Gaurav Jaiswal
Lecturer, Prestige Institute of Management and Research,Gwalior
Abstract: India is a country where the average selling of life insurance policies is still lower than
many western and asian countries, with the second largest population in world the Indian insurance market
is looking very prospective to many multinational and Indian insurance companies for expanding their
business and market share. Before the opening of indian market for Multinational Insurance Companies,
Life Insurance Corporation (LIC) was the only company which dealt in Life Insurance and after opening of
this sector to other private companies, all the world leaders of life insurance have started their operation in
india. With their world market experience and network, these companies have offered many good schemes
to lure all type of Indian consumers but unfortunately failed to get the major share of market. Still the LIC
is the biggest player in the life insurance market with approx 65% market share. But why Indian
counsumers do not trust on many companies and why the major population of india do not have any life
insurance policy or what are the factors plays major role in buying behavior of consumers towards life
insurance policies.
1
the attempt has been made in this Kahneman & Tversky, (1979) reported a
research paper to study the buying risk-averse individual, therefore, should
behavior of consumers towards life avoid nearly all types of risk. Empirical
insurance services. evidence, however, suggests most people
are risk averse for gains and risk seeking
Review of Literature for losses.
Mehr and Cammack (1976) agrees that
Insurance is usually thought of as a Kahneman & Tversky, (1984) stated
product that spreads the risk of serious, indeed, repeated demonstrations have
but low-probability, losses among a shown most people lack an adequate
group of individuals, thus providing understanding of probability and risk
some financial protection to each concepts Dhar, (1997) Greenleaf and
individual. Lehmann, (1995) Tversky and Shafir,
Kunreuther, (1979) said that his product (1992) have shown that offering more
makes good sense, particularly when the options can generate decision conflict
protection is purchased against potential and preference uncertainty, leading to
losses so large as to be catastrophic, such decision deferral.
as total destruction of one's home, a
large accident liability judgment, or Michael L. Smith (1982) said that a
death of primary family breadwinner. typical life insurance contract provides a
However, it has long been recognized package of options or rights to the policy
that this sensible product is difficult to owner that is not precisely duplicated by
sell.v any other combination of commonly
available contracts. Viewed from this
Kotler, (1973) considers insurance to be perspective, life insurance enjoys a
in the category of "unsought goods," unique position in the field of
along with products such as preventive investments and should be judged in this
dental services and burial plots.He notes light. The paper shows that an options
that unsought goods pose special viewpoint provides a more complete
challenges to the marketer. explanation of policy owner behavior
towards life insurance than the
Slovic, Fischhoff, Lichtenstein, conventional savings-and-protection
Corrigan, and Combs (1977) found that view.
subjects were more likely to buy
insurance against small, high-probability Michael L. Walden (1985) told that the
losses than insurance against large, low- option's package view of the whole life
probability losses, Hershey and insurance policy suggests that a whole
Schoemaker (1980) reported the life policy is a package of options, each
opposite result. of which has value and is expected to
influence the price of the policy. This
Kunreuther (1979) It is not the viewpoint implies the general hypothesis
magnitude of a potential loss that that price differences between whole life
inspires people to buy insurance policies can be explained by differences
voluntarily it is the frequency with in policy contract provisions and
which a loss is likely to occur. differences in selected company
characteristics. The option's package
theory was empirically investigated predicting customer loyalty and
using regression analysis on data from a relationship quality. In doing so, this
sample of policies marketed in North study used the relationship between
Carolina. The results suggest support for emotional satisfaction, service quality,
the options package theory. customer loyalty, and relationship
quality as a context, as well as data from
Kirchler and Angela-Christian Hubert a sample survey of 1,261 Australian
(1999) found that the present study aims retail customers concerning their
at describing spouses relative evaluation of their shopping experiences
dominance in decisions concerning to address this issue. The results show
different forms of investment. As that service quality is positively
determinants of spouses dominance, associated with emotional satisfaction,
partnership characteristics, such as which is positively associated with both
partnership role attitudes, marital customer loyalty and relationship
satisfaction and individual expertise in quality. Further investigations showed
relation to different investments, were that customers' feelings of enjoyment
considered. A questionnaire on spouses serve as the best predictor of customer
dominance in making decisions on loyalty, while feelings of happiness
various investments, on the serve as the best predictor of relationship
characteristics of particular investments quality. The findings imply the need for
and on partnership characteristics was a service firm to strategically leverage
completed by 142 Austrian couples. on the key antecedents of customer
Basically, wives appeared to adapt to the loyalty and relationship quality in its
dominance exerted by their husbands in pursuit of customer retention and long-
savings and investment decisions. term profitability.
Wives dominance was highest in
egalitarian partnerships, where Stephen Diacon (2004) presents the
autonomic and wife-dominated decisions results of a detailed comparison of the
were reported more frequently than in perceptions by individual consumers and
traditional partnerships. Additionally, expert financial advisers of the
spouses relative expertise in relation to investment risk involved in various UK
the investments in question showed personal financial services' products.
strong effects on dominance distribution: Factor similarity tests show that there are
Spouses with higher expertise than their significant differences between expert
partners exerted more dominance in and lay investors in the way financial
decision-making processes. risks are perceived. Financial experts are
likely to be less loss averse than lay
Amy Wong, (2004) empirically investors, but are prone to affiliation bias
examined the role of emotional (trusting providers and salesmen more
satisfaction in service encounters. than lay investors do), believe that the
Specifically, this study seeks to: products are less complex, and are less
investigate the relationship between cynical and distrustful about the
emotional satisfaction and key concepts, protection provided by the regulators.
such as service quality, customer loyalty, The traditional response to the finding
and relationship quality, and clarify the that experts and non-experts have
role of emotional satisfaction in different perceptions and understandings
about risk is to institute risk
communication programmes designed to Roger. A. Formisano (1981) examined,
re-educate consumers. However, this via consumer interviews, the impact of
approach is unlikely to be successful in the National Association of Insurance
an environment where individual Commissioner's Model Life Insurance
consumers distrust regulators and other Solicitation Regulation as implemented
experts. in New Jersey. A substantial portion of
the insurance buyers sampled did not
Helmut Grndl, Thomas Post, Roman become aware of the provisions of the
Schulze, (2005) found that demographic regulation aimed to improve their buying
risk, i.e., the risk that life tables change ability. Further, many life insurance
in a nondeterministic way, is a serious buyers were not well informed
threat to the financial stability of an concerning the nature and operation of
insurance company having underwritten life insurance contracts, and in
life insurance and annuity business. The particular, the life insurance policies that
inverse influence of changes in mortality they had purchased.
laws on the market value of life
insurance and annuity liabilities creates Objectives of the Study
natural hedging opportunities.
To develop and standardize a
Evan Mills, Ph.D.(1999) Studied the measure to evaluate investment
insurance industry is rarely thought of as pattern in life insurance services.
having much concern about energy To evaluate the factors
issues. However, the historical underlying consumer perception
involvement by insurers and allied towards investment in life
industries in the development and insurance policies.
deployment of familiar technologies To compare the differences in
such as automobile air bags, fire consumer perception of male and
prevention/suppression systems, and female consumers.
anti-theft devices, shows that this To open new vistas for further
industry has a long history of utilizing researches.
technology to improve safety and
otherwise reduce the likelihood of losses RESEARCH METHODOLOGY
for which they would otherwise have to
pay. We have identified nearly 80 The Study: The study was
examples of energy-efficient and exploratory in nature with survey
renewable energy technologies that offer method being used to complete the
loss-prevention benefits, and have study.
mapped these opportunities onto the
appropriate segments of the very diverse Sampling Design
insurance sector (life, health, property,
liability, business interruption, etc.). Population:
Some insurers and risk managers are Population included investors in Gwalior
beginning to recognize these previously region.
"hidden" benefits.
Sample frame: Results and Discussions
Since the data was collected through
personal contacts, the sample frames Consistency Measure
were the individuals who are investing in
life insurance policies. Firstly consistency of all the items in the
questionnaire is checked through item to
Sampling elements: total correlation. Under this correlation
Individual respondents were the of every item with total is measured and
sampling elements. the computed value is compared with
standard value (i.e. 0.1590). If the
Sampling Techniques: computed value is found less than
Purposive sampling technique was used standard value then whole
to select the samples. factor/statement is dropped and will be
termed as inconsistent.
Sample Size:
Sample size was 150 respondents.
7
Description of factors the study.
8
difference between male and female
investors perception towards investment Null Hypothesis Ho: It states that there is
in life insurance policies. no significant difference between the
perception of male and female investors
For applying Z-test mean and standard towards investment in life insurance
deviation was calculated, then values policies.
were put in formula to calculate standard
error.
GENDER MEAN S.D. SAMPLE SIZE SQUARE OF
S.D.
MALE 141.04 20.078 75 403.146
FEMALE 145.94 17.701 75 313.348
Z = 1.5877
Since the value of Z is less than the the Factor Analysis Test, and the six
standard value 1.96 at 5% level of factors that came out were Consumer
significance, so the null hypothesis is Loyalty, Service Quality, Ease of
accepted. Therefore there is no Procedures, Satisfaction Level,
significant difference between the Company Image, and Company-Client
perception of male and female investors Relationship.
towards investment in life insurance
policies. The consumers perception towards Life
Insurance Policies is positive. It
CONCLUSION developed a positive mind sets for their
investment pattern, in insurance policies.
In present Indian market, the investment Still some actions are needed for
habits of Indian consumers are changing developing insurance market. The major
very frequently. The individuals have factors playing the role in developing
their own perception towards various consumers perception towards Life
types of investment plans. The study of Insurance Policies are Consumer
this research work was focused over Loyalty, Service Quality, Ease of
consumers perception on investment Procedures, Satisfaction Level,
towards Life Insurance Services. The Company Image, and Company-Client
objectives of the study were to evaluate Relationship.
the factors underlying consumer
perception towards investment in life Insurance industry has to go ahead. A lot
insurance policies; and to compare the of opportunities are still waiting. This
differences in consumer perception of research will help in developing the
male and female consumers. The tests market share, loyalty and further
that were used for our research activities development in insurance sector.
were- Item to Total Correlation Test,
which we applied on 26 items and only References
one was dropped out, 25 items being Berger, Jonah A.; Michaele Draganska;
accepted. Next was Reliability Test to Itamar Simonson (1938); Stanford
check the reliability of the items. The University; Graduate School of
result was 0.915. Therefore the items Business.
were highly reliable. Then we applied
Dhar, Greenleaf and Lehmann, Tversky Environmental Science & Technology.
and Shaffer( 1997) by Journal Of
Consumer Research ,(Vol. 24). Slovic, Fischhoff, Lichtenstein, Corrigan
and Combs, (1977) Decision Research
Diacon. Stephen, (2001); International (vol.2, issue 2, pp83-93).
Journal of Bank Marketing.
Smith, Michael L.(1982); The Journal of
Formisano, Roger A. (1981); The Risk and Insurance, (Vol.49 no.4,
Journal of Risk and Insurance, (Vol.48 pp583-601).
no.1, pp59-79).
Walden, Michael L. (1985); The Journal
Fried, B. Robert and Lewis, Staphanie of Risk and Insurance, (Vol.52 no.1,
E., (2004) Choosing a Long Term pp44-58).
Insurance Policy: Understanding and Wong, Amy (2004), Managing Service
Improving the Process. Quality, (Vol.14, No.5, pp.365-376).