addition to creating and keeping new customers.

 The concept of product life cycle is giving way to the customer life cycle.

Focusing on developing products that anticipate the future needs of existing

customers and creating services that extend existing customer relationships

beyond the merely transactional.

 The customer life cycle will focus on lengthening the life span of the customer

with the organization rather than the endurance of a particular product.

 Customers have changing needs as their lifestyles alter-the development and

provision of products or services that continuously seek to satisfy those needs

is good CRM.

 Mission statements will begin to structure themselves around customer

segments and not product lines.

 A good CRM strategy will take the business vision and apply it to the customer

base by asking the following questions:

 CHAPTER-V

ANALYSIS AND INTERPRETATION

ANALYSIS AND INTERPRETATION

1. Table showing the awareness of LIC Insurance Company.

TABLE-1

S.No Response No of percentage

people
1 Relatives 120 48%
2 Friends 70 28%
3 Newspapers 35 14%
4 Advertisement 25 10%
TOTAL 250 100%

10%
Relatives
4%
Friends
48% Newspapers

4
Advertisement
28%

INTERPRETATION

Out of 100% peoples 48% of the Respondents are aware Relatives , 28% of the

respondents are aware Friends , 14% of the respondents are aware Newspapers,

10% of the respondents are aware Advertisement on the walls. During the survey
it was none that even though majority of the people know about Relatives and

Friends

2. Tables showing the awareness of plans in LIC policyholder

TABLE-2

S.no Response No of people Percentage

1 Aware 200 80%

2 Not aware 50 20%

TOTAL 250 100%

20%
1 Aware
2 Not aware

80%
INTERPRETATION:

In my survey 80% of the respondents are aware the LIC plans, remaining 20% of

them don’t know about the plans. Majority of the people are know about the LIC

plans.
 3. Tables showing the awareness of Premium payment facilities

Like ATMs, SMS, Internets among the LIC policy holders.

TABLE-3

S no Response No of people percentage

1 Aware 150 60%

2 Not aware 100 40%

TOTAL 250 100%

40%

Aware
Not aware
60%

INTERPRETATION:

60% of the respondents are aware of the other premium payment facilities like

ATMs, SMS, Internets etc.40% of them don’t know about those facilities .During

the survey ,it was known that even though majority of the people know about the

new age facilities to pay the premium ,they are making the payments through the

agents itself which is not a good practice .Hence it can be suggested that the LIC

should launch a communication campaign to increase the facilities like

ATMs,SMS,Internets to make the premiums which are more convenient and

faster .
4. Table showing the prefer payment methods like Cash, Credit
card, Cheque facilities among the LIC policyholders.

CHART-4

S no Response No of people percentage

1 Cash 110 64%
2 Credit card 80 20%
3 Cheque 60 16%
Total 250 100%

1 Cash
2 Credit card
16% 3 Cheque

20%
64%

INTERPRETATION:
In this System 64% of customers prefer Cash payment method, 20% of

customers prefer Credit card payment method and the remaining 16% of customers

prefer Cheque payment method. In my survey the maximum respondents prefer

Cash payment because it is very comfortable to them. Each and every person

doesn’t use Credit cards and Cheque books.

5. Table showing the prefer term payment premiums like Monthly,
Quarterly, Half-yearly, Yearly.

Response S no No of people Percentage

Monthly 1 40 16%
Quetery 2 40 16%
Half-yearly 3 50 20%
Yearly 4 120 48%
TOTAL 250 100%

16%

48% 16%

1 Monthly
2 Quetary
3 Half-yearly
20%
4 Yearly

INTERPRETATION:

In this system 16% of respondents prefer monthly mode of payment, 16% of

respondents prefer quarterly mode of payment, 20% of respondents prefer half

yearly mode of payment and the remaining 48% of respondents prefer yearly mode

of payment.

Majority of the people should prefer the yearly premium. Maximum number of job

holders should prefer the monthly premium because it is easy to pay for them when

they receive monthly salary.

 6. Table showing the aware of IVRS Centers for Information
about all type of LIC plans in policy holders.

TABLE-6.

S no Response No of people Percentage

1 Aware 50 20%

2 Not aware 200 80%

TOTAL 250 100%

20%

1 Aware
2 Not
aware

80%

INTERPRETATION:

20% of the people are getting proper response IVRS (Interactive Voice Response

System) centers, 80% of them don’t know about these facilities. During the survey

majority of the people don’t know this facility.

7. Table showing the Claim settlements in LIC holders view.

TABLE-7

S no Response No of people Percentage

1 Settled Claims 240 96%

2 Rejected Claims 10 4%

TOTAL 250 100%

4% Settled Claims
Rejected Claims

96%

INTERPRETATION:

96% of the respondents are settled claims in LIC, 4% of the respondents claims are

rejected .During the survey majority of the people settled claims in LIC.
8. Table showing the aware about loan granting facilities among

the

LIC policy holders.

TABLE-8

S.no Response No. of people Percentage

Aware 75 30%

Not aware 175 70%

TOTAL 250 100%

30%

Aware
Not aware

70%

INTERPRETATION:

30% of the Respondents are aware loan facility, 70% of them don’t know about

this facility. During the survey majority of the people don’t know about this

facility.
9. Table showing the awareness of housing finance facility among

the

LIC policy holders.

TABLE-9

S.No response No. of people Percentage

1 Aware 160 64%

2 Not aware 90 36%

Total 250 100%

36%
Aware
Not aware

64%

INTERPRETATION:

64% of the respondents are aware housing finance facility, 36% of them don’t

know about this facility. During the survey majority of the people know about

housing finance facility in LIC.

10. Table showing awareness about the social schemes

like Aam Admi Bhema Yojana,Janasree Bema

yojana,Y.S.R.Abhayahastam in LIC policy holders.

TAGLE-10

S.No Response No. of people Percentage

1 Awareness 60 24%

2 Not Awareness 190 76%

TOTAL 250 100%

24%

1 Awareness

2 Not
Awareness

76%

INTERPRETATION:

24% of the respondents are aware of the social schemes like Aam Admi Bhema

Yojana,Janasre Bhema yojana, Y.S.R.Abhayahastam etc. 76% of them don’t know

about these schemes. During these survey majorities of the people don’t know

about social schemes like Aam Admi Bhema Yojana , Janasre Bhema yojana ,

Y.S.R.Abhayahastam etc.
11. Table showing the opinion of the LIC Portal Policy holders.

TABLE-11

S.No. Response No. of people Percentage

1 Good 220 88%

2 Average 30 12%

TOTAL 250 100%

12%

1 Good
2 Average
88%

INTERPRETATION:
88% of the respondents are good opinion in LIC Portal Policy holders, 12% of
them don’t proper opinion in LIC. During in my survey majority of the people
express good opinion in LIC.
12. Table showing aware of customer grievances in hierarchy

level of LIC policy holders.

TABLE-12

S.No Response No. of people percentage

1 Aware 110 56%
2 Not Aware 140 44%
TOTAL 250 100%

44%
56% 1 Aware
2 Not Aware

INTREPRETATION:

44%of the Respondents are aware of the customer grievances, 56% of them don’t

know about this facility. Every Monday settled customer grievances in LIC. It is

one of the opportunities to the policy holders. Majority of the people do not know

about this facility.

CHAPTER-VI
FINDINGS

SUGGESTIONS

CONCLUSION

FINDINGS
 The findings of the study are

 Most of the people are interested to insure policies aware of insurance

policies from their friends & Relatives.

 Most of the people are aware of LIC plans.

 Most of the Urban LIC people were aware of ATMs, SMS, and Internets.

Rural LIC peoples premiums through payable agents only.

 Majority of the people don’t aware of IVRS (Interactive Voice Responsive

Service) Centers in LIC.

 Majority of the people don’t know the loan facility of LIC.

 Large no. of customers prefer yearly mode of payment.

 Most of the people don’t know the social schemes like Aam Admi Bheema

Yojan, Janasree Bheema Yojan and Y.S.R .Abhayahastam in LIC.

SUGGESTIONS
 Insurance sector is becoming more and more dynamic these days. It is

suggested that more types of life insurance plans should be launched to

sync with the changing customer needs

 LIC should take the measures of awareness through advertisements and

news papers etc.,

 LIC Company must have to give the more importance to the Insurance

plans which are in yearly mode of payment.

 LIC Company has to bring awareness in the people regarding Insurance.

 LIC Company has must introduce more Long term plans.

 To aware create rural areas in ATMs, SMS, Internets.

 To awareness create people in social service schemes.

 To the claims settled in shortly.

CONCLUSION
 The company can focus on marketing on customer relationship

activities to bring in more customers. It should keep the consistency and

transparency in its management and it may continue to give the best result keeping

in mind the customers objective in making their investment.

Most of the customers are satisfied with the return obtained through life

insurance. LIC offers flexibility and choice to go with every stage of life. LIC

Company has attained good awareness through media advertisements.

QUESTIONNAIRE
A questioner on the customer relationship management (CRM)

practices in LIC with reference to ELURU city

1. How do you know the name of LIC?

. a) Through newspaper

b) Through Relatives

c) Through friends

d) Through advertisements on the walls

2. Do you know about the planes of LIC?

A) Yes

b) No

3.are you aware of payment of premium through other channels likes

ATMs,SMS,Internets ?

a) Yes

b) No

4. Which method of payment do you prefer?

a) Cash
 b) Credit card

c) Cheque

5. What type of mode of payment do you prefer?

a) Monthly

b) Quarterly

c) Half-yearly

d) Yearly

6. Are you aware of IVRS centers for information about all type of plans in

LIC?

a) Yes

b) No

7. Did you notice any rejection of claim from LIC?

a) Yes

b) No

8. Did you noticed know about loan granting facilities from LIC?

a) Yes

b) No

9. Did you aware housing finance in LIC?

 a) Yes

b) No

10. Did you aware about social schemes like Aam Admi Bheema Yojan,

Janasree Bheema Joana, Y.S.R. Abhayahastam?

a) Yes

b) No

11.you are a portal policy holder what opinion in the LIC ?

a) Good

b) Average

12. Did you aware of LIC is maintaining customer grievances machinery each

hierarchy level?

a) Yes

b) No

BIBLIOGRAPHY
 1 Abhishek Agrwal “Insurance Destribution” English (2002) 1ST

Edition,ICFAI University Press,Hyderabad.Pages-171

2 K.Seethapathi,GRK Murthy “Group And Health Insurance” English

(2002) 1ST Edition,ICFAI University Press,Hyderabad.Pages-172

3. Principles of Marketing. : Philip Kotler & Gary Armstrong:

10th Edition New Delhi. Prentice Hall of India 2003.

Web Sites:

1. www.licof india.com

2. www.insurance.india.com

3. www.irdaindia.com

4. w.w.w.lifeinsurenceindustry.com