MINOR PROJECT REPORT ON Insurance Sector in Bajaj Allianz

Submitted Towards the Fulfillment of the minor project assigned for BBA (banking

and insurance) Semester III Programme of G.G.S.Indraprastha University, Delhi.

Under the guidance of : Ms. DEEPTI RAHEJA

Submitted by: Nilamber Anand BBA (B&I) Semester III Enrl. No. 05824001809

TABLE OF CONTENT
Acknowledgement Certificate Chapter 1: Introduction y y y Purpose of the study Research Objectives Research Methodology 3 4 6 7 8 9-10

Chapter 2: Companys Profile

11-29

Chapter 3: About the Topic

30-37

Chapter 4: Analysis of the Study

38-50

Chapter 5: Suggestions

51-52

Chapter 6: Conclusion

53-54

Bibliography

55

ACKNOWLEDGEMENT
The present work is an effort to throw some light on Insurance Sector in Bajaj Allianz. The work would not have been possible to come to the present shape without the able guidance, supervision and help to me by number of people. With deep sense of gratitude I acknowledge the encouragement and guidance received by our faculty member: Ms. DEEPTI RAHEJA. I convey my heartfelt affection to all those people who helped and supported me during the course of completion of my Project Report.

NILAMBER ANAND BBA (B&I) Enrolment. No. 05824001809

CERTIFICATE
This is to certify that Nilamber Anand is a bonafide student of this institute pursuing BBA full time programme of three years duration which is in affiliation with Guru Gobind Singh University. And has undertaken a minor project report on Insurance Sector in Bajaj Allianz in partial fulfillment of BBA degree as required under the rules of the university.

Signature of Guide (DEEPTI RAHEJA)

Chapter I Introduction

Chapter 1 : Introduction
The Business of General Insurance is related to the protection of the economic values of the assets. Every human being has the tendency to save to protect him from risks or events of future. General Insurance is one form of savings where in people try to assure themselves against risks or uncertainties of future. It is assurance against risks or events or losses. People can save their earnings either in the form gold, fixed assets like property or in banking. All the savings of people of a country account for gross domestic savings. In India, although savings rate is high but people prefer to invest either in gold or fixed assets so that they can make money out of it. Hence General Insurance sector is still untapped in India. The insurance sector is of considerable importance to every developing economy; it inculcates the savings habit, which in turn generates long-term invest able funds for infrastructure building. The nature of insurance business ensures constant inflow of funds - the payout is staggered and contingency related - thereby making it readily available for investment on infrastructure building. Insurance is one sector whose contribution to GDP is quite significant. Post independence, the Indian Government nationalized the private life insurance companies with a view to raise funds for the infrastructure developments, which lagged behind pathetically. The scatter of general insurance companies was brought under one umbrella the General Insurance Company in 1972. Nationalization however brought with it the public sector bureaucracies, cumbersome procedures and inefficiencies but still these nationalized companies managed to have millions of policyholders who had no other options. Any attempt to even suggest private participation with a view to instill healthy competition and efficient services was only met with stiff resistance. While the early 90s brought forth liberalization on all major economic fronts, the insurance was left untouched. But before long, the passage of IRDA bill in 1999 paved the way for the liberalization of the Indian insurance sector.
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Purpose of the study

The purpose of this research is to identify the consumers behavior about General Insurance , which will help the General Insurance companies to satisfy the needs of both present and future customers and at the same time adopt procedures to win back lost customers. y This research is based on primary data and secondary data. Due to time constraint only limited number of persons contacted. This study only focuses on urban buying behavior of customers because the research conducted in NCR area. The study does not say anything about rural buying behavior of customer because rural norms/status/attitude & acceptance of the rural customers differs with urban customers. The purpose of research is limited for NCR area. It provides help to further the research for organized retail sector in NCR area. It aim to understand the skill of the company in the area like technological advancement, competition in management.

Research Objectives
Through this study, consumer behavior about General Insurance can be found out, which will help the General Insurance companies to satisfy the needs of both present and future customers and at the same time adopt procedures to win back lost customers. Through this study, it will help companies to increase there y Sales volume Awareness about General Insurance Benefits of General Insurance Service of company y Sales quality Share of wallet Net present value of customers Persistency Consistency y Brand Image

Research Methodology

To analyze the problem given and to conduct the study among the people, the surveying was done with the help of a Questionnaire (which is attached as a part of the annexure in the report) was adapted. To know the consumers perception about what they think is important before taking a General Insurance policy, eight (8) main criterias were listed out to them, those are y y y y y y Premium Health and Accident Policy Term Charges on motor insurance Bonus Services

Research Problem

The problem of research was To make a study of the consumers perception about General Insurance sector (i.e. how they perceive about General Insurance and what criterias they consider before taking a General Insurance policy). The study was carried out with the following objectives in mind y To know about the various Investment alternatives that is mostly preferred by the people. y To find out the important criterias that people think are important before investing in a General Insurance policy.

Sampling Technique

The sampling technique that adapted to conduct the survey was Simple Random Sampling and the area of the research was concentrated in Delhi and NCR. The survey was conducted by visiting different places and questionnaire was uploaded in net so that survey can be done widely.

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Chapter II Companys Profile

11

Companys Profile

THE COMPANY

BAJAJ Allianz Life Insurance Company is a joint venture between two leading conglomerates, Bajaj Auto Limited, one of largest manufactures of motorcycles and scooters in the world, and Allianz AG of Germany one of the largest insurance companies. Bajaj Allianz Life Insurance Co. Ltd. was incorporated on 12th March 2001. The company received the Insurance Regulatory and Development Authority (IRDA) certificate of Registration (R3) No 116 on 3rd August 2001 to conduct Life Insurance business in India.

Bajaj Allianz Shareholder Capital Base stands at Rs. 500 crore with Bajaj Auto Limited and Allianz AG of Germany holding 74% and 26% stake respectively. It is the largest private player in the Insurance Industry in India with a market share of around 34% amongst the private companies and second to LIC. The total market share of Bajaj Allianz as of 31st March 2006 is at 12%.

During the financial year 2005-2006, Bajaj Allianz has sold over 13 lakh policies and collected about Rs. 4433 crore as premium income. Whopping growth of 216% for the FY 2005-06, Assets under management of Rs. 3324 Crore. It has paid up Rs 925 crores with IRDA as a caution deposit. Bajaj Allianz has insured lives for sum assure of over Rs 8500 crore.

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Bajaj Auto Limited

Bajaj Auto Ltd, the flagship company of the Rs. 8000 crore Bajaj group is the largest manufacturer of two-wheelers and three-wheelers in India and one of the largest in the world. A household name in India, Bajaj Auto has a strong brand image & brand loyalty synonymous with quality & customer focus. With over 15,000 employees, the company is a Rs. 4000 crore auto giant, is the largest 2/3-wheeler manufacturer in India and the 4th largest in the world. AAA rated by Crisil, Bajaj Auto has been in operation for over 55 years. It has joined hands with Allianz to provide the Indian consumers with a distinct option in terms of life insurance products.

As a promoter of Bajaj Allianz Life Insurance Co. Ltd., Bajaj Auto has the following to offer y Financial strength and stability to support the Insurance Business.

A strong brand-equity.

A good market reputation as a world class organization.

An extensive distribution network.

Adequate experience of running a large organization.

A 10 million strong base of retail customers using Bajaj products.

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Advanced Information Technology in extensive use.

Experience in the financial services industry through Bajaj Auto Finance Ltd

Allianz AG
Founded in 1890 in Berlin, Allianz is now present in over 70 countries with almost 174,000 employees. At the top of the international group is the holding company, Allianz AG, with its head office in Munich. Allianz AG is in the business of General (Property & Casualty) Insurance; Life & Health Insurance and Asset Management and has been in operation for over 110 years. Allianz is one of the largest global composite insurers with operations in over 70 countries. Further, the Group provides Risk Management and Loss Prevention Services. Allianz has insured most of the world's largest infrastructure projects (including Hongkong Airport and Channel Tunnel between UK and France), further Allianz insures the majority of the fortune 500 companies, besides being a large industrial insurer, Allianz has a substantial portfolio in the commercial and personal lines sector, using a wide variety of innovative distribution channels.

ALLIANZ AG- A GLOBAL FINANCIAL POWERHOUSE y Worldwide 2nd by Gross Written Premiums - Rs.4,46,654 cr.

3rd largest Assets Under Management (AUM) & largest amongst Insurance cos. - AUM of Rs.51,96,959 cr.

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12th largest corporation in the world

49.8 % of global business from Life Insurance

Established in 1890, 110 yrs of Insurance expertise

Bajaj Allianz Life Insurance

Bajaj Allianz Life Insurance Company Limited is a Union between Allianz SE, one of the worlds largest Life Insurance companies and Bajaj Auto, one of the biggest 2- &- 3 wheeler manufacturers in the world Allianz SE is a leading insurance conglomerate globally and one of the largest asset managers in the world, managing assets worth over a Trillion Euros (Over Rs.55,00,000 crores). Allianz SE has over 115 years of financial experience in over 70 countries. Bajaj Auto is one of the most trusted name is Indian auto for over 55 years. At Bajaj Allianz Life Insurance customer delight is our guiding principle. Ensuring world-class solutions by offering customized products with transparent benefits, supported by best technology is our business philosophy.

Key Achievements
y y y y Have sold over 50,00,000 policies to satisfied customers Is backed by a network of 876 offices spanning the country Accelerated Growth Shareholder capital base of Rs 700 cr.

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Problems of the Organization

Following are the various problems being faced by the company y Lack of adequate communication and transportation facilities y Absence of adequate distribution facilities y Low literacy levels y Dispersed and thinly populated markets y Lower per capita income and poor standard of living y Religious and language diversity y Cultural and social diversity y Seasonal demand y Insurance specific concerns Low insurance awareness Non availability of distribution channels Infrastructural deficiencies relating to medical exam, premium collection etc. Lack of adequate reinsurance support in the absence of historical data Our own mindsets-excessive concerns on adverse selection

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Competition Information
The opening up of insurance sector started in the late nineties when LIC had its complete monopoly in life insurance business. As the sector was opened up, in 2002 alone 11 private players entered the business. Now there are 15 private sector players and, at least, three more are planning to join the bandwagon. When the sector was opened up many large Indian groups in collaboration with established foreign companies entered life insurance business. At that time many strongly believed that LIC being a government-owned company will soon dislodge it from the number one position by the private sector. As, if to prove the critics right right, LIC kept on losing market share as aggressive and nimblefooted private were scooping away large share of the market. Bajaj Allianz life also had a fair chunk of the market and done a very good business in its very last year. Bajaj Allianz Life had shown a huge growth of over 381% during the year. It closed FY 07 with a fresh premium income of Rs. 4269.78 crore from 20.79217 lakh policies, up from Rs 1093.43 crore through 5,79,464 policies in the previous fiscal moving up to the sixth spot on the basis of new premium income among the 16 life insurers and fifth amongst the private life insurers.

GENERAL INSURANCE
The General Insurance industry in India over the past century has gone through big changes. In India this industry reveals the 360 degree turn. 360 degree turn means that it started in India from being an open competitive market to nationalization and back to a liberalized market again. General Insurance industry in India started as a fully private system with no restriction on foreign participation in the Nineteenth Century. Before independence, a few British General Insurance companies dominated the Market. General Insurance was first set up in India through a British company called the Oriental General Insurance Company in 1818, followed by the Bombay Assurance Company in 1823 and the Madras Equitable General Insurance Society in 1829.All of these companies operated in India but did not insure the lives of Indians. They were

17

there insuring the lives of Europeans living in India. Some of the companies that started later did provide General Insurance for Indians. But, they were treated as "substandard" and therefore had to pay an extra premium of 20% or more. The first company that had policies that could be bought by Indians with "fair value" was the Bombay Mutual Life Assurance Society starting in 1871. The first General Insurance Company, Triton General Insurance Company Ltd., was established in 1850. It was owned and operated by the British. The first general Insurance Company was the Indian Mercantile General Insurance Company Limited set up in Bombay in 1907.By 1938; the General Insurance market in India had nearly 176 companies (both life and non-life). After the independence, the industry went to the other extreme. It became a state-owned monopoly. The industry started to witness a problem like fraud. Hence many regulations were put in place to reduce and control the problems in the industry. After which General Insurance was nationalized. In 1956, the then finance minister S. D. Deshmukh announced nationalization of the General Insurance business and then the general Insurance business was nationalized in 1972. Only in 1999 private General Insurance companies have been allowed back into the business of General Insurance with a maximum of 26% of foreign holding.

Status of General Insurance in India

General Insurance business in India is growing at an annual rate of 24.9%.together with banking services, it accounts for 7.6% of GDP. But General Insurance penetration as compared to other nations of the world is very low in India. In 2004-05 it was 2.53% for life General Insurance and .65 % for non life General Insurance. Life General Insurance penetration in India was less than 1% till 1990-91.during the 90s it was between 1-2% and from 2001 onwards it is over 2%.this is due to active role played by IRDA in licensing private players and taking steps to increase awareness among masses.

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The general insurance industry grew 11.60 per cent so far in 2007-08, with robust performance by private players including reliance general which continues to be the fastest growing insurer. The 13 non-life insurers collected Rs 18,509 crore in premium in fy08 so far against the Rs 16,584 crore collected in the same period last year, according to industry data. During the period, the four public sector non-life insurance companies collected Rs 11,156 crore against Rs 10,771 crore in the corresponding period a year ago. The private players increased their business from Rs 5,813 crore to Rs 7,353 crore till November in fy08. In percentage terms, while the public sector could increase their premiums by just 3.57 per cent, nine private sector players clocked premium growth of 26.49 per cent. Private sector players' market share has grown to about 40 per cent in fy08 as compared to the public sector's 60 per cent in the month. Reliance general insurance continues to be the fastest growing insurer with a premium collection of Rs 1,315 crore in fy08 so far against Rs 521 crore in the same period the previous year. During the period, market leader new India assurance premium collection grew by 5.35 per cent to Rs 3,520 crore as compared to Rs 3,341 crore in the year-ago period. In the private sector space, the largest player icici Lombard -- collected nearly 13 per cent higher premium at Rs 2,348 crore in fy08 so far. New Delhi: According to data compiled by insurance regulator IRDA, private insurers like ICICI Lombard, Bajaj Allianz and Iffo-Tokio have cornered nearly 26 per cent of the market in the first half of 2005-06, helping the insurance industry to grow by 15 per cent. The 13 non-life insurers collected Rs10,415 crore in premium till September, 2005, compared to Rs9,025 crore a year ago, despite over six per cent fall in the business of Oriental Insurance and Reliance General Insurance.

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Among the private players, ICICI Lombard was at the top, doubling business to Rs823 crore and grabbing 70 per cent of the market. PSU market leader New India Assurance grew business by 10.59 per cent, to collect Rs2, 282 crore in premium till September this year, and had a market share of 21.91 per cent. Despite over six per cent fall in National Insurance's business, it was at the second spot by collecting Rs1, 780 crore with a market share of 17.09 per cent. Delhi-based Oriental Insurance collected Rs1, 761 crore by logging 12.61 per cent growth in premium income and cornered 16.92 of market. United India expanded its business by a mere 2.86 per cent to collect Rs1,628 crore in premium and a market pie of 15.64 per cent.

Advertising Scenario

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The graph shows that in comparison of life insurance the general insurance advertisement rate is very low.

This Graph shows that which source is how much contributing in the premium collection part of general insurance.

Types of General Insurance

General insurance only pays out when an insured event occurs. It includes

Home insurance (contents and/or buildings)

In the home insurance a heaven of safety. But is it really as safe as you believe it that at Bajaj Allianz and many companies gives us value your security & peace of mind. Hence we bring to you the House- Holders' Insurance policy designed to cover various risks and contingencies faced by householders under a single policy. It provides protection for property and interests of the insured and his family members who permanently reside with the insured. In home insurance company is cover these things, these are

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y y y y y y y y y y y

Fire & allied perils Burglary & Theft Jeweler & Precious Items, Plate Glass, Domestic Appliances, Electronic equipment, Pedal Cycles, Baggage Insurance Personal Accident Cover, Public Liability, Workmens Compensation

Motor insurance
Technology has made our daily life simpler in various ways. Motor vehicle is an invention which has made daily commuting easy. It is convenient and fast and saves our time. Though it is easy to own a vehicle it is expensive maintaining a motor vehicle especially in case of damage caused to your vehicle due to some unavoidable circumstances or accidents. Bajaj Allianzs Motor Vehicle policy helps you in maintaining your vehicle in such situations.

The policy offers the following scope of Cover: y y y Section 1 Undertakes to reimburse the expenses incurred for Repair / replacement of the parts of the vehicle To Pay the market value of the vehicle in case of a total loss
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Provided that the originating cause of such damage is an accident, including theft

Section 2 Is compulsory. It covers the legal liability to third party personal injury and property damage arising out of an accident involving the insured vehicle.

Travel insurance
Taking out travel insurance can help you get financial and practical assistance should something go wrong on your trip abroad. Unfortunately, illness, theft or accidents can happen anywhere. Travel insurance can vary widely on price and levels of cover. If your trip involves particular sports or activities that are considered a risk, check that your insurer offers extra cover or you may need to call a specialist insurer. Get several quotations before you choose your travel insurance and check carefully what each offers.

Health Insurance
The worst nightmare that anyone can have is the one when a family member is hospitalized. Today, when everything is uncertain nobody can be sure what will happen. A seemingly small ailment can turn into major one. And what happens when the earning member of your family is hospitalized? But with a policy from Bajaj Allianz you and your family can rest assured! These are the insurance which is given by Bajaj Allianz y y y y y Health Guard Hospital Cash Critical Illness Personal Guard Silver Health Policy

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E-opinion

Health Guard -covers all medical expenses on hospitalization

It is rightly said Health is Wealth. We are all aware that health care costs are high and getting higher. At times, unfortunately we fall prey to unanticipated accidents & illness. Bajaj Allianz promises to stand by you during those difficult times of physical and mental stress. Our Health Guard policy takes care of your hospitalization expenses & also coverage of pre & post hospitalization expenses. We are the first company to provide the higher coverage of SI 10 lacks.

Hospital Cash -covers non-medical expenses during hospitalisation

With a Hospital Cash policy from Bajaj Allianz you and your family can now breathe a sigh of relief! As this is a benefit policy which covers the incidental expenses incurred during the Hospitalization period. In the event of hospitalization this policy provides a cash allowance of Rs 500-2500 for each day of hospitalization.

Critical Illness - guaranteed lump sum payment once diagnosed of critical illness

Critical illness policy provides protection from the life threatening illness, which can hamper your routine life style. With a critical illness cover you can secure yourself from such contingencies. This is a benefit policy which pays the SI as lump sum amount once you are diagnosed with one of the listed critical illness.

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Personal Guard -covers expenses due to accidents

Life is full of uncertainties and unexpected events. Accidents can happen at home, at work, even at play. The death or injury of a breadwinner can create serious financial problems for any family. It is in situation like these, that you need to be prepared. To help you soften the blow Bajaj Allianz offers the Personal Guard cover. Our Personal Guard Policy offers these additional benefits.

Silver Health Policy - exclusive health insurance for people aged 46yrs and above
As the age of an individual increases the health care costs increase & become a burden on the individual. The senior citizens have to pay out the hard earned savings to meet the expenses. Bajaj Allianzs Silver Health plan is exclusively designed for the senior citizens, which covers medical expenses incurred during hospitalization period.

E-opinion
Bajaj Allianz launches e-opinion rider, which will cover the expenses of 2nd opinion econsultation services for serious illness in India. The policy offers unprecedented access to over 7000 physicians employed by the renowned hospitals of the World Care Consortium. This innovative e-opinion rider gives you an opportunity to obtain best of international expertise at a fraction of the cost.

Star Package - covers health & home in a single plan

Star Package policy is a unique family floater policy which protects your family against various risks and contingencies. It provides a gamut of covers for various health risks, household
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contents, education grant, travel baggage and public liability all under a single policy. It has 8 sections and you would have to opt for a minimum 3 sections to avail for this policy.

Health Ensure
In the times of rising medical costs Bajaj Allianzs Health Ensure policy is the perfect health protection for you and your family. It takes care of the medical treatment costs incurred during hospitalization due to serious accident or illness.

Other insurance
y y y y Corporate Employee Speciality Lines Office

Contribution of General Insurance Sector to Indian Economy

Some surveys have predicted that India and China will play a very vital role in the years to come. Indian economy can be termed as an emerging economy as it is doubling its GDP in 3 to 5 years and moreover it is not dependent on any particular sector for its GDP.

If we look at the GDP of the Indian economy very closely over the years, we can easily come to know the changing structure of the economy. We can also come to know the changing contribution of the various sectors like agriculture, manufacturing and the service sector. In the financial year 1993-94, agricultural sector contributed to 31%, manufacturing accounted to
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26.3% and the service sector contributed to 42.7% of the total GDP of the country. Thus over the years as India became an emerging economy in 2003-04 manufacturing sector contributed for 21.7 %, manufacturing contributed for 26.8 whereas service sector contributed for 51.4% of the total GDP.

There has been 7.5% growth in the total GDP of the country and is estimated to grow at 7.5% in 2005-06. The Indian economy has shown signs of strong performance despite a rise in oil prices, high inflation rate and abnormal rains in many parts of the country. The overall growth of the Indian economy has been equally supported by all the three sectors of the economy, i.e. the agriculture, manufacturing and the service sector. General Insurance, together with the banking sector, contributes to about 7.1 % of the total GDP of India, and the gross premium collected contributes to about 2% of the total GDP of the country The General Insurance sector in India has completed a full circle from being an open competitive market to nationalization and back to a liberalized market again. Tracing the developments in the Indian General Insurance sector reveals the 360 degree turn witnessed over a period of almost 200 years.

Bajaj Allianz Life Insurance-on the rise

Life Insurance Companies LIC of India ICICI Prudential Bajaj Allianz SBI Life HDFC Standard

Market Share (%) 75.0 7.0 6.1 3.0 2.1

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Reliance Life Max New York Birla Sunlife Aviva Life Tata AIG Kotak Mahindra ING Vysya Met life Others

1.2 1.2 1.2 1.0 0.8 0.8 0.6 0.5 0.3

IRDA Certificate
Bajaj Allianz Life Insurance Co. Ltd was granted renewal of IRDA Certification on 28th March 2006.

Pioneers of Bancassurance in India

Having pioneered the phenomenon, Bancassurance is one our core business strategies. Three of our strong Bancassurance tie-ups are: y y y Standard Chartered Bank Syndicate Bank COSMOS Co-op BANK Ltd.

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We have developed a range of life insurance products exclusively for our bancassurance partners. Also,our products are customized to suit specific needs of banks. A strong brand-equity y y y y y y A good market reputation as a world class organization. An extensive distribution network. Adequate experience of running a large organization. A 10 million strong base of retail customers using Bajaj products. Advanced Information Technology in extensive use. Experience in the financial services industry through Bajaj Auto Finance Ltd

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Chapter III About the Topic

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About the Topic

Main Report
PEST Analysis of General Insurance Sector
Political/ Legal Influences which have an impact on financial services and consumer confidence include the following

The Insurance Regulatory and Development Authority (IRDA) Reforms in the General Insurance sector were initiated with the passage of the IRDA Bill in Parliament in December 1999. The IRDA since its incorporation as a statutory body in April 2000 has fastidiously stuck to its schedule of framing regulations and registering the private sector General Insurance companies. The other decision taken simultaneously to provide the supporting systems to the General Insurance sector and in particular the General Insurance companies was the launch of the IRDAs online service for issue and renewal of licenses to agents. The approval of institutions for imparting training to agents has also ensured that the General Insurance companies would have a trained workforce of General Insurance agents in place to sell their products, which are expected to be introduced by early next year. The IRDA since its incorporation as a statutory body has been framing regulations and registering the private sector General Insurance companies. IRDA being an independent statutory body has put a framework of globally compatible regulations.

Privatization of General Insurance sector

The introduction of private players in the industry has added to the colours in the dull industry. The initiatives taken by the private players are very competitive and have given immense competition to the on time monopoly of the market major players. Since the advent of the private
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players in the market the industry has seen new and innovative steps taken by the players in this sector. The new players have improved the service quality of the General Insurance. As a result LIC down the years have seen the declining phase in its career. The market share was distributed among the private players.

Economic
Economic factors are key variables which have an impact on the activity in the financial services sector. The level of consumer activity is governed by income levels and personal wealth. As income levels grow, more discretionary income is available to spend on financial services. Consumer confidence in the economy and in job security also has a major impact; if lean times are foreseen ahead, savings will take priority over loans and other forms of expenditure. Consumers may also seek easy access savings and be willing to tie up their money for longer periods with potentially more attractive .

Indian economy growth projections

By 2025 the Indian economy is projected to be about 60 per cent the size of the US economy. The transformation into a tri-polar economy will be complete by 2035, with the Indian economy only a little smaller than the US economy but larger than that of Western Europe. By 2035, India is likely to be a larger growth driver than the six largest countries in the EU, though its impact will be a little over half that of the US. India, which is now the fourth largest economy in terms of purchasing power parity, will overtake Japan and become third major economic power within 10 years. All these facts or forecasts only drive at one point. India is booming as a market. The global General Insurance industry has a big eye on India owing to its big opportunity. India is the next big thing in the global General Insurance industry. Many new General Insurance companies are planning to enter Indian markets. South African major Sanlam recently announced a tie up with Chennai based Shriram Group for life General Insurance business. French multinational AXA,
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which has been studying the Indian market for long, is expected to finalize its plan this year. Dutch insurer Aegon, on its second visit to the country after a gap of four years, is scouting for a partner and has set up an office. Korean giant Samsung, the newest kid on the block, also has set up a representative office.

Per capita GDP

According to a study by Swiss Re, a leading global General Insurance company, once per capita GDP touches $10,000, life General Insurance premium collection takes off. Indias per capita GDP is hovering around $ 3000 but is expected to go up steeply given the economic growth projections. Also, India, despite being the second largest in terms of population and insured lives, posts a very low figure in terms of the countrys share of life General Insurance premium in the worlds total life premium collection about 0.8%. This shows that the General Insurance sector provides ample untapped market for insurers.

Tax benefits
Payment of General Insurance premium had also been included in the service tax net in the 2004 budget. Although 2004 seemed to be a dampener for individuals insured, the Budget 2005 was a delight. Section 88 benefits have been scrapped. This means that tax rebate under Section 88 will not be applicable to an individual anymore. It has now been replaced by Section 80C. Under Section 80C, one can now invest a sum of up to Rs 100,000 in investment avenues like NSC, PPF, infrastructure bonds and/or life General Insurance and the same will be deducted from an individuals taxable income. This is a welcome move. For one, there was a limit of Rs 70,000 on life General Insurance premium to avail of Section 88 benefits. This ceiling has now been raised to Rs 100,000. An individual can now allocate an enhanced amount to insure him adequately and still get a tax benefit. He can also manage his portfolio better without having to worry about tax benefits. For example, he can increase his General Insurance coverage by buying a term plan (pure risk cover plan) and allocate a sizable amount from his portfolio towards retirement planning. The changes in this years budget have also come as a welcome move for individuals

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whose annual earnings exceed Rs 500,000. Until now, these individuals did not benefit from the tax-saving on account of paying a life General Insurance premium. But this years budget has removed this anomaly and they too can now look at life General Insurance up to a ceiling of Rs 100,000 premium to avail of tax benefit.

Socio-cultural many demographic factors have an important bearing on financial services markets.

Life expectancy & Mortality rate

The life expectancy is defined as the number of years for which a new born baby will live in the prevailing mortality conditions of that particular year. The mortality or crude death rate refers to the number deaths per thousand people. Both these factors are very important as they are used to derive the premium of a particular policy. All the General Insurance companies follow a set standard table referring to which they decide upon the premium rates. This is generally prescribed by the government.

Demographics
One of the major influences on the premiums or prices charged by General Insurance companies is on the basis of the demographics. Premium rates largely depend on the age, sex of the individual insured. All the General Insurance policies have a different rate of premiums to be paid. This is mainly due to the difference in the risk involved of different individuals insured.

Gender discrimination
Gender based discrimination is rampant in any industry. In the General Insurance industry the companies have different premium rates for men and women. This cannot be actually called as gender discrimination. As is said earlier the premium depends on the life expectancy in the
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particular country. More often than not the life expectancy is different for men and women. Usually the women are expected to live more than the men and the difference is 5 years and greater. Hence, what the insurers argue is that the women are a relative less risk than the men and hence the premium charged is more for women. Insurers are providing cover against risk In order to provide them with cover against potential liabilities (that they can pay claims or the right level of benefits), pricing would have to be biased towards the most secure -and often least favorablevariant. This is to allow insurers to fulfill all their commitments. "Gender-neutral" General Insurance in the true meaning of the word is impossible in voluntary General Insurance products.

Improving standard of living

If, by 2030 AD 50% Indian population reaches the level of middle class, Indian market for General Insurance Sector will reach the level of 600 million from conservatively estimated present level of 100 million. Even at the present level of 100 million, Indian market is big enough by global standards for vigorous development as the premium density is only 0.6% as compared to 3 to 5% for developed markets. Prospects for conventional General Insurance development in Indian market in 21st Century are bright provided its transformation takes place in the right form and right type of strategy is developed to transform hidden potential into business.

Consumer attitude and preferences

General Insurance was always viewed by people as a safety net. Indians specially are very emotional as far as family members, security, social status and other such issues are concerned. The General Insurance industry is primarily based on the fact that people live their family their belongings and hence want them to be with them forever. This is the basic attitude of people towards General Insurance. The Indians, hence, are more vulnerable and tend to pay more attention towards the General Insurance advertisements and General Insurance products.

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Other factors
y y y y y y Changing attitude towards consumer credit and debit Changing employment patterns Numbers of working women The ageing population Marriage/divorce/birth rates Consumption trends.

Technological
Computerization
Initially, in the late 1950s the General Insurance companies used Unit Record Machines (Electro Magnetic Machines) to process data punched into cards. Computers were introduces in the mid 1960s and by the 1980s the Unit Phased Machines were phased out and the entire process was computerized. This brought about greater efficiency and quick service delivery.

Internet
Internet usage has drastically improved in the last decade. There was a tremendous increase in the use of technology by different companies during the late 1990s. The company launched its website www.licindia.com in the mid 1990s to offer basic services such as modifying policies (change of address, change of nominee, etc) and querying the status of the policy. But today, the internet has completely changed the service delivery process. Internet is today used to even sell General Insurance policies. Internet is, in fact, proving to be one of the widely used distribution networks for selling General Insurance policies. Also internet is used for sending premium notices to policy holders through e-mails.
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Electronic Clearance Service (ECS)

Almost all the big organizations today provide the ECS facility to its customers. A policy holder having an account in any bank which is a member of the local clearing house can opt for ECS debit to pay premiums. The advantage here is that once the option is exercised, the policy holder need not visit a branch for paying the premium or collecting the receipts. On the day indicated by the policy holder, the premium amount will be directly debited to the bank account of the policyholder and the receipt will be issued by the designated branch office.

Bank ATM s
Many General Insurance companies have a tie-up with commercial banks so as to enable policyholders to use the facility of paying premiums through the bank ATMs. ICICI Prudential has a tie up with ICICI bank; LIC has a tie-up with Corporation bank and UTI Bank.

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Chapter IV Analysis of the Study

38

Analysis of the Study

Learning Outcomes

In this time span of aproximately eight (8) weeks, many aspects have come to my knowledge both from the perspective of academic as well as corporate world. Those aspects of my learning can be summarized in the following way

It helps in knowing the broader perspective of the total General Insurance scenario prevailing in India. It explained all the pros and cons about the General Insurance industry.

The comparative analysis part helped to know about the different products offered by different companies as well as the different benefits that they are offering with their respective products.

Then I came to know about the operations that go on in an organization in the daily routine. It helped us to prepare our self for the future when we have to join an organization and work under similar conditions.

The skill of how to approach a person for convincing him/her to do a particular thing was learned by us at the time of filling up the questionnaire.

So, finally it can be said that this internship gave me the opportunity to learn the various aspects of General Insurance which can help me in the future as when I enter the corporate world, I
39

should be able to handle any job that is being offered to me by the company in which I am doing my job. This will help me immensely in the future as General Insurance sector is growing at a rapid speed and there will be lots of job opportunities in this sector in the future time to come.

SWOT Analysis of General Insurance Sector

Strengths

Consumer Grievance Redressal

The Insurers have to face the redressal of the consumers, grievances for deficiency in products and services. The Insurance Regulatory Development Authority (IRDA), the regulatory body has already appointed Ombudsman for looking into the grievances of the policyholders. His judgment will be binding on the insurers. Further under Consumer Protection Act, 1986, the consumer courts are operating at the district, state and national levels. This is a major strength from the consumer point of view as they could easily fight for their rights.

Increasing customer awareness

The gradual growth of the industry and also the increasing number of claims settled has slowly led to the increase in the awareness in the minds of the customers. These aware customers are now potential clients which can be used by the companies and converted into new clients.

40

Channels
General Insurance companies are getting savvy. Enhanced marketing thus is crucial. Already, many companies have full operation capabilities over a 12-hour period. Facilities such as customer service center are already into 24-hour mode. The opening up of the industry has defined new frontiers of distribution of which consumer concern is an indispensable part.

Weakness

Challenge to new insurers

The new insurers will have to invest a minimum capital of Rs. 100 Crores. The normal gestation period is of 5 years. The generation of profit normally starts in the sixth year. Hence the new insurers have to lock up their capital for at least 5 years.

Outdated products

Today, Bajaj has more than 60. But most of them are outdated, as they are not suitable to the needs of the consumers. Hence old as well as new insurers have to offer innovative products to the consumers and bringing more products would require good amount of capital investment.

Vast country

India is a vast country with more than 5, 76,000 villages having a population of at least 500-600 per village. The companies could recognize the fact that if it takes the whole district as one, it
41

would consist of a population more than 5000-10000. One district could give them a good amount of business. The company could have this opportunity and tap it and reap revenues.

Trained manpower

Since the sector has opened up, many new companies have already started its operation and few are just about to begin. The government has also introduced professional courses like Bcom. (Banking and General Insurance), identifying the potential growth in the General Insurance sector.

Opportunities
Today, adequate social protection available to only 20% of the world population No social protection available to over 60% of the global population Good network in rural areas required to get more business Rural economy shaping up fast Todays poor are tomorrows customers An opportunity to grab the mind space of the rural customers Success will belong to those who dare and act To get rich, sell to the poor Liberalization of Indian economic. Life insurance sector opening up. Very small percentage of populant insured in India one of the best product in the market.

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Hold General Insurance policy

hold general insurance policy Frequency Valid no yes Total Cumulative Percent 23.0 100.0

77 23
100

Percent 23.0 77.0 100.0

Valid Percent 23.0 77.0 100.0

Among the 100 respondents that were taken as a sample size, 23 of them had life General Insurance policy that was either taken by him/her self or it was taken by their parents on their name, while 77 of them did not have any kind of General Insurance policy from any company.

Important criterias before taking a general insurance policy

Now, let us see what criterias people consider most important before taking a life General Insurance policy (the criterias for the study have been mentioned before). Here, the most important criteria as perceived by the people are being rated as 1 and the least important criteria are being rated as 8, (as there are 8 criterias that have been suggested under the research study). Here the number of respondent is only 77, because those people who do not have any life General Insurance policy have been excluded from the purview of the study.

43

Premium
MUIMERP

Now if we consider one of the criteria we can see that 54.5% of the respondent has rated it as the most important thing that they consider before taking any General Insurance policy from any company, while no body has rated it as the least important criteria. So, it can be clearly interpreted that premium that the policy holder has to pay to continue his/her policy plays a very important role before selecting the terms and conditions of the policy and also the company from which the policy is to be taken.

Charges
SEGRAHC

0.001 7.89 2.29 9.77 1.07 3.26 5.45 tnecreP evitalumuC 0.001 1.69 2.29 5.08 9.46 0.93 9.61 8.7 tnecreP evitalumuC

0.001 3.1 5.6 3.41 8.7 8.7 8.7 5.45 tnecreP dilaV 0.001 9.3 9.3 7.11 6.51 0.62 1.22 1.9 8.7 tnecreP dilaV

0.001 0.32 0.77 0.1 0.5 0.11 0.6 0.6 0.6 0.24 tnecreP 0.001 0.32 0.77 0.3 0.3 0.9 0.21 0.02 0.71 0.7 0.6 tnecreP

001 32 77 1 5 11 6 6 6 24 ycneuqerF 001 32 77 3 3 9 21 02 71 7 6 ycneuqerF

metsyS latoT 7 6 5 4 3 2 1 metsyS latoT 8 7 6 5 4 3 2 1

latoT gnissiM

latoT gnissiM

dilaV dilaV

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Now if we consider the charges the customer has to pay to the General Insurance company like Fund Management charges, administration charges etc. most of the people consider it as a important criteria which can dictate the terms before deciding on whether to take the policy or not. But very few people (only 7.8% of the total respondents), considers that it can be the most important criteria before taking the decision on life General Insurance policy.

Policy Term
Policy term Frequency 17 9 8 17 14 5 2 4 76 24 100 Percent 17.0 9.0 8.0 17.0 14.0 5.0 2.0 4.0 76.0 24.0 100.0 Valid Percent 22.4 11.8 10.5 22.4 18.4 6.6 2.6 5.3 100.0 Cumulative Percent 22.4 34.2 44.7 67.1 85.5 92.1 94.7 100.0

Valid

1 2 3 4 5 6 7 8 Total System

Missing Total

The tenure of the policy i.e. the policy term depends on the policy holder but sometimes the insurer can also influence the policy term by giving some additional benefits on policies taken for a longer period of time or vice versa. In the study that was conducted by us, we found out that nearly 22% of the respondents thinks that policy term offered by the company is the most important thing that one should consider before taking any life General Insurance policy while 5.3% of the respondents think that it is the least important thing that one should consider before taking any life General Insurance policy.

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Rider Benefits

Rider benefits are the additional benefits that the insurer company provides to its customers for attracting them. Things like accidental benefit, critical illness benefit, and permanent disablement benefit are provided as arider with the original policy with a payment of some additional premium from the point of view of the customers. According to the study nearly 18% of the respondents think that it is the most important criteria before selecting a General Insurance policy, while on the other hand 4% of the respondent feels it is the least important criteria.

0.001 1.69 2.29 6.67 1.75 6.14 7.42 2.81 tnecreP evitalumuC

0.001 9.3 9.3 6.51 5.91 6.51 9.61 5.6 2.81 tnecreP dilaV

stifeneb redir 0.001 0.32 0.77 0.3 0.3 0.21 0.51 0.21 0.31 0.5 0.41 tnecreP 001 32 77 3 3 21 51 21 31 5 41 ycneuqerF metsyS latoT 8 7 6 5 4 3 2 1 latoT gnissiM dilaV

46

Service (Pre and Post Sales)

While conducting the study we have met many respondents who things that many of the companies provide them satisfactory services only till the policy is being taken by the respondent, but after that if there is any requirement from the point of view of the customer, the company does not pay the same attention to them as they had paid earlier. So, nearly 25% of the respondents feel that services (both pre and post sales) provided by the company is the most important thing to consider before undertaking any kind of life General Insurance policy.

0.001 2.29 7.58 1.07 6.05 9.24 9.92 7.42 tnecreP evitalumuC

0.001 8.7 5.6 6.51 5.91 8.7 0.31 2.5 7.42 tnecreP dilaV

0.001 0.32 0.77 0.6 0.5 0.21 0.51 0.6 0.01 0.4 0.91 tnecreP

SECIVRES 001 32 77 6 5 21 51 6 01 4 91 ycneuqerF metsyS latoT 8 7 6 5 4 3 2 1 latoT gnissiM dilaV

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Accessibility
ytilibissecca

The term accessibility here refers to the easy availability of the facilities that the company provides to its customers. The facilities can be regarding information about the company and the various products offered by them, which can be made available through internet. According to the study nearly 12% of the respondents thing it is the most important thing, while 9% of them feel that it is the least important thing that one may consider before taking any life General Insurance policy.

0.001 9.09 8.18 7.95 9.24 5.23 5.91 7.11 tnecreP evitalumuC

0.001 1.9 1.9 1.22 9.61 4.01 0.31 8.7 7.11 tnecreP dilaV

0.001 0.32 0.77 0.7 0.7 0.71 0.31 0.8 0.01 0.6 0.9 tnecreP

001 32 77 7 7 71 31 8 01 6 9 ycneuqerF

metsyS latoT 8 7 6 5 4 3 2 1

latoT gnissiM

dilaV

48

Company Image
egami ynapmoc

Company image also plays a very important role in influencing the decision of a prospective customer while taking the final decision. From the study it has been found out that nearly 33% of the people feel that it is the most important thing that influences ones decision regarding taking of life General Insurance policy, while for 9% of people it does not provide any significant importance in their decision making.

So, to conclude from the above representations, it can be said that the premium that the policy holder has to pay for taking any life General Insurance policy, plays the most important role in influencing their decision, followed by the factors like bonus and interest paid by the company, company image and so on. So, those companies who are charging the least premium as well as providing all other complementary services, has a better chance of succeeding in the life General Insurance sector in comparison to other companies who are also operating in the same field. Now to further analyze the perception of the respondents about what they think as the important criteria before taking a General Insurance policy. I have taken two independent parameters, namely

0.001 9.09 9.77 2.66 6.36 9.15 5.54 5.23 tnecreP evitalumuC

0.001 1.9 0.31 7.11 6.2 7.11 5.6 0.31 5.23 tnecreP dilaV

0.001 0.32 0.77 0.7 0.01 0.9 0.2 0.9 0.5 0.01 0.52 tnecreP

001 32 77 7 01 9 2 9 5 01 52 ycneuqerF

metsyS latoT 8 7 6 5 4 3 2 1

latoT gnissiM

dilaV

49

y y

Age of the People. Annual Income of the People.

After taking these two independent parameters, the analysis is being made to see which age group people think what criteria is important or what is difference in perception among the people who have annual income which are significantly different from each other. The number of respondents here is taken as 77 (76 in case of annual income, as one of the respondents did not disclose his income) only as those people who are not having any life General Insurance policy have been excluded from the purview of the study.

50

Chapter V Suggestions

51

Suggestions
y Company should find out any such type of policy which can serve the requirement of above 60 years because we have seen from the study that very less people are insured above 60 years and those who are insured they have done it earlier. y Rider Benefit should be equal to all people, coverage network should be increased and awareness should be given. y Company should reduce the charges (Fund management charges, administration charges, etc.) because customer thinks that charges which they are paying are not worth if they compare with their policy. y The company has to keep in mind while framing the premium charges that is the age group of less then 30 and above 50 either they are new to the organization and earn less or they are retired and their income is low. So that premium should not create any barrier to take General Insurance.

52

Chapter VI Conclusion

53

Conclusion
The conclusions that can be drawn from the survey that was conducted by me can be summarized in the following way: y General Insurance is the most perfect to squire of our present and future of unnatural and natural things. y According to the survey Premium to be paid for taking an life General Insurance policy is the most important criteria which people consider before taking a General Insurance policy followed by Company Image and Service of the Company. y People who belong to different age groups have different perception regarding the most important criteria before taking the decision on a General Insurance policy. y People who belong to different income groups also have different perception regarding the important criterias concerned with the General Insurance. y Customers are not happy with pre and post services which companies are offering to them.

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Bibliography

Books y Philips Kotler,Marketing Management:11th Edition, Prentice Hall of India Ltd., New Delhi, 2004 y Jim Blythe,The essence of consumer behaviour, Prentice Hall, Europe Hertford shire, 1997 y Everett M. Rogers Diffusion of Innovations, 4th Edition, New York: Free Press, 1995.

Websites y http://business.mapsofindia.com/insurance/bajaj-allianz-insuranceindia.html.(2,july,2010) y y http://www.bajajallianz.com/Corp/index.jsp(23,Aug,2010) http://www.irda.org/displaycommon.cfm?an=1(29,Aug,2010)

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