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Literature Review

Lect. D.ramkumar(2003), Relationship Marketing The

new mantra for life insurance sector. Department Of
Management Studies, N.M.S.S. Vallaichamy Nadir College,
Nagamalai, Madurai studied the role of relationship marketing
in life insurance sector. In todays impersonal marketplace,
customer satisfaction, retention and loyalty are rapidly become
the thing of the past. Relationship marketing brings them back to
the forefront, providing easy-to-apply solutions and strategies for
establishing meaningful bonds with customers and turning them
into reliable, life-long partners. Relationship marketing can be
defined as the process to identify and establish, maintain and
enhance and, when necessary, terminate relationships with
customers and other stakeholders at a profit so that the objective
of all parties involved are met; and this is done by mutual
exchange and fulfillment of promises. The important objectives
of relationship marketing are to acquire new customers, maintain
and enhance existing relationships with existing customers,
reactivation of ex-customers, and handling of customer
terminations. The key objective of relationship marketing is to
establish a one to one relationship with all the customers. This
may sound like a daydream few years ago; but thanks to the
technology breakthrough and technological solutions providers it
is very much of reality.
Dr. Ch.rajesham (2004), changing scenario of India
insurance sector, department of commerce & Business
Management, University P G college, Kakatiya University
Khammam, Andhra Pradesh revised that insurance sector has
not only been playing a leading role within the financial system in
India but also has significant socio-economical function, making
inroads into the interiors of the economy and is being considered
as one of the fast developing area in the Indian financial sector
too. It has also been facilitating economic development with an
objective to build an efficient, effective and a stable insurance
business in India as well as a strong base to both the needs of the
real economy and socio-economic objective of the country. It has
been mobilizing long term saving through life- insurance to
support economic growth and also facilitating economic
development, insurance cover to a large segment of people, while
the non-life insurance and reinsurance firms in India are main
providers of risk financing for manmade disasters and natural
catastrophes. Thus, both life insurance and non-life insurance are
found playing a significant role in avoiding or facing the risk of life
and business enterprises and also aiding to certain extents for
their smooth sailing. Therefore, an attempt is made in this paper
to highlight the developments of insurance sector in India in a
phased manner and to examine the reasons for the entry of
private and foreign insurance players into Indian insurance
market and to present the changing scenario of insurance
business in India. It is also attempted to examine the growth of
Indian insurance sector during the period of pre and post
liberalization and finally to suggest the strategies and challenges
need to be adopted by Indian insurance sector in the light of
global scenario so as to enhance its market share.

J.Mehra (2005), innovations in life insurance industry,

the financial express, new delhi studied that economic growth
in the emerging markets has time and again outpaced the
developed and industrialized countries. Alongside the rising
importance of emerging economics, their life insurance sectors
are also drawing more attention. Its been four years since the life
insurance sector was opened up for private players in India. The
reasons that prompted the government to bring in reform in this
sector are well known. While the public sector life insurance
companies made enormous contribution in the spread of
awareness about insurance, and expanded the market, it was
recognized that their reach was still limited, the range of product
offered restricted to the services to the consumer inadequate. It
was also felt that the rapid economic growth witnessed in the 90s
couldnt be sustained without a thriving insurance sector.
Today, the private accounts for nearly 20% of the market. The
market share of the private players has to be seen in the context
of this enlarged market. There has been a flurry of private players
providing a wide range of innovation products, services and
customized solutions. Emerging markets-such as China, India,
Mexico, and Russia- are home to some 86% of the worlds
population. Collectively, they account for 23% of world economic
output. Yet, insurance business is underdeveloped in these
In fact, India as a country is under-insured. Only 35% of the 250
million insurable population is insured. Exploiting the growth
potential of emerging insurance market- India and China are in
the spotlight. Both the countries currently attract a lot of attention
due to their size, strong growth performance and favorable
regulatory changes. To begin with, India and China are the most
populous countries and both have sustained impressive economic
growth in the last decade. Between 1993 and 2003, annual real
GDP growth averaged 8.9% in china and 5.9% in India.
Interestingly, both markets have gone through a similar period of
nationalization of their insurance business, although China
revoked state monopoly earlier than India.

Joseph Calandro Jr, Scott Lane, Ranganna Dasari , (2008)

"A practical approach for riskadjusting
performance", Measuring Business Excellence, Vol. 12 Iss:
4, pp.4 12 studied that many insurance companies vigorously
pursue top-line growth, even though it has the potential to
develop unprofitably over time. The time lag(or tail) between
when insurance is sold and when claims are paid generates risks
unique to insurance companies. Furthermore, the insurance
market is both mature and efficient (i.e. its level of completion is
very high), which means that profitable opportunities are both
rare and untenable unless protected by competitive advantage.
There currently no practical measure available ( of which the
authors are aware ) at the business unit level to evaluate
insurance premium growth in the face of the industrys risk,
impairing executives ability to assess segment opportunities (and
hazards), thus hampering strategies decision making. The
purpose of this paper is to introduce a practical measure
developed by the authors called Underwriting Return (UWR) which
aims at helping to alleviate this situation. The paper introduces
UWR which was developed during the course and scope of the
authors work in the insurance industry, and their research into
applying value-based management to that industry. The paper
finds that UWR is a practical measure that property and casualty
executives can use at the business unit level to help quantify
market segments to grow, hold, harvest and abandon. A variety of
strategies analysis tools, such as the popular Boston Consulting
Group matrix, are utilized today. In general, the application of
such tools is hampered by an imprecision of measurement but
each can add a level of insight to executive resource allocation
options. UWR can further aid insurance executive in strategic
analysis by helping to quantify in which segments to compete,
and which ones to abandon. The paper demonstrates the utility of
the measure in an example based on an actual analysis.

Keerthi, P. and Vijayalakshmi, R., A Study on the

Expectations and Perceptions of the Services in Private
Life Insurance Companies, SMART Journals, Vol. 5, 2009 . A
study conducted by Keerthi, P. and Vijayalakshmi, R. (2009)90 A
Study on the Expectations and Perceptions of the Services in
Private Life Insurance Companies reveals that the policyholders
expectations are well met in the case of certain factors reacting to
service quality. But in the case of other variables, there exists a
significant gap which means that policyholders have experienced
low levels of service as against their expectations. If all the
players in the Life insurance industry focus on the effective
delivery of services, they can win the hearts of customers and
anticipate their increased market share.

Ramanathan, K.V., A Project on A Study on Policyholders

Satisfaction with Special Reference to Life Insurance
Corporation of India, Thanjavur Division, Bharathidasan
University, 2011. research has resulted in the development of a
reliable and valid instrument for assessing customer perceived
service quality, awareness level, and satisfaction level of
customers towards life insurance industry. Here, service quality
needs to be measured using a six dimensional hierarchal
structure consisting of assurance, competence, personalized
financial planning, corporate image, tangibles and technology
dimensions. This would help the service managers to efficiently
allocate resources, by focusing on important dimensions first.
There is no right and 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.

R.S. Arora,Marketing of Services: A Study of LIC in

Jalandhar Division, Ph.D. Thesis Submitted to Guru Nanak
Dev University, Amritsar, 2008. R.S.Arora64 (2008) in his
thesis entitled, Marketing of Services: A Study of LIC in Jalandhar
Division has explained that service quality to be a
multidimensional construct. The research indicated that the five
dimensional structure of service quality was not only industry
specific but also country specific. The results also showed that out
of the seven factors used to define service quality,
responsiveness had the strongest correlation and was the best
predictor of the overall quality. Product convenience was found to
have the greatest influence on customer satisfaction followed by
assurance and tangibility. The results regarding the intermediaries
showed that the agents attached 56 more weight to all aspects as
compared to bank employees. The agents gave more importance
to good customer service and regular updating of knowledge,
whereas the bank employees stressed more on providing
objective information. No significant difference was found in the
demands of customers of both agents and bank employees. The
data analysis revealed that agents had better success rate as
compared to the bank employees in selling products and that
agents perceived lower competitive pressure than bank
R. Kumar, Performance Evaluation of General Insurance
Companies: A Study of Post-Reform Period, Ph.D. Thesis
Submitted to Punjabi University, Patiala, 2010. R. Kumar65
(2010) in his thesis entitled, Performance Evaluation of General
Insurance Companies: A Study of Post-Reform Period has
explained that the public sector exhibited higher underwriting
losses in the post-reform period than the pre-reform period. The
higher investment return of the public sector general insurance
companies compensated their underwriting losses. The author
had suggested that productivity of the private insurers was higher
than the public insurers due to their hi-tech environment and
modern technology features supported by them. The study
suggested methods to improve the performance of these
companies. The results showed that private sector companies
provide significantly higher service quality than the public sector
general insurance companies.

V. Singla, Impact of Service Quality on Customer Loyalty:

A Study of Hotel Industry in Punjab and Chandigarh,
Ph.D. Thesis Submitted to Punjabi University, Patiala,
2010 . Singla 66 (2010) in her thesis entitled, Impact of Service
Quality on Customer Loyalty: A Study of Hotel Industry in Punjab
and Chandigarh has modified the SERVQUAL scale to include six
dimensions. The gap scores were significant for a number of
attributes and these attributes were different for different
categories of hotels. The performance was found to be below the
expectations of the customers. So, they were 57 unable to deliver
the service according to customers expectation. The study also
showed that the managers over estimated and were also too self
assured about the delivery of a particular service. Lastly, the
study had suggested measures for improving customer loyalty.

M.K. Brady and C.J. Joseph, Some New thoughts on

Conceptualizing Perceived Service Quality; A Hierarchical
Approach, Journal of Marketing, Vol. 65, 2001, pp.34-47.
M.K. Brady and C.J. Joseph58 (2001) in their article titled, Some
New Thoughts on Conceptualizing Perceived Service Quality; A
Hierarchical Approach have concluded that evidence proved that
customers form service quality perceptions on the basis of the
three primary dimensions: interaction, environment and outcome
and customers based their evaluation of these primary factors on
their assessment of three corresponding sub factors. The
combination of all these constitute the customers overall
perception of the service quality. The results also indicated that
reliability, responsiveness and empathy are important for
providing superior service quality.

Gorski, Lorraine (2002a). "The New Producers." Bests Review, May

2002, p.45-48.

The article describes how insurers can use the banks' customer base to
reach new customers. Banks have the trust of their customers and that
would be a good distribution channel for life insurance, especially in the
midlevel or mass market.

Banks could represent 3-4 different insurers therefore the insurance

products need to be competitive (for the customer and the representative)
and specific for bank employee selling. Furthermore, stable relationships
are necessary and the product needs to be branded and well-advertised.
Underwriting will stay with the insurers but selling may go both ways by
insurance agents or bank employees.

Insurers have founded banks to offer banking products. One hundred and
thirty five applications were made between Jan.1, 1997 and May 31, 2001.
Insurance banks have an uphill battle to convince their customers to
establish a bank account because it is hard to determine when and why an
insurance customer needs a bank account.

On the other hand, it is easier for a bank that provides a loan to sense
when insurance is necessary. Since most people already have a bank
account, customer as well as agents have to be motivated to deal with
another financial institution or to switch. In addition these new institutions
often have no brick and mortar establishment but rather rely on Internet
applications and Internet interactions.

Establishing banks enable insurers to get into the trust business and offer a
sophisticated retirement package and to be able to cross-sell insurance
products to their customers and to earn fee income. Although this can be
done through partnerships, some insurers want to do it alone and thus to
avoid finding later on unpleasant surprises. They count on their name
recognitions and the availability of their agents (State Farm, Allstate).

Increasing brand awareness, direct mailing, providing up-to-date interest

rates should help to lure customers. Most insurance firms have hired
experienced bankers to create and manage these banks .

Shobhit and Sanjay Shukla, Failure of Private Insurance

Players in Rural Areas- An Analysis, Insurance Industry-
The Current Scenario, ICFAI University Press, Hyderabad,
2005, pp.9-19. Shobhit and Sanjay Shukla (2005) conducted a
study in Lucknow city and its adjoining rural areas to expose the
reasons for the failure of insurance players of private sector in
attaining a significant share in the rural market. The study
revealed that there is a major difference in the objectives and
expectations between rural and urban policyholders. Rural
population showed high bias towards low premium and maximum
risk coverage. In rural areas private players have not achieved
much success. The private players have not been able to provide
policies preferred by rural people. In urban areas, for the
conservative consumers insurance is a tax saving device. In urban
areas consumers belonging to the middle income group prefer
policies of public sector players and only high income group
preferred private sector players. The study also revealed that in
urban areas the efficient customer service helped the 24 market
penetration by private players. The major reasons cited for the
failure in the rural sector can be summarised as follows. 1. Lack of
popular appeal in marketing strategy 2. High variation between
services provided and consumers expectations 3. High premiums
4. Product differentiation and innovation are not in conformity
with the rural population 5. Professional style of working has
failed to generate confidence and goodwill as rural population
prefers personalised approach and that too in accordance with the
regional culture The above findings reveal that there should be a
change in the products, marketing and service strategy of private
players of insurance sector.

Srinivasan K. K. Changes in the Insurance Market

Globally-Regulators Perspectives, IRDA Journal, October
2006, pp.12-15. Srinivasan K.K. (2006) in his article attempts to
identify the key areas of change that require the regulators
urgent attention. The regulator has to be supportive of industry
development. The regulator also has to play a positive role in
enhancing international competitiveness of the players. The
regulator also has to monitor the rural and social obligations of
the insurers. Thus the major areas that require the attention of
the regulators are:- 29 1. Regulation of conglomerates 2. Products
and the regulator 3. E-commerce 4. Regulator and consumer
confidence 5. Corporate governance 6. Channel proliferation 7.
Socio- economic and developmental challenges 8. Integrating
technology Life Insurance Corporation could streamline their
marketing programmes on the basis of the valuable
recommendations of this research study so that need - based
strategies may be formulated to suit the requirements of all
segments, especially the rural household sector. The planning
wing of LIC Divisional office, Warangal, conducted a study to
assess the level of customer satisfaction regarding the services of
LIC. The overall conclusions that emerged from the above study
are: 1. There is an urgent need for keeping up the tempo of
maturity claim settlement operations at the present level. 2. It is
necessary to verify policy ledgers every month for omissions in
the computer list so that delays can be reduced. The study
reveals the various lapses of the Corporation in the settlement of
claims, service of agents and officers and personal attention in
the settlement of claims.

Khansili, Dinesh Chandra, A New Way of Thinking-

Innovation in Product and Pricing by the LIC, IRDA
Journal, Vol.11, No. 6, May 2004, pp.25-26 . Khansill (2004)
examines the innovation in product design and pricing by LIC.
Innovation in life insurance market is attributed to the 37
initiatives taken by new private companies. The private life
insurance companies have joint venture partners from countries
operating in US, UK, Germany, Canada and Australia. The
practices of the life insurance market of these countries are
reflected in the products made available in our country by private
life insurance companies. The LIC has introduced two novel
products, namely, Jeevan Bharti and Jeevan Saral. These products
are very unique. This reflects a change in the product pricing
concepts of LIC.

Reddy, Appi V., Marketing of Life Insurance Services,

Printwell Publishers, Jabalpur, 1998 Reddy (1994) in his study
makes a comprehensive analysis of marketing programmes of LIC
of India to market its products to different segments of customers.
He has examined the problem on the basis of evaluation of the
perception of different customers segments in respect of different
components of marketing mix that are essential to meet the 39
challenges posed by intangibility in service-provider-
customerinteraction and customer involvement in service
consumption and production. 1. The results of the study suggest
that policies with profit plans account for about ninety percent of
the total policies sold and policies without profit plans account for
about ten percent of the same. Segmentwise analysis of
preference of policies also suggest that majority of customers in
all segments prefer policies with profit plans. 2. Among the
various types of plans, endowment assurance plans account for a
major share (92 percent) followed by childrens plans (5 percent)
and whole life insurance plans and pension plans (3 percent).
Segmentwise analysis also clearly indicates that endowment
plans are more popular than other types of insurance plans. 3.
Analysis of motives for buying insurance policies indicates that
risk coverage is the most important motive in the selection of life
insurance policies. Savings motive, income tax relief, marriage
and education of children, old age protections are perceived to be
the other important motives in their order of preference. 4.
Segmentwise analysis of motives reveal the following:- a. The
professional and managerial group regard income tax relief as the
second important motive followed by savings motive. 40 b. Rural
and illiterate segments consider savings as the second important
motive. They are not fully conscious of the benefit of risk
coverage associated with life insurance plans even though it is
their primary motive. c. Self employed and regular income groups
consider old age protection as the second important motive and
childrens marriage and education as the third important motive.
5. Some of the insurance plans were hastily introduced without
proper planning and research. Consequently LIC incurred heavy
loss on account of such short lived plans. 6. While designing new
insurance plans by LIC to satisfy the requirements of different
segments, systematic and elaborate efforts are not infused to
generate new product ideas or to examine them thoroughly from
various angles. 7. LIC did not make any serious attempt to design
policies to suit the requirements of rural population and the lower
income group. 8. Seventy eight percent of the policyholders felt
that the services of agents are inevitable for promoting LIC
business. 9. Performance rating of the pre purchase service of
agents is very high and in the post purchase period service
performance rate is very poor. 10. Mortality, rate of interest,
service and selling expenses are the important factors taken as
the basis for determining premium rates. 41 The study is a
valuable contribution in the area of marketing of products by
financial institutions, especially for marketing insurance products.
The study identified many lapses in the marketing of life
insurance services. In fact, some of the observations of the study
point out the fact that product designing, premium fixation and
service attributes deserve serious attention of the policyholders
and the management in view of increased competition and socio-
economic transformation.