INTRODUCTION
Overall, the life insurance and pension sector is set for rapid changes and growth in the years ahead. Delivering service, building trust and being innovative are key areas in which any company will have to excel in order to do well in the long road ahead. Different companies will take different approaches and it would be myriad of solutions that will be found to delight the Indian customer. Market Research was done through various activities and tele-calling which are discussed further in the report. Activities led to practical exposure and taught me the aspects of customer dealing. Finally, interesting conclusions were drawn out of the data collected regarding the Awareness of Financial Planning among the people in todays environment.
FINANCIAL PLANNING
A comprehensive financial advisory service involving financial strategies, tax, corporate/trust structures, estate planning, legal issues, family law, asset allocation, asset protection and investment advice.
Owning a new car, Buying a dream house, Providing your children with the best education, Planning a grand wedding for your children Having a great time after your retirement
But in today's world of skyrocketing costs and increasing inflation, how many of these dreams can you hope to turn into reality? By planning well, you can utilize your limited resources to the fullest.
INDUSTRY PROFILE
Overview
With largest number of life insurance policies in force in the world, Insurance happens to be a mega opportunity in India. Its a business growing at the rate of 15-20 per cent annually. Together with banking services, it adds about 7 percent to the countrys GDP .In spite of all this growth the statistics of the penetration of the insurance in the country is very poor. Nearly 80 per cent of Indian population is without life insurance cover while health insurance and non-life insurance continues to be below international standards. And this part of the population is also subject to weak social security and pension systems with hardly any old age income security. This it-self is an indicator that growth potential for the insurance sector is immense.
Historical Perspective
The insurance came to India from UK; with the establishment of the Oriental Life insurance Corporation in 1818.The Indian life insurance company act 1912 was the first statutory body that started to regulate the life insurance business in India. By 1956 about 154 Indian, 16 foreign and 75 provident firms were been established in India. Then the central government took over these companies and as a result the LIC was formed. Since then LIC has worked towards spreading life insurance and building a wide network across the length and the breath of the country.
Structure
Government stake in the insurance Companies to be brought down to 50%. Government should take over the holdings of GIC and its subsidiaries so that these subsidiaries can act as independent corporations.
Competition
Private Companies with a minimum paid up capital of Rs.1 billion should be allowed to enter the sector. No Company should deal in both Life and General Insurance through a single entity. Foreign companies may be allowed to enter the industry in collaboration with the domestic companies.
Regulatory Body
The Insurance Act should be changed. An Insurance Regulatory body should be set up. Controller of Insurance- a part of the Finance Ministry- should be made independent
Investments
Mandatory Investments of LIC Life Fund in government securities to be reduced from 75% to 50%. GIC and its subsidiaries are not to hold more than 5% in any company (there current holdings to be brought down to this level over a period of time)
Customer Service
LIC should pay interest on delays in payments beyond 30 days. Insurance companies must be encouraged to set up unit linked pension plans. Computerization of operations and updating of technology is to be carried out in the insurance industry.
The global life insurance market stands at $1,521.2 billion while the non-life insurance market is placed at $922.4 billion.
The United States itself accounts for about one-third of the $2443.6 billion global insurance market and Japan stands next with a 20.62% share.
India takes the 23rd position with US $9.933 billion annual premium collections and a meager 0.41% share.
Out of one billion people in India, only 35 million people are covered by insurance. India's life insurance premium as a percentage of GDP is just 1.77 per cent. The income derived by GIC and its subsidiary companies through investment was Rs.2491.76 crore and the investable fund generated was Rs.2843 crore in 1999-2000.
Indian insurance market is set to touch $25 billion by 2010, on the assumption of a 7 per cent real annual growth in GDP.
NATURE OF INDUSTRY
The insurance industry provides protection against financial losses resulting from a variety of perils. By purchasing insurance policies, individuals and businesses can receive reimbursement for losses due to car accidents, theft of property, and fire and storm damage; medical expenses; and loss of income due to disability or death. The insurance industry consists mainly of insurance carriers (or insurers) and insurance agencies and brokerages. In general, insurance carriers are large companies that provide insurance and assume the risks covered by the policy. Insurance agencies and brokerages sell insurance policies for the carriers. Insurance companies assume the risk associated with annuities and insurance policies and assign premiums to be paid for the policies. In the policy, the companies states the length and conditions of the agreement, exactly which losses it will provide compensation for, and how much will be awarded. The premium charged for the policy is based primarily on the amount to be awarded in case of loss, as well as the likelihood that the insurance carrier will actually have to pay. In order to be able to compensate policyholders for their losses, insurance companies invest the money they receive in premiums, building up a portfolio of financial assets and income-producing real estate which can then be used to pay off any future claims that may be brought.
There are two basic types of insurance carriers: Direct and Reinsurance. Direct carriers are responsible for the initial underwriting of insurance policies and annuities,
while Reinsurance carriers assume all or part of the risk associated with the existing insurance policies originally underwritten by other insurance carriers.
Direct insurance carriers offer a variety of insurance policies. Life insurance provides financial protection to beneficiariesusually spouses and dependent
childrenupon the death of the insured.
Disability insurance supplies a preset income to an insured person who is unable to work due
to injury or illness
Health insurance pays the expenses resulting from accidents and illness.
An Annuity(a contract or a group of contracts that furnishes a periodic income at regular intervals for a specified period) provides a steady income during retirement for the remainder of ones life.
Liability insurance shields policyholders from financial responsibility for injuries to others or
for damage to other peoples property. Most policies, such as automobile and homeowners insurance, combine both property-casualty and liability coverage. Companies that underwrite this kind of insurance are called property-casualty carriers.
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Human life is subject to risks of death and disability due to natural and accidental causes. When human life is lost or a person is disabled permanently or temporarily, there is a loss of income to the household. The family is put to hardship. Risks are unpredictable. Death/disability may occur when one least expects it. There are a number of life insurance products which offer protection and also coupled with savings. A Term insurance product provides a fixed amount of money on death during the period of contract. A Whole Life insurance product provides a fixed amount of money on death. An Endowment Assurance product provided a fixed amount of money either on death during the period of contract or at the expiry of contract if life assured is alive. A Money Back Assurance product provides not only fixed amounts which are payable on specified dates during the period of contract, but also the full amount of money assured on death during the period of contract. An Annuity product provides a series of monthly payments on stipulated dates provided that the life assured is alive on the stipulated dates. A Linked product provides not only a fixed amount of money on death but also sums of money which are linked with the underlying value of assets on the desired dates. There are a variety of life insurance products to suit to the needs of various categories of peoplechildren, youth, women, middle-aged persons, old people; and also rural people, film actors and unorganized laborers. Life insurance products could be purchased from registered life insurers notified by the IRDA. Insurers appoint insurance agents to sell their products.
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As per regulations, insurers have to give the various features of the products at the point of sale. The insured should also go through the various terms and conditions of the products and understand what they have bought and met their insurance needs. They ought to understand the claim procedures so that they know what to do in the event of a loss.
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MISSION-IRDA
To protect the interests of the policyholders, to regulate, promote and ensure orderly growth of the insurance industry and for matters connected therewith or incidental thereto. The following companies have the rest of the market share of the insurance industry.
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COMPANY NAME
LIC ICICI PRUDENTIAL BAJAJ ALLIANZ HDFC STANDARD LIFE BIRLA SUNLIFE TATA AIG SBI LIFE MAX NEWYORK AVIVA LIFE ING VYSYA OM KOTAK LIFE AMP SANMAR METLIFE RELIANCE LIFE
MARKET SHARE
79.30 5.63 3.27 3.11 2.32 1.45 1.24 0.90 0.82 0.66 0.54 0.38 0.33 0.05
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CUSTOMER SERVICE
Consumers remain the most important centre of the insurance sector. After the entry of the foreign players the industry is seeing a lot of competition and thus improvement of the customer service in the industry. Computerization of operations and updating of technology has become imperative in the current scenario. Foreign players are bringing in international best practices in service through use of latest technologies. The one time monopoly of the LIC and its agents are now going through a through revision and training programs to catch up with the other private players. Though lot is being done for the increased customer service and adding technology to it but there is a long way to go and various customer surveys indicate that the standards are still below customer expectation levels.
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DISTRIBUTION CHANNELS
Till date insurance agents still remain the main source through which insurance products are sold. The concept is very well established in the country like India but still the increasing use of other sources is imperative. It therefore makes sense to look at well- balanced, alternative channels of distribution. LIC has already well established and have an extensive distribution channel and presence. New players may find it expensive and time consuming to bring up a distribution network to such standards. Therefore they are looking to the diverse areas of distribution channel to have an advantage. At present the distribution channels that are available in the market are: Direct selling/Retail Corporate agents Group selling Brokers and cooperative societies Banc assurance
DIRECT SELLING/RETAIL
Direct selling or retail business is carried out by Agents of the company. This is the main distribution channel due to the complexity of most insurance products (Endowment, Whole of Life, Unit Linked). This tends to be the focus of most companies due to its past success as well as its ability to deliver the right advice. However, this channel can be expensive and it is a time consuming sales process. An agent is the public face of an Insurance company. Hence it is important that this face is always smiling and presentable and the facts and figures at his/ her command are updated and correct. An agent should be a pleasing personality with complete knowledge about the various plans and solutions which the company has to offer and must also understand the customers psychology well to deal in an efficient manner.
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BANCASSURANCE
Banc assurance is the distribution of insurance products through the bank's distribution channel. It is a phenomenon wherein insurance products are offered through the distribution channels of the banking services along with a complete range of banking and investment products and services. To put it simply, Banc assurance, tries to exploit synergies between both the insurance companies and banks.
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3) Multiple Applications
The future is uncertain for each and every one. No one knows how long he or she will live. The investment benefit is paid to the insured's beneficiaries after his death or it can be used during the life as well. Life insurance policy owners can turn to the cash value of the policy in case of a financial emergency when all avenues are either blocked or denied.
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4) Enduring Elasticity
Since life insurance is flexible enough to serve several needs, the insured can keep several longterm goals in mind once he or she invests in the insurance plan. The cash value of the policy can be allocated towards augmenting the monthly income during the retirement years. Leisure years should be turned into pleasure years. Permanent life insurance is designed on the concepts of long-term flexibility.
5) Financial Security
The insurance policy offers contractual guarantees to people looking for peace of mind when they buy life insurance. Life insurance offers complete financial security. The purchase of life insurance demonstrates concern for a family's future financial well-being.
7) Insurance is Safer
No financial institution can do what life insurance does. No industry can back its products with reserves and surplus as sound as those of the insurance industry. The proof of strength and safety that insurance companies have ensured even under the most adverse of conditions is a matter of pride for the entire insurance industry. For generation after generation, life insurance has been acclaimed as the very benchmark of security against which the other industries are measured.
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Indians have always been wary of employing their hard-earned money in a venture that will pay them on their death. Insurance has always been used as a Tax saving tool. No more, no less. It is upon the insurers to educate the people to secure/insure their future against any unknown calamity and make a shield around their families and businesses.
The reason for this being on the top of our understanding is that whenever we have seen any sector open up in India there are always grey areas and unsure policies. These are not exactly what any player, be it Indian or foreign, looks for. It creates an air of uncertainty in all the decision making process. Insurance as a sector requires players who are strong financially and are willing to wait for returns. Their confidence can be bolstered only if there is an open and a transparent policy guidelines. This will also help the consumers feel safe that the regulatory is an active one and cares to do everything possible to keep things under control and help the insurance environment grow maturely.
To cater to the largest democracy in the world is by no means a cakewalk. Insurance profits are directly related to number of insured and this is in turn related to the reach.
It is said that the insurance agent is the best salesman in the world. He makes you pay, regularly, an amount promising to pay back only on your death. Thus the players will require an excellent sales team to sell their products in the now competitive environment.
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Encouragement of new and better products and letting the hackneyed ones die out.
This will itself ensure the market grows. And that every class/society gets a product that best suits them.
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COMPANYS PROFILE
INTRODUCTION
Helping Indians experience the joy of home ownership. Incorporated in 1977 with a share capital of Rs. 10 crores, HDFC has since emerged as the largest residential mortgage finance institution in the country. The corporation has had a series of share issues raising its capital to Rs. 119 crores. HDFC operates through 75 locations throughout the country with its Corporate Headquarters in Mumbai, India.
Business Objectives
The primary objective of HDFC is to enhance residential housing stock in the country through the provision of housing finance in a systematic and professional manner, and to promote home ownership. Another objective is to increase the flow of resources to the housing sector by integrating the housing finance sector with the overall domestic financial markets..
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HDFC has a staff strength of 1029, which includes professionals from the fields of finance, law, accountancy, engineering and marketing.
HDFC Bank
HDFC Reality
Other Companies Co-Promoted by HDFC HDFC Trustee Company Ltd. HDFC Developers Ltd. HDFC Venture Capital Ltd. HDFC Ventures Trustee Company Ltd. HDFC Investments Ltd.
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HDFC Holdings Ltd. Home Loan Services India Pvt. Ltd. Credit Information Bureau (India) Ltd
THE PARTNERSHIP :
HDFC and Standard Life first came together for a possible joint venture, to enter the Life Insurance market, in January 1995. It was clear from the outset that both companies shared similar values and beliefs and a strong relationship quickly formed. In October 1995 the companies signed a 3 year joint venture agreement. Around this time Standard Life purchased a 5% stake in HDFC, further strengthening the relationship. In October 1998, the joint venture agreement was renewed and additional resource made available. Around this time Standard Life purchased 2% of Infrastructure Development Finance
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Company Ltd. (IDFC). Standard Life also started to use the services of the HDFC Treasury department to advise them upon their investments in India. Towards the end of 1999, the opening of the market looked very promising and both companies agreed the time was right to move the operation to the next level. Therefore, in January 2000 an expert team from the UK joined a hand picked team from HDFC to form the core project team, based in Mumbai. Around this time Standard Life purchased a further 5% stake in HDFC and a 5% stake in HDFC Bank.
COMPANYS MISSION:
To be the top life insurance company in the market. This not only means being the largest or the most productive company in the market, but a combination of several things like
Customer service of the highest order Value for money for customers Professionalism in carrying out business Innovative products to cater to different needs of different customers Use of technology to improve service standards Increasing market share
COMPANYS VALUES:
SECURITY: Providing long term financial security to our policy holders will be our constant endeavor. This is done by offering life insurance and pension products.
TRUST: Company appreciates the trust placed by our policy holders in us. Hence, company will aim to manage their investments very carefully and live up to this trust.
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INNOVATION: Recognizing the different needs of our customers, company will be offering a range of innovative products to meet these needs.
Companys mission is to be the best new life insurance company in India and these are the values that will guide us in this.
Board Of Directors
Mr. K. M. Mistry Ms. Renu S. Karnad Mr. A. M. Crombie Ms. Marcia D. Campbell Mr. Norman Keith Skeoch Mr. G. R. Divan Mr. G. N. Bajpai Mr. Ranjan Pant Mr. Ravi Narain
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AuditCommitee
Haribhakti& Company Chartered Accountants B.K. Khare& Co. Chartered Accountants
Bankers
HDFC Bank Ltd. Union Bank of India Indian Bank The Saraswat Co-operative Bank Ltd. Federal Bank
LIFE STAGES
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Marriage brings about a significant change. New dreams and new opportunities also bring in additional responsibilities. While both of you look forward to a happy and secure life , it is equally important to ensure that eventualities dont come in the way of shaping your dreams. Your needs:
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o Planning for home / securing your home loan liability o Save for vacation o Save for your first child
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PRODUCT MIX
At HDFC Standard Life, there is a bouquet of insurance solutions to meet every need. They cater to both, individuals as well as to companies looking to provide benefits to their employees. For individuals, they have a range of protection, investment, pension and savings plans that assist and nurture dreams apart from providing protection. One can choose from a range of products to suit ones life-stage and needs. For organizations they have customized solutions that range from Group Term Insurance, Gratuity, Leave Encashment and Superannuation Products.
INVESTMENT- This includes a plan that is well suited to meet your long term investment needs. We provide you with attractive long term returns through regular bonuses.
Plan :
PENSION - Our Pension Plans help you secure your financial independence even after retirement and live a relaxed retired life.
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Unit Linked Pension Unit Linked Pension Plus SAVING-Our Savings Plans offer you flexible options to build savings for your future needs such as buying a dream home or fulfilling your childrens immediate and future needs.
Plans :
Endowment Assurance Plan, Unit Linked Endowment, Unit Linked Endowment Plus, Money Back Plan, Childrens Plan, Unit Linked Youngstar, Unit Linked Youngstar Plus .
GROUP PLANS
HDFC Standard Life has the most comprehensive list of products for progressive employers who wish to provide the best and most innovative employee benefit solutions to their employees. They offer different products for different needs of employers ranging from term insurance plans for pure protection to voluntary plans such as superannuation and leave encashment.
Plans: Group Term Insurance with Riders Group Term Insurance with Profit-Share Group Unit-Linked Plan
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For Gratuity For Defined Benefit Superannuation For Defined Contribution Superannuation Group Leave Encashment Plan
RURAL CUSTOMER- According to research findings, there is keenness among rural customers to invest in savings cum protection plan with a term of five years, especially, if the premium amount is low and affordable. Keeping this in view, HDFC STD> LIFE has plans like:
CONSUMPTION PATTERN
Food & Grocery Home Textiles Personal Care Saving & Investment Clothing Consumer Durable Vacation Eating out Footwear Movies & Theater Entertainment
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SALES PROCEDURE :
FIRST CONVERSATION
Follow Up
APPOINTMENT
Follow Up
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This is the first time, when you interact with a person and try to get the information from him about the industry or the company and understand the customers insight i.e. what actually does a customer expects from the companies. The objective was to know the awareness about Financial Planning among the customers and this was done by getting a questionnaire filled by the people. The various activities performed were:
1) DELHI METRO : Here we interacted with the commuters & Collected the data.
2) MARKETS : (Connaught Place & Karol Bagh) During this activity, we interacted with the shopkeepers as well as the walking people regarding their views about the industry.
3) CANOPY AT NOIDA : This activity was designed to target the people working in BPOs and other IT companies.
4) TELE-CALLING: This was random calling from the data base provided by the company and the aim was to collect information from them.
5) CORPORATE PRESENTATION: A presentation was arranged for the employees of VED RAM AND SONS (Paras), to make them aware about the importance of Financial Planning in todays unpredictable environment.
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STEP 2: APPOINTMENT
All the potential and interested customers of all the activities performed are then followed up and an appointment is fixed for further details.
The motive is to explain the customer in detail, about the various plans offered by the company. The customer is informed about the procedure and the options he can opt for like: 1) Choose the premium he wish to invest 2) Select the Premium Payment Option i.e. annual mode, half yearly mode, quarterly mode, or monthly mode. 3) Choose the amount of protection i.e. the sum assured, he desires. 4) With Maturity Benefit, choose the additional benefits like: a) Life option Death Benefit b) Life & Health option Death Benefit + Accidental Death Benefit c) Extra Life & Health option Death Benefit + Critical Illness Benefit + Accidental Death Benefit
5) Choose the Investment funds or funds one desires. The various funds available are: Liquid Fund Secure Managed Fund Defensive Managed Fund Balanced Managed Fund Equity Managed Fund Growth Fun
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Within 15 days, the policy documents reach the customers place, and the customer is required to read the documents carefully.
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HDFC STANDARD LIFE PACING AHEAD The Financial Express 15th May 2009
HDFC Standard Life has recorded a strong year-on-year growth of 112% for the period AprilMarch 2009-10, in comparison to the same period 2008-09, with a new business first year premium of Rs 1,029 crore. In terms of effective premium income (EPI), which gives a 10% value to a Single Premium policy and is an internationally-accepted indicator of an insurance company's performance, the EPI grew by 103% to Rs 887 cr from Rs 436 crore. HDFC Standard Life's growth in new business is a manifestation of the number of lives insured as well as an increase in the average premium. For the individual business, volume measured by the number of lives insured witnessed a 32% growth. The average premium also grew by 62% to Rs 27,500 in 2009-10 from Rs 17,000 in 2008-09. During the year the company issued over 3,97,000 policies and has covered more than 5,80,000 lives
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i. New Business
486.15
1028.94
111.65
ii. Renewal Effective Premium Income (Total) Group (EPI) Business Premium
182.25
503.27
176.14
436.08
887.30
103.47
49.40
135.15
173.58
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LITERATURE REVIEW
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planning. Or, the Planner may work with you on a single financial issue but within the context of your overall situation. This big picture approach to your financial goals sets the Planner apart from other Financial Advisors, who may have been trained to focus on a particular area of your financial life.
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that you are getting Financial Planning advice, check if the Advisor follows the six step process.
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Make a financial decision without understanding its affect on other financial issues. Confuse Financial Planning with investing. Neglect to re-evaluate their Financial Plan periodically. Think that Financial Planning is only for the wealthy. Think that Financial Planning is for when they get older. Think that Financial Planning is the same as retirement planning. Wait until a money crisis to begin Financial Planning. Expect unrealistic returns on investments. Think that using a Financial Planner means losing control. Believe that Financial Planning is primarily tax planning.
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CHAPTER 2
RESEARCH OBJECTIVE
To study the awareness of Financial Planning among the people.
Brand awareness of various private insurance companies. Preference among different investment tools. Purpose of buying insurance. Preference in choosing channel for buying life insurance. Quality of service provided by agents and clients satisfaction level.
A big boom has been witnessed in Insurance Industry in recent times. A large number of new players have entered the market and are vying to gain market share in this rapidly improving market. The study deals with HDFC Standard Life in focus and the various segments that it caters to. The study then goes on to evaluate and analyse the findings so as to present a clear picture of trends in the Insurance sector.
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RESEARCH METHODOLOGY
RESEARCH MEHODOLOGY
The study of awareness about Financial Planning among the people and particularly the insurance sector covers data collection through observation, questionnaire and interview of consumers.
Method of collection
SECONDARY DATA
The given data is collected by me from the various sources like internet, magazines, company
websites. The secondary data can be obtained easily and it is not very expensive. The secondary data further can be collected from reports, company literature and web search portal etc.
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Research Instrument:
Questionnaire
The questionnaire was formulated by keep in mind the following Points: Giving the respondents clear comprehension of the question. Inducing the respondents to co-operate. Giving instructions as to what is wanted. Identifying the needs to be known.
Limitations:
The following were the limitations that were there during the course of the study: 1. Limited time period. 2. Less number of respondents. 3. Biasness of the respondents.
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AGE DISTRIBUTION
AGE DISTRIBUTION(yrs.)
24%
Highest number of Respondents (41%) from Age group 31 to 45 yrs. 35% respondents are of age below 30 yrs, small percentage of which is unemployed.
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MARITAL STATUS
MARITAL STATUS
100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0%
SINGLE
MARRIED
16 37 19 4
Below 30 31 - 45 Above 45
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AGE(yrs)
Total number of single respondents 23 Total number of married respondents 77
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INCOME DISTRIBUTION
10
INCOME
3 - 5 lacs
12
12
1.5 - 3 lacs
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12
<1.5 lacs
16
Below 30
31 - 45
Above 45
Highest, 16 respondents in income bracket below 1.5 lacs, which mainly comprises of age group below 30 years. Respondents of the age group 31-45 yrs, lie in all the income slabs. Minimum, 6 respondents in income bracket of above 5 lacs, which are in age group of above 45 years.
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100
YES 98% NO
NO OF PEOPLE
90 80 70 60 50 40 30 20 10 0
2%
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BRAND RECALL
BRAND RECALL
LIC
60 71
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100 96
ICICI Prudential HDFC Std Life TATA AIG BIRLA SUN LIFE KOTAK MAHINDRA
75 92 64 72 82 86
100 % respondents mentioned first name to be LIC Among private players, ICICI Prudential has the highest Brand Recall i.e. 96% HDFC Standard life has Brand Recall of 92%
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INVESTMENT PREFERENCE
INVESTMENT PREFERENCE
Banks & Post office 9% 21% 21% Share Market Insurance Bonds Mutual Funds Real Estate
21% respondents prefer banks and post office schemes as an investment tool preference. Respondents of age group below 30 years prefer Mutual Funds, as they provide higher returns than banking investment tools. Insurance ranks 2nd as an investment tool choice, which itself includes various protection, saving and pension plans. Govt. Bonds & securities are mostly preferred by people of higher age group rather than young generation. Property as an investment option is most lucrative choice. However it is important to mention that majority of respondents are in age group of above 30 years and people with high income bracket prefers to invest in Real Estate.
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INSURED PERCENTAGE
13%
YES NO
87%
87 % of respondents were insured on own life and on life of their family members. So we had 13 % of potential customers to approach.
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COMPANY PREFERENCE
COMPANY PREFERENCE(in %)
55%
30%
15%
20
40
60
80
100
120
ONLY LIC
BOTH
55% of respondents have insurance cover provided by LIC only 15% of respondents have insurance cover provided by Private Cos. only Whereas 30% have got insurance from both LIC and Private Companies. Total number of LIC policies sums up to 85% and total number of Pvt. Companies policies sold sums up to 45%. Data provides that though LIC is still got a maximum market share but Private Companies are making a fast move in the market.
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TYPE OF PLAN
ULIPs
Money back Policies have been most popular and also the endowment plans. As people today are more aware about financial planning, so people of the age 30 years have planned for their Retirement now. ULIPs are fast gaining popularity as they provide investment benefit with Insurance.
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Investment
Risk Cover
Risk cover remains the most important purpose for buying insurance followed by option as Tax saving tools. Retirement Planning in a early period is also gaining the market share. ULIPs are responsible for increasing popularity of insurance as an investment tool
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CHANNEL PREFERENCE
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17
14
9 4
20
40
60
80
100
120
According to the data, known/current Advisors remains the 1st choice for buying Insurance. In retail also known Advisors are preferred over referrals. Bancassurance is emerging as a popular option for buying life Insurance. Group insurance is a channel which customers expect but it is not so popular because only few employers have taken the initiative. Buying insurance from a unknown person or getting a phone call is still not preferred by most of the people
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CHAPTER 4
Positioning insurance as a means to fulfilling ones duties during ones lifetime. Fears relating to thefts, ailments, death could be addressed through sensitive communication Fears relating to claims: positioning as worry free. Low returns: Reposition insurance as a risk cover, security instrument rather than a financial investment. Lack of understanding: Training of Channels To provide quality advice on products best suited Lack of Knowledge: Ease of Process, simplifying the product and the procedure Need to promote the quality of awareness The benefits: Leverage on Risk Protection or Returns oriented or both The product: catering to life stages Need to promote trust. Demonstrating claim testimonials,
Need for Branding in Insurance: Branding is more relevant in the Insurance market which not only faces the problem of securing and retaining customers in an increasingly competitive marketplace but also experiences the need for heightened relevance of the brand proposition in a world where brand has been termed the new religion. In rural India, the LIC is especially synonymous with insurance. But in the wake of competition insurance companies have to do a considerable brand building exercise at least in urban India. Adequate time, investment and longer-term management of the brand are essential, not only for success All brands need to be built around well-differentiated and credible positioning that springs from the organizations history. The brand must not only be believed but lived by management and employees. but also survival.
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environment. Each
company has to choose its own unique positioning based on its unique strengths. Belowmentioned positioning alternatives can be worth considering.
VARIETY-BASED POSITIONING
This type of positioning is based on varieties in products and services rather than customer segments. It is a sensible strategy for those companies who have distinctive advantages or strengths in offering certain products and services. In the insurance industry too, it is possible to achieve a unique position by focusing on certain category of products.
NEEDS-BASED POSITIONING
This is the most commonly understood positioning and is based on the differing needs of different groups of consumers. This can be done successfully if a company has unique strengths to service a group of customer needs better than others. The insurance needs of customers vary significantly for different groups of customers. The insurance needs of young family with small children will be quite different from that of a family in which the income-earner is close
to retirement. However, in India most of the life insurance companies have a wide variety of products tailored for different customer needs and there is no company focusing on a particular customer need.
ACCESS-BASED POSITIONING
Positioning of customers can also be done by the way they are accessible. That is different groups of customers may be accessible in different ways even though they may have similar needs. Access is typically a function of customer geography or customer scale. There is excellent opportunity in the insurance industry to employ access-based positioning by targeting the rural insurance sector.
The rural market for life insurance is very different from the urban market in terms of needs, income levels and distribution (seasonality, for example), penetration of media and so on.
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Rural market can be a highly profitable position if one is able to carefully plan and tailor an entire set of low-cost activities of advertising, distribution, and product design etc. to successfully exploit the potential.
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CHAPTER 5
CONCLUSION
The various conclusions drawn from the project are:
There has been a tremendous change in the insurance industry. And with it there has been continuous growth in this sector both in Indian as well as world context. The opening up of the insurance sector has changed the whole look of the industry. While the LIC, in order to face the competition is coming up with new strategies. New private players are leading the sector due to their strategic management and tailored made projects. From the research, we also conclude that though the awareness and people opting for LIC plans are more as compared to other private players but the latter are gaining momentum in the market day by day. The demand for insurance is likely to increase with rising per-capita income, rising literacy rates, and growth of service sector. In-fact opening up of the insurance sector is an integral part of the liberalization process being pursued by many developing countries. Life insurance as a form of protection is the single-most important financial product any earning member of a family must have. Having said this, a well-diversified portfolio is one of the first rules of financial planning, and as such one should consider different instruments as the ability to save increases. Possible investment options range from bank deposits and government small saving schemes to mutual funds, stocks and property.
Certainly ULIPs successfully combine the first and most important need of protection, with savings, and hence are an excellent addition to your portfolio. All financial products have a certain amount of risk and charges, be it a mutual fund, property, or even a bank deposit. It would be unrealistic to assume that the features and benefits of a ULIP come at no cost, though the charges are considerably lower than that of a traditional product.
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In fact, the very reason the product is transparent is because the customer knows the charges and risks. There is no right or wrong in this. The success of marketing insurance depends on understanding the social and cultural needs of the target population, and matching the market segment with the suitable intermediary segment. All intermediaries cant sell all lines of business profitably in all markets. There should be clear demarcation in the marketing strategies of the company from this perspective. Clients should also receive price differentials for using different channels. The intermediaries need to be empowered with the right learning, training and sales tools and technology enablers. Coupled with the right product mix, this will help the insurers to survive and flourish in this competitive market scenario. So lets conduct this business with utmost economy with the spirit of trusteeship; thereby making insurance widely popular.
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