Project Report on

Customer perception about the life insurance product of Max New York Life

A report submitted to Delhi Business School, New Delhi

As a part fulfillment of

MBA+PGP Graduate program (industry integrated) in entrepreneurship and business.

Submitted to: Submitted by:

Director Academics Name of student:Shikha Bhargava

Delhi business school Roll. No: 113

New Delhi Batch: Spring 09-11

Semester: 4th

University: Punjab Technical University,

Jalandhar

Internal guide:

Faculty: Mr. Loknath Mishra

Delhi Business School

New Delhi

Dbs delhi business school

Delhi Business School

B-II/M.C.I.E.,Mathura Road, New Delhi

Website: www.dbs.edu.in

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PREFACE

In insurance sector the market is growing very fast. The opportunities are also high in this

sector as only 5% of Indian market is covered by this sector and the players are trying to

extend into the rest of untapped 95%. Insurance companies pay for financial losses

arising out of occurrence of insured events, e.g. personal accidents, fire and other allied

incidents like riots, strike and explosion etc.

Risk is the most important factor one should consider now a day as risk associated with

everyone’s life. The moment he or she wakes up from his or her bed. So insurance is the

world comes in our mind at a spontaneous manner.

After liberalization of the insurance sector in 1999, private players have entered both life

and non life businesses in India. IRDA was constituted in April 2000, as in autonomous

body to regulate develop the business of insurance and re-insurance in the term of IRDA

act 1999.

Insurance is as old as our civilization, hence in earlier times also the concept of insurance

was prevailing and it has been mention in Rig-Veda also as YOGAKSHENA. Insurance

is not only used as a risk assessment tool but also risk adverse tool for financial for

financial investment for future earnings for the purpose of wealth creations.

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ACKNOWLEDGEMENT

It gives me immense pleasure to express my deep sense of gratitude to Mr. Loknath

Bagla, Delhi Business School, New Delhi for his valuable guidance and consistent

supervision thought out of course..

I am extremely thankful to Miss Jasleen Kaur, Faculty Guide of Delhi Business School,

for his timely guideline and support throughout the final report work. In the course of

carrying out the project work.

Finally I am indebted to our other faculty members, my friends and my parents who gave

their full-fledged co-operation for successful completion of my project.

It was an indeed learning experience for me.

Shikha Bhargava.

EXECUTIVE SUMMARY

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The project of mine, I have been assigned to do as many summary project is quite

interesting and also needed hard work as well as skills.

As my project deals with customer perception about the projects of insurance market for

Max New York Life. As each and every next insurance company is searching for the

prospective buyers, I had started the project by designing the questionnaire for the

MNYL customer to know about their needs (financial). Financial planning specification

of the product of insurance, they are looking for; I kept one thing very precise in my mind

that was customer perception about a particular insurance product. Main motive behind

my project is to an untapped full of prospective buyers.

TABLE OF CONTENT

PREFACE

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ACKNOWLEDGEMENT

EXECUTIVE SUMMARY

CHAPTER I

INTRODUCTION

COMPANY PROFILE

PRODUCT PROFILE

CHAPTER II

OVERVIEW OF THE PROJECT

OBJECTIVE,SCOPE & RATIONALE

INDIAN INSURANCE MARKET SCENARIO

WORLD WIDE VISION

IRDA GUIDELINES

CHAPTER III

RESEARCH METHODOLOGY

DATA ANALYSIS

RECOMMENDATION

CONCLUSION

BIBLIOGRAPHY

CHAPTER IV

ANNEXURE

QUESTIONNAIRE

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INTRODUCTION

Insurance is basically sharing of losses or can be termed as a sharing device. The

losses to assets resulting from natural calamities like fire flood, earthquake,

accident etc, are met out of the common pool contributed by large number of

persons who are exposed to similar risk.

Insurance is as old as civilization. It was present in the form of mutual help. Joint

stock Companies and Corporation are the recent form of the insurance. The

‘YOGAKSHENA’ has been the oldest term of insurance used in the Rig-Veda for

some kind of insurance. Today the nationalization of Life Insurance business and

General Insurance business is expected to contribute maximum for the well-being

and safety of the people by providing insurance service in every walk of life, the

principles and practices of insurance have been changing from time to time

according to the need.

The contribution of many is used to pay the losses suffered by unfortunate few

however the basic principle is that loss should occur as a result of natural or

unexpected events which are beyond the human control secondly insured person

should not make any gains out of insurance. It is natural to think of insurance of

physicals assets such as motor car insurance or fire insurance but often we forget

that creator of all these assets is the human being whose efforts have gone a long

way in the building up the assets in that sense human Life is unique income

generating assets. Unlike the physical assets, which decrease in value with passage

of time, the individual becomes more experienced and more matured as he

advanced in age. This raises his earning capacity and the purpose of Life insurance

is to project the income of individual and provide financial security to his or her

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family, which is dependent on his income in the event of his premature death. The

individual himself also needs financial security for the old age or on his becoming

permanently disabled when his income will stop. Insurance also has an element of

saving in certain cases.

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Company Profile of Max New York Life:

Max New York Insurance

“Max New York Life wants people to view insurance as a financial protection and

wealth creation instrument and not just a tax.”

Max New York life Insurance Company Ltd. is a joint venture between New York

Life, a Fortune 100 company and Max India Limited, one of India`s leading multi-

business corporation. The company has positioned itself on the quality platform.

In line with its vision to be the most admired life insurance company in India, It

has developed a strong corporate governance model based on the core values of

excellence, honesty, knowledge, caring, integrity and teamwork. The strategy is to

establish itself as a trusted life insurance specialist through a quality approach to

business.

New York Life is a Fortune 100 company that has over 160 years of experience in

the life insurance business. Max India Limited is a multi-business corporate

dealing in Clinical Research, IT and telecom Services, and Specialty Plastic

Products business.

Max New York Life Insurance started its operation in India in 2000. It is the first

life insurance company in India to be awarded the ISO 9001:2000 certifications.

Max New York offer customized products tailored to suit individual’s needs. With

its various Products and Riders, there are more than 400 products combinations to

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choose from. Today, Max New York Life Insurance has a network of 57 offices

spread over 37 cities all over India.

In line with value of financial responsibility, Max New York Life has adopted

prudent financial practices to ensure safety of policy holder`s funds. The

company`s paid up capital is Rs. 657 crores, which is more than the norm laid

down by IRDA.

Max New York Life has identified individual agents as its primary channel of

distribution. The company places a lot of emphasis on its selection process, which

comprises four stages-screening, psychometric test, career seminar and final

interview. The agent advisors are trained in-house to ensure optimal control on

quality of training.

Max New York Life invites significantly in its training program and each agent is

trained for 152 hours as opposed to the mandatory 100 hours stipulated by the

IRDA before beginning to sell in the marketplace. Training is a continuous

process for agent at Max New York Life and ensures development of skills and

knowledge through a structured program spread over 500 hours in two years. This

focus on continuous quality training has resulted in the company having amongst

the highest agent pass rate in IRDA examinations and the agents have the highest

productivity among private life insurances.

It has established a wide agency distribution network with 172 offices and

representatives across 120 cities in India. The company has established additional

channel with 22 ban assurance relationships, corporate tie-ups and a strong direct

sales Team. Through its wide network of highly competent life insurance agent

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advisors, flexible product solutions and strong customer focus, Max New York life

is creating a partnership for life with its customers in India.

Max New York Life, one of India’s leading Life Insurance Company, expended its

presence in the southern region by opening its first general office in the city of

Mysore. Max New York Life now has established a country wide network of 172

offices and representatives across 120 cities in India.

Max New York Life, which has till date sold over 1.53 million policies and

recorded a sum assured of over Rs. 46,000 crores, has positioned itself on the

quality platform. The company has developed a strong corporate governance

model based on defined core values of caring, knowledge, excellence and honesty.

Its strategy is to establish itself as a trusted life insurance specialist on the bedrock

of quality of advice. The company has over 25,300 agent advisors, who are widely

considered the best in the business.

Max New York Life aspires to be the “Life Insurance brand of first choice”

amongst Indian consumers. To achieve this company will draw on New York

Life’s demonstrated competence in developing and managing a supervisor

personal sales network. For the last 46 years consecutively, the largest number of

agents qualifying for membership to the Million Dollar Round Table (MDRT)

have been Max New York Life. The MDRT is the industry’s most prestigious

organization comprising the world’s most successful insurance agents.

Max New York Life, a merit oriented and equal opportunities employers, is

looking for a few good men and women who will spearhead the effort to realize

this vision.

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Max New York Life wants people to view insurance as a financial protection and

wealth creation instrument and not just a tax-saving tool. Since the launch of our

operations, our focus has always been on providing risk protection and long-term

wealth creation solution to our customers. With a diverse product portfolio to meet

customer requirements, it is evident that we are setting benchmarks in the

marketplace and are well on course of realizing our vision to become India’s most

admired Life Insurance Company.”

“An ever expending presence of max New York Life officers across India

reinforces our commitment to serving the nation. We are extremely pleased with

our progress in the region and feel that opening an office in Mysore would help us

educate people about the true potential and benefits of life insurance. As life

insurance specialist, Max New York Life will continue to help consumer make the

right make the right choice to meet their financial goals, both for the short term,

through sound quality advise offered by our agent advisors and a right mix of

product offering.” He added.

Max New York Life has been instrumental in changing the paradigm of life

insurance in India. It is the first life insurance company in India to introduce

because related marketing.

Children are at the very heart of Max New York Life’s strategy. SOS children’s

Village of India is internationally recognized for its work in giving

underprivileged children a wholesome life. The mission of SOS is to help

orphaned and abandoned and children, by providing them with a family, a

permanent home, education and strong foundation for an independent life. “Its

mission ties in the Max New York Life’s philosophy of helping people secure the

future of their near and dear ones.

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The 5 core values of the group

The Max group has always sought to be a value-driven organization. These values

continue to direct the group’s growth and businesses. The five core Max values

underpinning the ways we do business are-

INTEGRITY- We must conduct our business fairly with honest and transparency.

Everything we do must stand the test of public scrutiny.

UNDERSTANDING- We must be caring show respect, compassion and

humanity for our colleagues and customers and always work for the benefit of

India.

EXCELLANCE- We must constantly strive to achieve the highest possible

standards in our day to day and in the quality of the goods and services we

provide.

UNITY- We must cohesively with our colleagues across the group and with our

customers and partners around the world building strong relationships based on

tolerance, understanding and mutual cooperation.

RESPONSIBILITY- We must continue to be responsible, sensitive to the

country, communities and environment in which we work analysis ensuring that

what comes from the people goes back to the people many times over.

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PRODUCT PROFILE

Production Plans

Five years Renewable & Convertible Plan.

Level Term Policy

Children plans

Children’s Endowment to 18(par) Plan

Children’s Endowment to 24(par) Plan

SMART Steps

SMART Steps Plus

Investment Plans

Life maker Premium

Life maker Gold

Life maker platinum

Life Invest

Retirement Plans

SMART invest Pension

Easy Life Retirement (par) Plan

Health Plans

Lifeline Medic ash

Lifeline wellness Plus

Lifeline Medic ash Plus

Lifeline Safety Net

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Saving Plans

Whole Life Participating

Life Gain Plus 25 Participating plan

20 year Endowment(par) Plan

Life Pay money Back plan

Partnership Distribution

Max Man gal

Capital Builder

Max Vriksha

Max New York Life Unit Builder

Max Am Sure

Future Builder

Business Builder

Bonus builder

Secure Returns Builder

Group Plans

Group Credit Life

Unit Linked Group Superannuation Plan

Group gratuity cum Term Assurance

Group Term Life

Unit Linked Group Gratuity Plan

Employee deposit Linked Insurance

Max Super Life

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OVERVIEW OF THE PROJECT

The topic I have been given needs a sincere and hard perseverance to come up with

desired results. Marketing research program is for an untapped hidden prospective.

Market needs an extensive study of both demographic and psychographic profile of

people and its impact on their mindset. Research to be done in the perception of people’s

desire for insurance, hence my project curtails an extensive survey on customer’s

perceptive including their need, desire and if they have already insurance policy, then

what all are the problems they are facing. Keeping all these views in the mind, I have

done my research based project initiating designing of questionnaire. Questionnaire is an

important step to start up a research project, for that I have prepared a structured

Questionnaire comprising closed ended questions.

Research methodology, I have used is a descriptive study with qualitative and

quantitative techniques.

Sampling technique used is convenient sampling. I have taken 75 as my sample size but

due to shortage of time which is one of the major limitations of my project I could only

take 50 as my sample size. Questionnaire, I have been using was of two types, one, I was

supplemented by the company itself and other by my own tailor made questionnaire.

At a certain point of time, I was not able to get the respondents whom I can give the

questionnaire, then I decided to follow a disguise research program.

Somewhere I had also become disguise researcher without giving the exact purpose of

my project and I got positive response. I had also adopted secondary data method for

getting some information about the Insurance as I was complete novice to this industry; t

had to gather information from Internet, Insurance, Journals, text books on insurance and

Newspapers.

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Henceforth, I come to an end to my journey to research program with some productive

and robust ideas and strategies which will assiduously help the Company to grab the

market-share in this highly competitive market.

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OBJECTIVE

Primary:

To do a systematic research for insurance product for Max New York Life

Insurance Company.

Secondary:

To foster the profit maximization of the company accompanied with a good will.

Scope:

My endeavor is to do a Market Research on the fro insurance products which will

surely butters the company to maximize the profit and hence grab the market share

so that I will be able to get an opportunity after completing my course in this fast

growing Insurance Sector(Service Sector).

Rationale:

As according to the “Economic Survey” report Insurance is the next booming

sector after Telecommunication, I have chosen “Insurance” to go ahead in near

future. This is one of the sectors which require toughest market skills as it literally

means concept selling. As a bird’s eye view, Insurance has got propounding future

in forthcoming years.

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THE INSURANCE SECTOR IN India

INDIA AT A GLANCE

Population:-14, 79, 95,900

Economy: - 5th largest in the world in terms of purchasing power parity (PPP).

GDP Growth Rate:-Over 6 percent per year on an average for the last decade.

Saving Rates: - Around twenty six percent of GDP.

Estimated Middle Class Population:-Three Hundred Million.

Insured Population: - Seventy Million only.

The business of life insurance in India in its existing form started in India in the year

1818 with the establishment of the Oriental Insurance Company in Calcutta.

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

statically information about both life insurance and non – life insurance.

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

objective of protecting the interest of the insuring public.

1956 – 245 Indian and foreign and provident societies taken over by the central

government and nationalized. LIC formed by the act on Parliament, viz. LIC act, 1956,

with a capital contribution of Rs. 5 crores from the government of India.

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The general insurance business in India, on the other hand, can trace its root on the Triton

Insurance Company Ltd. the first general insurance company established in the year 1850

in Calcutta by the British.

Some of the important milestones in the General 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

of 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 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.

107 insurance amalgamated and grouped into four companies viz. The National Insurance

Company Ltd., the New India Assurance Company Ltd., and the United Insurance

Company, Oriental Insurance company Ltd., the United India Insurance Company Ltd.,

GIC incorporated as a company.

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Indian Insurance Industry

Learn about 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

including fire, the peril of sea, death, incident and burglary. Any risk contingent upon

these may be insured against at a premium commensurate with the risk involved.

Insurance is actually a contract between two parties whereby one party called insurer

undertakes in exchange for a fixed sum called to pay the others party happening of a

certain event.

Insurance is a contract whereby, in return for the payment 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.

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Function of Insurance

The function of insurance can be bifurcated into two parts:

Primary Functions

Secondary Functions

Other Functions

The primary function of insurance includes the following:

Provide Protection – The primary function of insurance protection against future risk,

accidents and uncertainty. Insurance cannot check the happening of the risk, but can

certainly provide for the losses of risk. Insurance is actually a protection against

economic loss, by sharing the risk with others.

Collective Bearing of risk – Insurance is a device to share the financial loss of few

among many others. Insurance is mean by which few losses are shared among larger

number of people. All the insured contribute the premiums towards a fund and out of

which the persons exposed to a particular risk is paid.

Assessment of risk – Insurance determines the probable volume of risk by evaluating

various factors that give risk to risk. Risk is the basic for determining the premium rate

also.

Provide Certainty – Insurance is a device, which helps to change from uncertainty to

certainty. Insurance is a device whereby the uncertain risk may be made more certain.

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The Secondary Functions of Insurance include the following:

Prevention of Losses – Insurance cautions individual and businessmen to adopt suitable

device to prevent unfortunate consequences of the risk by observing safety instructions;

installation of automatic sparkler or alarm systems, etc. prevention of losses cause lesser

payment to the assured by the insurer and this will encourage for more saving by way of

premium. Reduced rate of premiums stimulate for more business and better protection of

the insured.

Small capital to cover larger risk – Insurance relieves the businessmen for security

investments, by paying small amount of premium against larger risks and uncertainty.

Contributes towards the development of longer industries – Insurance provides

development opportunity to those larger industries having more risks in their setting up.

Even the financial institutions may be prepared to give credit to stick industrial units

which have insured their assets including plant and machinery.

The other functions of insurance include the following:

Means of saving and investment – Insurance serves as saving and investment, insurance

is a compulsory way of saving and it restricts the unnecessary, expenses by the insured’s

for the purpose of availing income-tax exemptions also, people invest in insurance.

Source of earning foreign exchange – Insurance is an international business. The

country can earn foreign exchange by way of issue of marine insurance policies and

various other ways.

Risk Free Trade – Insurance promotes exports insurance, which makes the foreign trade

risk free with the help of different types of policies under marine insurance cover.

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The end of the year 2000 marks a significant change and growth of ‘India Insurance’

industry scenario. Monopoly of Public Sector Insurance Company marks an end and

private company’s makes inroad. Foreign companies, both life and general flocked,

collaborated and helped astronomical growth of ‘Insurance Industry in India’.

‘India Insurance’ growth was long overdue. Within 1st, 12 months of liberation of ‘Indian

Insurance Industry’ 10 licenses for selling non-life products were issued to private

companies. The public sector giant LIC started losing its market share at the cost of

stupendous growth of private players. Now ‘India Insurance’ industry has more than

dozen private life insurance players and 9 private general insurance companies.

Aggressive and penetrative marketing strategy.

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THE LIFE INSURANCE SCENARIO

Since 1956, with the nationalization of Insurance Industry, the state-run life Insurance

Corporation of India as (LIC) has held monopoly in that country’s Life insurance sector,

General Insurance Corporation of India (GIC), with its for subsidiaries was its counter

parts in the casualty sector. Over time taking advantage of its monopoly and virtual

prerogative in the establishing premiums, LIC has evolved into a monolith. With around

600,000 agents in every nook and corner of the vast country, it has created and enviable

brand name, particularly among the rural population of the country. It has around $40

billion as its life font and is a strong player in the financial sector. However, on the

qualitative side, it has very little two take pride in and there lies the potential players to

challenge this behemoth.

India, which account for the lion’s share of LIC’s present business. The foreign player

must learn to adapt to Indian realities. The well-publicized failures of world famous

consumer goods companies like Electrolux, Whirlpool, Reebok, Nike, etc. To gauge the

Indian psyche and sentiments demonstrate the concept. They failed in the areas of

realistic pricing, product, promotion and reaching to the consumer, the foreign companies

need to know the “ground realities” to the details.

The Government of India liberalized the insurance sector in March 2000 with the passage

of the Insurance Regulatory and Development Authority (IRDA) Bill, lifting all entry

restrictions for private players and allowing foreign players to enter the market with some

limits on the direct foreign ownership. Under the current guidelines, there is a 26% equity

cap for foreign partners in an insurance company. There is a proposal to increase this

limit to 49%.

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The opening up of the sector is likely to lead to greater spread and deepening of insurance

in India and this may also include restructuring and revitalizing of the public sector

companies. In the private sector 12 Life insurance and 8 general insurance companies

have been registered. A host of private insurance companies operating in both life and

non-life segments have started selling their insurance policies since2001.

Non-Life Insurance Market

In December 2000, the GIC subsidiaries were restructured as independent insurance

companies. At the same time, GIC was converted into a national re-insurer. In July 2002,

Parliament passed a bill, delinking the four subsidiaries from GIC.

Presently there are 12 general insurance companies with 4 public sector companies and 8

private insurances. Although the public sector companies still dominate the general

insurance business, the private players are slowly gaining a foothold. According to

estimates, private insurance companies have a 10% share of the market, up from 4% in

2001. In the first half of 2002, the private companies booked premiums worth Rs. 6.34

billion. Most of the new entrants reported losses in the first year of their operation in

2001.

With a large capital outlay and long gestation periods, infrastructure projects are fraught

with a multitude of risks throughout the development, construction and operation stages.

These include risks associated with project implementation, including geological risks,

maintenance, commercial and political risks. Without covering these risks the financial

institutions are not willing to commit funds to the sector, especially because the financing

of most private projects is on a limited or non-recourse basis.

Insurance companies not only provide risk cover to infrastructure projects, they also

contribute long-term fund, in fact, insurance companies are an ideal source of long term

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debt and equity for infrastructure projects. With long term liability, they get a good asset-

liability match by investing their funds in such projects. IRDA regulations require

insurance companies to invest not less than 15% of their funds in infrastructure and social

sectors. International Insurance companies also invest their in such projects.

Insurance costs constitute roughly around 1.2%-2% of the total project costs. Under the

exiting norms, insurance premium payments are treated as the part of the fixed costs.

Consequently they are treated as pass-through costs for tariff calculations.

Premium rates of most general insurance policies come under the purview of the

government appointed Tariff Advisory Committee. For projects costing up to Rs. 1

Billion, the Tariff Advisory Committee sets the premium rates, for the projects between

Rs. 1 billion and Rs 15 billion, the rates are sets in keeping with the committee’s

guidelines; and projects above Rs. 15 billion are subjected to re-insurance pricing. It is

the last segment that has a number of additional products and competitive pricing.

Insurance, like project finance, is extended by a consortium. Normally one insurer takes

the lead, shouldering about 40%-50%of the risk and receiving a proportionate percentage

of the premium. The other companies share the remaining risk and premium. The policies

are renewed usually on an annual basis through the invitation of bids.

Of late, with IPP project fizzling out, the insurance companies are turning once again to

old hands such as NTPC, NHPC and BSES for business.

Re-insurance Business

Insurance companies retain only a part of risk(less than 10 percent) assumed by them,

which can be safely borne from their own funds. The balance risk is re-insured with other

insurers. In effect, therefore, re-insurance is insurer’s insurance. It forms the backbone of

the insurance business. It helps to provide a better spread of risk in the international

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market, allows primary insurance accept risks beyond their capacity settle accumulated

losses arising from catastrophic events and still maintain their financial stability.

While GIC’s subsidiaries look general insurance, GIC itself has been the major re-insure.

Currently, all insurance companies have to give 20% of their reinsurance business of

GIC. The aim is to ensure that GIC’s role as the national reinsurer remains unhindered.

However, GIC reinsurers the amount further with international companies such as

Swissre(Switzerland), Munichre(Germany), the Royale(UK). Reinsurance premiums

have seen an exorbitant increase in recent years, following the rise in threat perceptions

globally.

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Life Insurance Market

The Life Insurance market in India is an underdeveloped market that was only tapped by

the state owned LIC till the entry of private insurers. The penetration of life insurance

products was 19% of the total 400 million of the insurable population. The state owned

LIC sold insurance as a tax instrument, not as a product giving protection. Most

customers were underinsured with no flexible or transparency in the products. With the

entry of the private insurers the rules of the game have changed.

The 12 private insurers in the life insurance market have already grabbed nearly 9% of

the market in the term of premium income. The new business premium of the 12 private

players has tripled to Rs. 1000 crores in 2002 over last year. Meanwhile, state owned

LIC’s new premium business has fallen.

Innovative products, smart marketing and aggressive distribution. That’s the triple

whammy combination that has enabled fledgling private insurance companies to sign up

Indian customers faster than anyone ever expected. Indians, who have always seen life

insurance as a tax saving device, are now suddenly turning to the private sector and

snapping up the new innovative products on offer.

The growing popularity of the private insurers in the other ways. They are coining money

in new niches that they have introduced. The state owned companies still dominate

segments like endowments and money back policies, but in the annuity or pension

products business, the private insurers have already wrested over 33% of the market, and

in the popular unit-linked insurance scheme they have a virtual monopoly, with over 90%

of the customers.

The private insurers also seem to be scoring big in other way. They are persuading people

to take out bigger policies. For instance, the average size of a life insurance policy before

privatization was around Rs. 50,000. That has risen to about Rs. 80,000. But the private

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insurers are ahead in this game and the average size of their policies is around Rs. 1.1

lacs to 1.2 lacs way bigger than the industry average.

Buoyed by their quicker than expected success, nearly all private insurers are fast-

forwarding the second phase of their expansion plans. No doubt the aggressive stance of

private insurers is already paying rich dividends. But a rejuvenated LIC is also trying to

fight back to woo new customers. The insurance sector in India governed by Insurance

Act, 1938, the Life Insurance Corporation Act, 1956 and General Insurance Business

(Nationalization) Act, 1972, Insurance Regularity and Development Authority (IRDA)

Act, 1999 and other related Acts.

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Insurance Companies:

IRDA has so far granted registration to 12 private Life Insurance companies and 9

General Insurance companies. If the exiting public sector insurance companies are

included, there are currently 13 insurance companies in the life side and 13 companies

operating in general insurance business. General Insurance Corporation has been

approved as the “Indian Reinsurer” for underwriting only reinsurance business.

Particulars of the life insurance companies and general insurance companies including

their web address are given below:-

INSURANCE COMPANIES WEBSITES

LIFE INSURANCE

Public Sector

Life Insurance Corporation of India www.licindia.com

Private Sector

Allianz Bajaj Life Insurance Company Limited www.allianzbajaj.co.in

Birla Sun-Life Insurance Company Limited www.birlasunlife.com

HDFC Standard Life Insurance Co. Limited www.hdfcinsurance.com

ICICI Prudential Life Insurance Co. Limited www.iciciprulife.com

ING Vysya Life Insurance Company Limited www.ingvysaylife.com

Max New York Life Insurance Co. Limited www.maxnewyorklife.com

MetLife Insurance Company Limited www.metlife.com

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Om Kotak Mahindra Life Insurance Co. Limited www.omkotakmahindra.com

SBI Life Insurance Company Limited www.sbilife.co.in

TATA AIG Life Insurance Company Limited www.tata-aig.com

AMP Sanmar Assurance Company Limited www.ampsanmar.com

Dabur CGU Life Insurance Co. Pvt. Limited www.avivaindia.com

GENERAL INSURANCE

Public Sector

National Insurance Company Limited www.nationalinsuranceindia.com

New India Assurance Company Limited www.niacl.com

Oriental Insurance Company Limited www.orientalinsurance.nic.in

United India insurance Company limited www.uiic.co.in

Private Sector

Bajaj Allianz General Insurance Co. Limited www.bajajallianz.co.in

ICICI Lombard General Insurance Co. Ltd www.icicilombard.com

IFFCO-Tokio General Insurance Co. Ltd www.itgi.co.in

Reliance General Insurance Co. Limited www.ril.com

Royal Sundaram Alliance Insurance Co. Ltd. www.royalsun.com

TATA AIG General Insurance Co. Limited www.tata-aig.com

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Cholamandalam General Insurance Co. Ltd. www.cholamanadalam.com

Expert Credit Guarantee Corporation www.ecgcindia.com

HDFC Chubb General Insurance Co. Ltd

REINSURER

GENERAL Insurance Corporation of India www.gicindia.com

POLITICAL SCENARIO

32

Until recently, Indian continued to be one of the few remaining countries of the world to

remain insulated from the direct foreign investment in its insurance sector. However

things are changing now with the passage of Insurance Regulatory Development Act

(IRDA) through Indian Parliament in late 1999. A much awaited and took almost six

years to see daylight. Though first recommended by Malhotra Committee on insurance

on insurance reform in 1994, what emerges is a diluted form of the original

recommendation. However in the long waited period of its passage the issue was

nationally debated and was finally ‘depoliticized’, meaning that reform path is

‘irreversible’.

IRDA, for the time being, prohibits 100% foreign equity in insurance. It requires the

Indian promoter to invest either wholly in an insurance venture of team up with a foreign

insurer, with a cap of 26% of equity for a foreign partner. Through a public offering of

shares, at which time the equity structure will provide for equal participation between the

Indian and foreign partner with a cap 26% of equity for a foreign partner. The Indian

promoter is permitted to invest only after 10 years to the Indian public, through a public

offering of shares, at which time the equity structure will provide for equal participation

between the Indian and foreign partner with a share of 26% each in the share capital. The

underlying tone of the 26% cap for the foreign insurer is to ensure that financial interest

substantially vests with the Indian promoter, permitted the foreign co-promoter a definite

say in direction and management( by Indian Company Law, 26% is the minimum equity

to move resolution or vetoing in Brand of Directory Meeting). It is important to note that

the 26% level is the bargained solution by the privatization proponents (real Government)

in the face of stiff political resistance. The main two political poles of Indian politics- the

Congress party and the Bhartiya Janta Party are both in favour of the reform, only the

extent of the reform and who-will-bell-the-the-cat-get-the-(dies) credit factor bar them in

reaching a consensus for more sweeping reforms. The populist out of fashioned

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socialistic jingoism, masking these parties, rightist, ideology, is fast losing its appeal to

the masses. This will only hasten the reform process.

COMPARISION WITH CHINA

34

Currently India and China are the most lucrative insurance markets in the world. India

and China constitute the home of the half of the population the world and their recent

rapid economic development makes them attractive for foreign investment. Through

India economic development is not as rapid as China’s it enjoys comparative strength in

the socio-political front. India is the world’s largest democracy land democracy is deep-

rooted in its social and political institutions. The executive and the judiciary systems are

the continuation of British instruction, is well spoken by the educated. Strength is its

abundant highly educated skilled workforce.

India’s stride in the field of software and logical ability is well known in the world. The

saving rate is quite high in US standards. All this makes Indian an attractive destination

of US insurance companies.

Insurance sector reforms have been slow to take shape, taking nearly a decade. Thanks to

the proposed reforms, quite a few global insurance majors are streaming into the country.

A burgeoning middle class, high per capita saving and low penetration of insurance are

same of showing in the Indian Insurance industry. An insurance surveys by LIC and

KPMG reveals interesting facets of the emerging trends in Indian insurance industry. The

annual growth in the average insurance premium in India has been 8.2% compared with

the global average of 3-4%. Insurance density in the country, based on per capital

premium, was $5 in the life insurance segment and $2 in the general segment, compared

with the Indian life and $14 in the México. The share of life insurance premium to GDP

was 1.29% in India, which is abysmal in the global standard. Despite these opportunities,

however there is also a rough ride a\head for the new player in India. This is because

unlike the west insurance security. LIC’s 1996 insurance survey reveals that more than

40% of insurance-buyers look at insurance products as a means of savings. Risk coverage

is only a secondary objective nearly 26% of insurance policies sold are considerations,

between expectations and invest his life lifetime’s earning with them? Here, the new

companies probably will be fighting their monopoly status, are so deeply entrenched in

35

the popular psyche that is would likely require Herculean effort to sell the idea of private

insurance products. They have to educate the people, and integrate the sector with its

world counterpart by shifting its learning from saving to risk heading. The economic

reform process in India is ‘irreversible and is producing a strong efficient financial

system in the model of its US counterpart. The insurance companies will only hasten the

process, from a socio-economic development point of view the huge amount of funds

that’s will be the disposal of players will be directed in desired avenues like

infrastructure, housing, safe drinking water, electric and primary education. The growth

of the debt marked which hitherto had been a neglected child of the capital market, will

also get a boost as funds from insurance companies start flowing into the kitty of the

corporate sector. Once again this will boost demand and growth by raising employment

levels. Similarly, stack market investment will further aid the growth of the capital

market and equity cult. The multiplier effect will be enormous. Policy holders will better

pricing of products from insurance major permission to invest more in corporate equity

and debt instrument would also enhance the misplace concern regarding ‘flight of money

outside the country’ will be removed from the mindset of the people, which should aid in

garnering popular support for the free competitive liberalized economy.

IRDA GUIDELINES

36

Insurance regulation in India stated with the passage of the Life Insurance Companies

Act, 1912, and the provide fund Act, 1912 the first comprehensive legislation was

introduced with the insurance Act 1938, which provide strict control over insurance

business in the country under the supervision of the controller of Insurance.

The phased globalization of the Indian economy that started in the early nineties began to

have its impact on the monopolies structure of the insurance industry.

The important function of IRDA as per the IRDA Act, 1999 include the following:-

Licensing and regulating the insurance by acting as an independent and regulatory

body.

Specifying requisite qualification, code of conduct and practical training for

insurance intermediaries and agents.

Protecting the interest of the policy holders in the matter concerning assigning of

policy, settlement of insurance claims etc.

Regulating maintenance of margins of solvency and intermediaries.

Supervising functioning of tariff advisory committee.

Promoting efficiency in the conduct of insurance business.

Efforts are underway to bring about internationalization of regulation in the sector

so as to take care of development and health of insurance.

RESEARCH METHODOLOGY

37

Research Design

Primary Data

1. Data collected through questionnaire

2. Interview of customers & business advisor

Research Instrument

Questionnaire, open ended.

Sampling Plan

I choose convent sampling because I interacted with the customer on regular basis.

Analysis

Q.1:- Do you know about the LIFE INSURANCE policy?

No. of respondent for-

38

Yes-90

No-10

90

10

Awerness about Life Insurance

YesNo

In India most of the people know about the Life Insurance. They are also aware of its importance in life. But there are also the people who are not aware of Life Insurance.

Test of significance:-

H0: Customer knowledge about the Life Insurance is not significant.

H1: Customer knowledge about the Life Insurance is significant.

39

X2 =∑ {(f0-fe)2 /fe} follow chi square with (k-1)df, where f0 is observed and fe is expected frequency.

Expected frequency= Sample Size X Probability

No. of respondent

Yes= 90

No= 10

So; X2= (90-50)2/50+ (10-50)2/50

=1600/50+1600/50

=32+32

=64

Tabulated X21, 0.05=3.84

Rejected H0

Accepted H1

64

3.84

Hence, People awareness about the Life Insurance is more.

Q.2:- Are you a policy holder?

No. of respondent-

Yes=80

No=20

40

Yes No0

10

20

30

40

50

60

70

80

80

20

No. of policy holder

Today, policy holders are most in compare to earlier days. They want to save their family after them. Numbers of policy holders are in ratio 80:20.

Test of significance:-

H0: Customer knowledge about the Life Insurance is not significant.

H1: Customer knowledge about the Life Insurance is significant.

41

X2 =∑ {(f0-fe)2 /fe} follow chi square with (k-1)df, where f0 is observed and fe is expected frequency.

Expected frequency= Sample Size X Probability

No. of respondent

Yes=80

No=20

So; X2= (80-20)2/50+ (20-50)2/50

= 900/50+900+50

=18+18

=36

Tabulated X21, 0.05=3.84 Accepted H1

Rejected H0

36

3.84

Hence, No. of customers are significantly policy holder.

Q.3:- From which company you have taken policy?

LIC – 40

MNYL – 40

42

TATA AIG – 10

Others – 10

40

40

1010

LICMNYLTATA AIGOthers

In India, a large number of Life Insurance companies are there. People have more choice to choose the company which they believe or trust.

Q.4:- Are you satisfied with policy you have taken with MNYL?

No. of response

Yes – 60

No – 40

43

Yes No0

10

20

30

40

50

60

60

40

Satisfied customers are made in compare to not satisfied customer in the company. They believe the company polices.

Test of significance:-

H0: Customer satisfaction about the policy is not significant.

H1: Customer satisfaction about the policy is significant.

44

X2 =∑ {(f0-fe)2 /fe} follow chi square with (k-1)df, where f0 is observed and fe is expected frequency.

Expected frequency= Sample Size X Probability

No. of respondent

Yes= 60

No= 40

So, X2= (60-50)2/50 + (40-50)2/50

= 100/50 + 100/50

= 2+2

= 4

Tabulated X21, 0.05= 3.84

Reject Ho

Accept H1

4

3.84

Hence, the customer satisfaction is more about the policy.

Q.5:- What is the purpose of your policy?

Responses for –

Family Needs – 50

Health – 20

45

Pension – 20

Special Need – 10

50

20

20

10

People have different-different purpose to take the policy. It also depend upon the age group, income, safety matter & their need etc.

Q.6:- Which plan do you have?

ULIP – 50

TERM – 20

ENDOWMENT – 30

46

ULIP TERM ENDOWMENT0

5

10

15

20

25

30

35

40

45

50

50

20

30

People have different choices to select the plans according to their need, income etc. Most of the people chose the ULIP plans, because they trust the terms & conditions of the plan, other than term & endowment.

Q.7:- Are you familiar with the term and conditions of the policy in details?

No. of respondent –

Yes – 40

No – 30

47

Not sure – 30

40

30

30

Many people wants aware before purchasing the policy or investing a heavy amount. Some people have no time to understand the terms and conditions of the policy due to busy in their work, lack of knowledge or they trust their advisor to some extent.

Q.8:- Does the policy fulfill your requirements?

No. of respondent –

Yes – 70

No – 10

48

Not match – 20

Yes No Not match0

10

20

30

40

50

60

70

70

1020

Most of the people are agree that the policy fulfill their requirement on time.

Q.9:- Are you satisfied with the services provided by the company?

Responses –

Strongly Agree – 20

Agree – 40

49

Neutral – 20

Strongly disagree – 10

Disagree – 10

20

40

20

10 10

60 percent customers are satisfied with service provided by the company, 20 percent are neutral and rests are not satisfied with the company services. They want company develop their services.

Test of significance:-

H0: Service satisfaction are neutral = 3

H1: Service satisfaction is high>3

Test used: Z test

50

X = 4.1

σ = 1.21

μ = 3

Z = (X- μ)/ σ

So, Z = 0.90

From table z at 95% significance level

Z = -1.645

Therefore reject H0

Reject H0

Accept H1

0.90

-1.645

It can be easily interpreted from the above test that the service offered to the customer is more satisfying.

Q.10:- Will you recommend MNYL policy to your friends and relatives?

Responses –

Yes – 70

No – 30

51

Yes No0

10

20

30

40

50

60

70

70

30

Many customers recommended the MNYL product to their friends & relatives, because they are satisfied with the company.

Test of significance:-

H0: Customer knowledge about the Life Insurance is not significant.

H1: Customer knowledge about the Life Insurance is significant.

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X2 =∑ {(f0-fe)2 /fe} follow chi square with (k-1)df, where f0 is observed and fe is expected frequency.

Expected frequency= Sample Size X Probability

No. of respondent

Yes = 70

No = 30

So, X2 = (70-50)2/50 + (30-50)2/50

= 400/50 + 400/50

= 8 + 8

= 16

Tabulated X12, 0.05 = 3.84 Reject H0

Accept H1

16

3.84

Hence, the recommendation of the policy is more significant.

Q.11:- Over all how will you rate the company?

Responses –

Excellent – 30

Good – 30

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Neutral – 20

Bad – 10

Worst – 10

Excellent Good Neutral Category 40

5

10

15

20

25

30

30 30

20

10

Customers rating are different to each others.

Test of significance:-

H0: Service satisfaction are neutral = 3

H1: Service satisfaction is high>3

Test used: Z test

54

X = 3.6

σ = 1.28

μ = 3

Z = (X- μ)/ σ

So, Z = 0.46

From table z at 95% significance level

Z = -1.645

Therefore reject H0

Reject H0

Accept H1

0.46

-1.645

It can be easily interpreted from the above test that the company rating is positive.

Recommendation

The data and studies reveal the fact that in Indian market of insurance will surely bust up

next to China. India market is still having potential for the insurance product, because

there is a he market segment which could be the prospective market.

55

Henceforth analyzing the customer perception of the Max New York Life should also

move to semi-urban place to grab the untapped hidden market. It should also reduce the

premium amount because this untapped market segment is belonging from lower middle

income group of the society, so that it should be easily rechargeable to the common

people.

Company should also take up some strategies to improve the distribution channel.

The company should target the younger generation, highly innovated but belonging to the

lower middle class and middle class family, whose top priority is their security.

Conclusion

With the large number of the life insurance policies is force in the world, Insurance is a

major opportunity in India.

With the penetration of life insurance product at a mere 19% of a total 400 million

insurable population, there is a staggering 70% of the Indian population that is currently

56

without insurance cover. The untapped market represents that part of the population

which is already subject to weak social security and pension system with hardly any age

income safety.

This untouched segment itself is an indicator that growth potential for the insurance

sector is immense.

But, after completion of my survey, I can conclude that many customer are aware of their

security, security of their family, health and basic needs etc.

BIBLIOGRAPHY

Sources of information:

Booked Referred:-

Marketing Research by M.N. Malhotra

Life Insurance by S.Balachandran

57

Websites Visited:-

www.irda.com

www.google.com

www.maxindia.com

Newspapers and Journals:-

The Economics Times.

ANNEXURE

Q.1:- Do you know about the LIFE INSURANCE policy?

Q.2:- Are you a policy holder?

Q.3:- From which company you have taken policy?

58

Q.4:- Are you satisfied with policy you have taken with MNYL?

Q.5:- What is the purpose of your policy?

Q.6:- Which plan do you have?

Q.7:- Are you familiar with the term and conditions of the policy in details?

Q.8:- Does the policy fulfill your requirements?

Q.9:- Are you satisfied with the services provided by the company?

Q.10:- Will you recommend MNYL policy to your friends and relatives?

Q11:- Over all how will you rate the company?

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