There is nothing more by alicejenny



                       Section – I
  The Service Marketing Perspective

1. Need of life insurance.

2. The life insurance mix.

3. Life insurance marketing triangle.

4. Life insurance – flower of service.

5. 4 – I‘s of Life insurance.

6. Complaint handling.
                   Section – II

         A Study of the Industry

1. A sectoral study.

2. PEST analysis of the life insurance sector.

3. SWOT analysis of the life insurance sector.

4. Findings and Hypothesis.
                  EXECUTIVE SUMMARY

“There is nothing more uncertain than life and there is nothing more certain
than                    life                    insurance”                      ---
Miles Dawson (the business of life insurance)
Security has always been a universal desire, right from the earliest civilizations.
This quest for security has been a major motivating force in the progress of
mankind. The early societies looked up to their families for providing this
security, which resulted in cohesive units. Gradually, as lifestyles changed and
as man progressed into a more modern industrialized setup, this cohesive
quality of the family started fading. One had to look for other ways of
providing economic security and somewhere along the line was born

The insurance landscape in India is in the process of tremendous change.
Closed to foreign competition due to nationalization in 1956, the Indian
insurance industry was run by the government for over 40 years through the
„Life Insurance Corporation of India‟ (LIC) and four general insurance
companies that spanned the length and breadth of the country. While these
companies had done a commendable job in helping the industry grow, the task
of making an essential financial product available to the masses gave scope to
several other companies to participate in this arena
Only 22% of the insurable populations in India possess life insurance, and in a
country of over 1.06 billion people, life insurance premia forms 1.8% of the
G.D.P., indicating the extent of underinsurance or rather revealing the latent
potential in insurance spectrum.
Liberalization is in full swing in the Indian markets. Insurance industry being
one of the most affected markets has experienced a plethora of new
relationships in the last couple of years there are a few forces acting on the
industry that have brought about significant changes in the behavior of the
industry trends. Moreover there have been significant changes in the service
outlook with respect to insurance industry. From the opinion that it was an
instrument intended to provide monetary support at the time of the death of an
individual, life insurance life insurance grew up to be a major financial
instrument during the past 50 years in our country. There has also been a
change in the consumer outlook with regards to life insurance as very
beneficiary financial tool as against the orthodox thinking of unfruitful use of
The findings of this project throw light on the service perspective bringing out
the fundamentals of service marketing and its determinants. The finding of the
research widens the consumer understanding aspect and it would be very
helpful to imbibe customization. The research studies the changing trends in
life insurance and describes the latent potential and also gives a hypothesis on
the future of the insurance industry based on the study of insurance sector and
the expert opinion.
       SECTION– I

                        Does one need insurance?

The business of insurance is related to protection of the economic values of the
assets. Every asset is of some value and is expected to last for a certain period
of time during which it will deliver that value. In case the asset is destroyed it
ceases to provide the value to the owner thus leading to an unpleasant situation.
Insurance is a mechanism to reduce the affect of such unpleasant situation.
Human life is considered to be a value generating asset and is also subject to
Assets are insured because there if a possibility that perhaps they might get
destroyed, through accidental occurrences. Such possible occurrences are
called perils. If such perils can cause damage to the asset we say that the asset
is exposed to risk. Insurance is done against the contingency that it might
happen. Insurance is relevant only if there are uncertainties. If there is no
uncertainty about the occurrence of an event, it cannot be insured against. In
case of human beings death is certain; however the time of death is uncertain.
Insurance doesn„t protect the asset. It doesn„t prevent the loss due to its peril.
The perils can sometime be avoided by ensuring better safety and damage
control management. Insurance only tries to reduce the impact of the risk the of
the asset and those who depend on that asset. Only economic consequences can
be insured. If the loss is not financial, insurance may not be possible. Moreover
insurance is backed up with many economic benefits which can be enlisted as
untimely or premature death.

                    ndividuals, who are in credit business, can ensure for
themselves recovery of loan in case their debtor dies.

by each in the business.
         ‘keyman ’insurance, an organization can insure the lives of their
executives, whose expertise greatly contributes to their profits.

employee- welfare program.

procuring loans from the market.
                   THE LIFE INSURANCE MIX

                               Product Mix.
The best way to get and keep customers is to constantly figure out how to give
them more for less. .In case of insurance sector, the product mix
comprises Life and Non – life insurance policies that are offered to the customer
by the company.
The length of a product mix refers to the total number of items in the mix. In
case of insurance sector, the following is the length of product mix:

The depth of a product mix refers to how many variants are offered of each
product in the line. In the insurance sector, one policy can be made available
in different variations.
                    THE SERVICE PRODUCT

The offer has a nucleus or core in the center, which is supported by series of
tangible and intangible features and benefits and these form a cluster around
the core product. The surrounding features are known as supplementary
services. The core product and the supplementary services share a symbiotic
relation, i.e. both are not complete without each other. Hence supplementary
services are of immense importance.



                           Content                   Insurance sector
Level Type of

Level Core or generic Basic service product
1     product/ service                                     -life   insurance

Level Expected         Basic     product    and
2     product/ service minimum purchase that
                       must be met

Level Augmented        Something different which
3     product/ service enables one product to be
                       differentiated from other      payment

                                                       Standing instruction
                                                      to bank

Level Potential        Features that attract the                     claims
4     product/ service customers and are useful to    settled on or before
                       them.                          the maturity date.
                                     Price Mix.
    Price is one element in the marketing mix that produces revenue; all the
    other elements produce costs. Prices are easiest marketing mix elements to
    adjust; product features, channels and even promotion take more time. Price
    also com m unicates to the m arket the company„s intended value positioning
    of its product or brand.

    The price in case of insurance sector refers to the premium charged on the
    policy. The Tariff advisory committee fixes the price for each policy. Hence
    all insurance companies have to charge approximately similar premium on
    similar policies. However, different elements affect the rate of premium to be
    charged on each policy. The price for the same policy is different for different

    The company must set its price in relation to the value delivered and
    perceived by the customer. If, the price is higher than the value received, the
    customer will not be willing to pay so high and the company will lose
    potential profits. If the price is less than the value received then, the
    company will fail to receive the profit that it deserves for providing a good

             HIGH                  MISSED
  A                      OPPORTUNITIES

  R          MEDIUM
  C                                 PRICE = VALUE
  D                                                 UNHARVESTED

                          LOW          MEDIUM              HIGH

                                       PRICE PAID

There are various steps, which are followed in order to fix the price. They
are as follows:

                           1) Selecting The
                              Pricing Objective

                          2) Determining Demand

                          3) Estimating Costs

                          4) Analyzing
                             com petitor„s costs,
                             price and offers

                          5) Selecting the Final
STEP 1 In the first step, the company decides where it wants to position its
market offering. The clearer the firm„s objective, easier it is to set the price.
STEP 2 Each price will lead to a different level of demand therefore has a
 different impact on company„s marketing strategy.

STEP 3 Demand sets the ceiling whereas costs set the floor on the price             the
company can charge for its product/service. In case of insurance sector, it
comprises costs of recruiting, training, motivating agents along with other fixed
and variable costs.

 STEP 4 Within the range of possible prices determined by the market demand
 and company costs, the firm must take the competitor„s costs, prices and
 possible price reaction into account. In order to win the market share, such
 products/ services, which have not yet been created by the competitors, should
 be created by the company.

 STEP 5 In selecting the price in insurance sector, the company must
 consider life expectancy of the person as well as his financial position. In case
 of Life Insurance, if the person while taking the policy is at a high risk of some
 terminal disease then he is charged a higher premium. At the
 same time, if a person who does not enjoy good financial condition cannot
 take a high price insurance policy. Thus, every customer taking a policy
 should disclose all his medical as well as financial details in utmost good
 faith to the insurance agent.
                             Place Mix
           Today you have to run faster to stay in the same place

Place mix can be defined as the ―Physical distribution i.e. the delivery of
goods/ services at the right time at the right place to the customers. Place
decisions involve building relationships with the wholesalers, retailers and
through these intermediaries building relationships with the customers.
Products and services must be at the right place, at the right time in order to be
consumed. Probably the best way to perceive place is to think of the flow of
products from manufacturer through intermediaries to the consumer or user.
This flow can be thought of as a channel used to move goods and services. The
channel of distribution is a component of the place mix.

According to Philip Kotler, Channels are sets of interdependent
organizations involved in the process of making the product or service
available for use or consumption.

                           Call Centers
                           Selling through Corporate


                           Promotion Mix.

            The best advertising is done by an augmented customer.
Promotion is a descriptive term for the m ix of communication activities,
which a service organization carries out in order to influence the public on
whom their sales depend. It is an element in an organization„s marketing m ix
that serves to inform, persuade, or/ and remind people about an
organization or individual goods, service, image, ideas, community
involvement or impact on the society.
                         People Mix.
It is no longer enough to satisfy the customers, you must delight them.

The various employees involved in providing service to the customer in
insurance sector are:
     Customer service representatives
     Marketing and sales managers
       Claims adjusters, appraisers, examiners, and investigators
     Underwriters Insurance sales agents
       Lawyers
       Actuaries


People mix not only includes employees but also customers. The
customers are to be treated with respect and courtesy. LIC (India) ltd.
provides following facilities to keep the customers happy and satisfied.
The birth dates of the policyholders are recorded and on the day of the
birthday, the policyholder is given a ―happy birthday call by the com
pany. The customers are reminded to pay their premium on time through
                            Physical Evidence.

Companies try to demonstrate their service quality through physical evidence
and presentation. However, in case of insurance sector, the customer rarely
visits the insurance company. The customer comes mostly only in contact
with the service provider hence the service provider (insurance agent) should.

 Have good communication skills.

The physical evidence factor is directly proportional to the level of faith of
customers as well as the employees in the organization. Physical evidence
goes way beyond an individual. It includes the company‟s advertisements,
public          relation,         employees,               and        branches.

            Insurance Service       Tangibles as Physical Evidences

                    1                  Policy Documents
                    2                  Brochures
                    3                  Periodic Statements
                    4                  Renewal Notices
                    5                  Business Cards
                    6                  Stationary
                    7                  Calendar, Diaries
                    8                  Letters/Cards
                    9                  Website
                               Process Mix.
It is more important to do what is strategically right than what is
immediately profitable - Philip Kotler
In case of insurance sector, the process mix includes the various interactions
that take place between the insurance agent and the customer in the process
of selling the policy to the customer till the settlement of claims.

The following process mix is followed by insurance companies in case
of life insurance:
1) The insurance agent calls up the customer and informs him about the
different policies offered by the company and the price mix of all the
policies. If, the customer seems interested in taking the policy then, he fixes
an appointment with the customer.
2) The insurance agent meets the customer and gives him some
information about the insurance company and also about the benefits of the
3)The customer is then asked to fill a financial review form (FRF) and the
agent is asked to find out the standard of living of the customer.
4) The insurance company offers various policies but they might not be
suitable for the customer hence, on the basis of his requirements and
is then asked to fill up the proposal form which contains various
financial status, the insurance agent suggests two or three policies to the
customer, which will be suitable for him.
5) The insurance agent explains the different policy plans in detail to
the customer i.e. the amount of premium to be paid, the time interval
at which the premium is to be paid, the benefits of each of the policy etc.
6) Then, the insurance agent provides a feedback form to the customer and
asks him to give his feedback regarding the policies that he has
been informed about.
7) Then, the next appointment is fixed by the insurance agent with
the customer and in this meeting; the customer selects the policy plan,
which appeals to him. The customer details of the payment and he is
asked to make the first premium payment.
8) Then, the insurance agent submits the duly filled and signed for in
the insurance office along with the other necessary documents.
9) The customer must get himself examined from the approved doctor
of LIC. The medical examination is necessary to determine the physical
fitness of the customer. If the medical report is favorable, then only LIC
will issue the policy.
10) An average twelve days time is taken by the company to verify the
submitted documents. After the twelve days period, the insurance
agent meets the customer to provide him a policy document, which
consists of the terms and conditions of the policy.
11) Then, a reconfirmation is taken by the agent from the customer that
he agrees with the terms and conditions of the policy.
12) The insurance agent then regularly collects the premium from
the customer whenever the premium becomes due.
The blue printing show what the product should look like a details the
specification to which it should conform. In contrast to the physical
architecture of building, ship, or piece of equipment service process have a
largely intangible structure. The process of logistics, industrial engineering,
decision theory, and computer system analysis each of which employs blue
print   techniques      to    describe processes   involving    flow,   sequences,
relationship and dependencies.

  Telephonic conversation between                  Interaction with customer and
 the agent and potential consumer
                                                    analyzing customer need.

 Explaining product clearing every
                                                   Offering a product with various
 doubt. It should be presented in a
                                                   product specifications.
 customized manner.

 Completing formalities like filling               Collecting payments and
 forms and receiving necessary
                                                   closing the sale.

                                                   After sale service, handling
                                                   Customer queries.
          Life Insurance Marketing Triangle.

           The concept of services marketing triangle is as follows:-


       Internal Marketing                     External Marketing

SERVICE PROVIDER                                      CONSUMERS

The above diagram explains the services triangle with its three
constituents, namely, the company, the provider and the consumer. Each of
them have been explained as follows:-
The Company
The company makes various promises to its customers through external
marketing. The way and means of marketing will be covered it the marketing
The Provider
The agents and the development officers act as the front-line staff and
they are in direct contact with the potential or existing customers. They are
the ones who keep or satisfy the promises made by the company. The
marketing of insurance basically comes under concept selling. The agents are
thus given various incentives, rewards, commissions and all the necessary
training required.

As regards incentive, they receive PLI (Productivity Linked Incentive),
which is based on the increase in premium amount and the sums assured by
the agent. They are also given extra commissions in case of policies,
which are of high value. There are normal promotions for any good work
done on a regular basis. The agents generally work under the training and
guidance of their respective development officers.

The Consumers
The consumers are the policyholders. Apart from the routine life insurance
policies other services like housing finance, mutual funds, pension and
group insurance. Thus the range of consumers is far and wide.
              Life Insurance Flower of Service.

Flower of services refer to a well-formed package of total services with
all the supplementary services being well formulated along with the core
services. The various petals of the flower are:
A marketer needs to provide adequate information to his employees and
his customers. This information is general information provided through
various communication channels. In the insurance industry information is
provided to the customers with the help of:
         Web sites
         Print media
         Television, etc.

This is additional customized information provided to the potential
customers by the service provider. In the insurance industry it is
provided by com pany„s staff and agents. Example: In LIC when a
customer enters asking of information about the policy, he is directed
towards the assistant sales manager. Assistant sales manager w ill listen to
the customer„s requirement and as per his requirement list the number of
policies that are available. He will also ask the customer about the price
and limit the number of options for the customer, so that he can easily
choose     the    policy    without     confusion    to   the    customer.
   Order taking:
Order taking should be done without mistakes. In LIC order taking is
generally done by:
             By Agents
             On Web site
             By Assistant sales manager directly in the office.

Hospitality is a very pretty petal, reflecting pleasure at meeting new
customers and greeting old ones when they return. Hospitality finds its full
expression in face-to-face encounters. In LIC customers directly come in
contact with the sales manager. The customers are treated as guests. The
sales managers of LIC are given special training of how to sell the
policies to the clients. It is only in LIC that a customer can meet the
chairman directly without any appointment.

   Safe keeping:
It is in the process and procedures used by marketers to safe guard and to
maintain secrecy. In LIC the data of the customers is very important. They
feed the data of the customers in their Front and Application Program
Software        which                is       connected         with         all
the branches of LIC. The data is only available with the sales people and not
shown to any person.
E xceptional service m eans service over and above custom er„s
expectation. LIC has the fastest claim settlement in the world
thereby providing exceptional service. LIC also solves complains of
the customers within 7days.

The payment of premium is normally through cheques. Customer can
make payment in LIC through:
            Web sites
            Standing instruction to banks:
In this the account holder will give standing instruction to his bank to pay
the amount of premium every month without his consent on the given
date directly to LIC.

The billing should be done in such a way that there are no mistakes and
if there are any they must be immediately rectified. The billing should
provide break-ups of premium charged, service charges, etc.
                 4 I’s for Life Insurance

Life insurance has four major characteristics that greatly affect the
marketing programs.


      Inseparability                    I   Inconsistency

1. Intangibility:

Unlike products, services cannot be held, touched, or seen before the
purchase decision thus, they should be made tangible to a certain extent.
Marketers should ―tangibilize the intangible‖ to com m unicate service
nature and quality. This can be done through:
Insurance is a guarantee against risk and neither the risk nor the guarantee
is tangible. Hence, insurance rightly come under services, which are intangible.
Efforts have been made by the insurance companies to make insurance
tangible to some extent by including letters and forms.

2.   Inconsistency:

Service quality is often inconsistent. This is because service personnel
have different capabilities, which vary in performance from day to day.
This problem of inconsistency in service quality can be reduced through
standardization, training and mechanization. In insurance sector, all agents
should be trained to bring about consistency in providing service or, the
insurance process should be mechanized to a certain extent. E.g.: the
customers can be reminded about the payment of premium through e-
mails and sms instead of agents.
3. Inseparability:

Services are produced and consumed simultaneously. Consumers cannot and
do not separate the deliverer of the service from the service itself. Interaction
between consumer and the service provider varies based on whether
consumer must be physically present to receive the service.
In insurance sector too, the service is produced when the agent convinces the
consumer to buy the policy and it is said to be consumed when the claim is
settled and the policyholder gets the money. In both the above cases,
it is essential for the service provider (agent) and the consumer (policy
holder) to be present.

4. Inventory:
No inventory can be maintained for services. Inventory carrying costs are
more subjective and lead to idle production capacity. When the service is
available but there is no demand, cost rises as, cost of paying the people and
overhead remains constant even though the people are not required to
provide services due to lack of demand. In the insurance sector however,
commission is paid to the agents on each policy that they sell. Hence, not
much inventory cost is wasted on idle inventory. As the cost of agents is
directly proportionate to the policy sold.
                     Complaint Handling.

In a vast Organization like LIC, catering to the various needs and
aspirations of millions of policyholders, grievances of customers do
arise occasionally. In order to redress these grievances LIC has established
elaborate Grievance Rederessal Machinery and the details are as under.

1) Grievance Redressal Officers:
II) Complaint Cells:
III) Claims Review Committee:
IV) Complaints received through the Government:
V) Policyholder Councils and Zonal Advisory Boards:
VI) Consumer Affairs Committee:
VII) Citizens' Charter
       SECTION – II

                           A Sectoral study

Insurance is suddenly gaining all the attention and what used to be a
strangewould in it is a household name, thanks to opening up of the
industry, while there are several reasons for opening up of insurance
sector the foreign investors are eyeing it as a very lucrative prospect.
After the opening up, several private insurers have started operating in
life insurance, especially in metro areas. New marketing channels like
Bancassurance, brokers, etc. are also in the offing.

Size of market life & non life         $16 billion
Total Global insurance premium         $2408.25 billion(-1.5% as against 2000)
Rate of annual growth 2002-03          Life- 11.27%

                                       Non life- 23%

Geographical restriction for new       None. Players can operate all over the

players                                country.

Registration restriction               Composite registration not available.

Equity restriction in the new Indian   Foreign investor can hold up to 26% of the
insurance company                      equity.
Number of registered companies.        Public sector – 01
                                       Private sector – 13
Source: IRDA annual report 2002 - 03
                          Life insurers in India.

As an answer to globalization of economy and the increasing pressure of the
WTO regulations, the govt. appointed the Malhotra Committee. After
considering all aspects, the government ultimately enacted Insurance
Regulatory and development authority and vested the authority to formulate
regulations for insurance industry.

          Public sector                         Private sector

  1. Life Insurance Corporation       1. Allianz bajaj life insurance.

             (LIC)                    2. Birla sun life insurance
                                      3. HDFC standard life insurance
                                      4. ICICI Prudential life insurance.
                                      5. Reliance life insurance.
                                      6. ING vysya life insurance
                                      7. Max New York life insurance
                                      8. MetLife insurance
                                      9. Kotak mahindra life insurance.
                                      10. SBI insurance Co Ltd.
                                      11. TATA-AIG life insurance Co Ltd.
                                      12. AMP-Sanmar Assurance Co Ltd.
                                      13.Aviva Life insurance Company Ltd..
                              Present Market Structure

The insurance sector in India has come a full circle from being an
open competitive market to nationalization and now back to a liberalized
market again. After privatization LIC is no longer a monopoly. Insurance
sector was converted into Oligopoly. The market share of private players
is as under.

                             ING Vyasa                1.1%     AMP Sanmar
                AVIVA Life 3.5%          SBI Life                 1.2%
                     3.7%                 4.1%
    Om Kotak                                                                           ICICI Pru

       5.7%                                                                             36.2%

    Max NYL

     Allianz Bajaj
                       Tata AIG              Birla Sunlife                  HDFC Standard
                            6.0%                    14.0%                       9.4%
Total market share of LIC as compared to
other private players.

                           ICICI PRU
                           SUNIFE BIRLA
                           TATA AIG
Characteristics of Insurance sector as oligopoly:

1. Presence of few sellers: After liberalization the no. of sellers increased
from 1 to 13 as on date, like LIC, ICICI Prudential, HDFC
Standard, Birla Sun life, Om Kotak, SBI Life, ING Vysya, and MAX
New York Life etc.

2. Regulator:      IRDA (Insurance Regulatory Development Authority)
regulates the Insurance industry. License to the new comer is granted by it
only. All products, premiums, Tariffs require its approval.

3. Price Giver: Price of the policy i.e. premium is calculated by the
actuaries of the respective companies depending upon the nature of risks
covered, coverage of the policy and many other probability calculations. But
premium as well as the product needs to be approved by IRDA.

4. Entry or Exit Barrier: There is no free entry into this sector as already
outlined New entrants has to satisfy certain condition before entering
into this industry. Exit is even tougher since all the contracts are long
term so there are very strict regulations for exit from the industry by IRDA.

5. Product Differentiation: There are no homogenous products. There are
wide varieties of products available in the market. Each seller can introduce
any new policy depending on the efficiency of its product development team
within the broad guidelines of IRDA.

Political/ Legal Influences which have an impact on financial services
and consumer confidence include the following:

   The Insurance Regulatory and Development Authority:
Reforms in the Insurance sector were initiated with the passage of the
IRDA Bill in Parliament in December 1999. The IRDA since its
incorporation as a statutory body in April 2000 has fastidiously stuck to
its schedule of framing regulations and registering the private sector
insurance companies.
   Privatization of Insurance sector:
The introduction of private players in the industry has added to the
colours in the dull industry. The initiatives taken by the private players
are very competitive and have given immense competition to the on time
monopoly of the market LIC. Since the advent of the private players in the
market the industry has seen new and innovative steps taken by the
players   in   this sector. The new players have improved the service
quality of the insurance.The market share was distributed among the
private players.
   FDI in insurance sector:
Then, the issue came of amount of FDI to be allowed by a foreign player in
the insurance sector. The government had allowed the private players to
have foreign equity up to just 26 %.

   Indian economy – growth projections:
By 2025 the Indian economy is projected to be about 60 per cent the size of
the US economy. The transformation into a tri-polar economy will be
complete by 2035, with the Indian economy only a little smaller than the US
economy but larger than that of Western Europe. By 2035, India is likely to
be a larger growth driver than the six largest countries in the EU, though its
impact will be a little over half that of the US.

   Growing premiums:
Growing premiums are obviously attracting the new players. During the
financial 2004 05 alone, the life insurance premium grew by 35% to
over $ 13.5 billion in 2004-05. According to Mumbai based research
agency Crystalise Research, over the next five years, this figure to zoom
past the US $ 33.5 billion mark.

  Per capita GDP:
According to a study by Swiss Re, a leading global reinsurance
company once per capita GDP touches $10,000, life insurance premium
collection takes off. India„s per capita G D P is hovering around $ 3000
but is expected to go up steeply given the economic growth projections.

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

   Gender discrimination:
Gender based discrimination is rampant in any industry. In the insurance
sectore, different premium rates prevail for women and men.
One of the major influences on the premiums or prices charged by insurance
companies is on the basis of the demographics. Premium rates largely
depend on the age, sex of the individual insured. All the insurance policies
have a different rate of premiums to be paid.
   Improving standard of living:
If, by 2030 AD 50% Indian population reaches the level of middle
class, ndian market for Insurance Sector will reach the level of 600
million from conservatively estimated present level of 100 million

   Consumer attitude and preferences:
Insurance was always viewed by people as a safety net. The insurance
industry is primarily based on the fact that people live their family their
belongings and hence want them to be with them forever. This is the
basic attitude of people towards insurance.

   Other factors:

This brought about greater efficiency and quick service delivery.
Internet usage has drastically improved in the last decade. There was
a tremendous increase in the use of technology by L IC during the late
1990„s. The company launched its website in the m id
1990„s to offer basic services such as modifying policies
   Metropolitan Area Network (MAN) and Wide Area Network
LIC has commissioned a MAN connecting more than 75 branches in
Mumbai. These MAN centres were connected to each other by a
WAN network. This WAN was designed for distributed processing
without a central database – each division maintained a database of the
   Electronic Clearance Service (ECS):
Almost all the big organizations today provide the ECS facility to its
customers. A policy holder having an account in any bank which is
a member of the local clearing house can opt for ECS debit to pay
   Call Centres and SMS services:
Al the insurance companies have their own call centres which cater
to the phone based queries of the policyholders. This service is 24x7
and they have the Interactive Voice Response (IVR) systems.


The Insurers have to face the redressal of the consumers, grievances
for deficiency in products and services. The Insurance Regulatory
Development Authority (IRDA), the regulatory body has already appointed
Ombudsman for looking into the grievances of the policyholders. His
judgment will be binding on the insurers.

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

Insurance companies are getting savvy. Enhanced marketing thus is
crucial. Already, many companies have full operation capabilities over a
12-hour period. The opening up of the industry has defined new
frontiers of distribution of which consumer concern is an indispensable

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

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

Vast country
India is a vast country with more than 5, 76,000 villages having a
population of at least 500-600 per village. The companies could recognize
the fact that if it takes the whole zilla as one, it would consist of a
population morethan5000-10000. One zilla could give them          a good
amount of business. The company could have this opportunity and tap it
and reap revenues.
Trained manpower.
Since the sector has opened up, many new companies have already started
its operation and few are just about to begin. The government has also
introduced professional     courses like Bcom. (Banking and insurance),
identifying the potential growth in the insurance sector.


Lack of understanding.
Very soon the market will be flooded by a large number of products
by a fairly large number of insurers operating in the Indian market. Even
with limited range of products offered by LIC, there is chaos as far as
the consumers are concerned. Their confusion will further increase in the face
of a large number of products in the market. The existing level of awareness of
the consumers for insurance products is very low. This is because only
62% of the population of India is literate and only 10% are well educated.
Even the educated consumers are ignorant about the various products of
insurance. With new companies coming in the market, the products would
be comparatively more, which would again create confusion in the minds of the
customers so as to which policy best suits the needs.
                        Findings from the study
With an annual growth rate of 15-20% and the largest number of life
insurance policies in force, the potential of the Indian insurance industry is
huge. Total value of the Indian insurance market (2004-05) is estimated at
Rs.450 billion. According to government sources, the insurance and banking
services' contribution to the country's gross domestic product (GDP) is 7%
out of which the gross premium collection forms a significant part. Till
date, only 20% of the total insurable population of India is covered
under various life insurance schemes, the penetration rates of health and
other non-life insurances in India is also well below the international level.
These facts indicate the of immense growth potential of the insurance
sector.     The share of LIC for this period has further come down to 75
percent, while the private players have grabbed over 24 percent. There are
presently 12 general insurance companies with four public sector companies
and       eight   private insurers. According to estimates, private insurance
companies collectively        have    a 10%       share    of    the non-life

Thus it is clear, that insurance sector is booming and is one of the
most dynamically growing sectors of the Indian chapter. Growth potentials
are tremendous, and in era of cut-throat competition, the best marketer can
reach to dizzying heights. The life insurance industry in India grow by an
impressive 36%, with premium income from new business at Rs.253.43
billion during the fiscal year 2004-2005, braving stiff competition from
private insurers.
             Future of the Insurance Sector –
              A hypothesis based on the study.
Wage and salary employment in the insurance industry is projected to
increase 8 percent between 2002 and 2012, more slowly than the 16 percent
average for all industries combined. While demand for insurance is expected
to rise, downsizing, productivity increases due to new technology, and a
trend toward direct mail, telephone, and Internet sales will limit job growth.
Also, thousands of openings are expected to arise in this large industry to
replace workers who leave the many successful insurance com panies w ill
recognize the Internet„s potential as a powerful marketing tool. Not only
might this reduce costs for insurance companies, but it also could enable
many clients to turn to the Internet first to get information on their policies,
obtain quotes, or submit claims. As insurance companies begin to offer
more information and services on the Internet, some occupations, such as
insurance sales agent, could experience slower employment growth.

There could be a huge inflow of funds into the country. Given the industry's
huge requirement of start-up capital, the initial years after opening up are
bound to see a strong inflow of foreign capital. Sales agents working in
the property and casualty market, particularly in auto insurance, will be
most affected by increasing reliance on the Internet. Auto policies are
relatively straightforward and can be issued more easily without the
involvement of a live agent.
Insurance companies will continue to face increased competition from banks
and securities firms entering the insurance markets. As more of these firms
begin to sell insurance policies, increasing numbers of insurance sales
agents will be employed in them, rather than in insurance companies. In
order to stay competitive, insurance companies have begun to expand their
financial service offerings or to establish partnerships with banks or
brokerage firms.   Productivity   gains   caused   by   the greater use of
computer software will continue to limit the growth of certain jobs
within the insurance industry.

For example, the use of underwriting software that automatically analyzes
and rates insurance applications will limit the employment growth of
underwriters. Also, computers linked directly to the databases of insurance
carriers and other organizations have made communications easier
among sales agents, adjusters, and insurance carriers, so that all have
become much more productive.

Furthermore, efforts to contain costs have led to an increasing reliance
on customer service representatives to deal with the day-to-day processing
of policies and claims. In addition, the Internet has made insurance
investigators more productive by drastically reducing the amount of
time it takes to perform background checks, allowing investigators to
handle an increasing number of cases, but limiting their employment
Sales agents and adjusters still are needed to meet face-to-face with clients,
many of whom prefer to talk directly with an agent, especially
regarding complicated policies. Opportunities will be best for sales
agents who sell more than one type of insurance or financial service.
Adjusters will still be needed to inspect damage and interview witnesses,
and although the number of available jobs for actuaries will be limited due
to the small size of the occupation, employment opportunities should be
good    as   stringent qualifying     requirements     resulting   from     the
examination system limit the number of new entrants.

Insurers in India should also explore distribution through non-financial
organizations. For example, insurance       for consumer items       such   as
refrigerators can be offered at the point of sale. This piggybacks on an
existing distribution channel and increases the likelihood of insurance sales.
Alliances with manufacturers or retailers of consumer goods will be
possible. With increasing competition, they are wooing customers with
various incentives, of which insurance can be one.
                     Concluding summary.

Life Insurance in India has a long way to go in terms of percentage
of population covered by life insurance companies if we compare ourselves
to most of the developed and developing nations and in terms of
customer service. Some of the statistics that further gives evidence of the
immense scope of Life Insurance industry in India

 o    The global life insurance market stands at $1,521.2 billion while the
      non-life insurance market is placed at $922.4 billion.

 o   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.

 o    India takes 23rd position with US $9.933 billion annual premium
      collections and a meager 0.41% share.

 o   Out of one billion people in India, only 35 million people are
     covered by life insurance.

 o    Indian insurance market is set to touch $25 billion by 2010, on the
      assumption of a 7 % real annual growth in GDP.
Planning of various reforms in this industry are in the process like
privatization of pension funds, increase in the FDI in this sector, increasing
automation and better customer service. But the biggest barriers in the
growth of Life Insurance Industry is in terms of the attitude of people towards
life insurance and certain bad practices existing in the market as a result
of prolonged monopoly of public sector. Some People still think that it is
an investment product where we get low return or a simple tax saving
device u/s 88 or Sec10CCC.Awareness regarding the insurance is not merely
an investment but it covers your life risk as well; is required and new private
players have already started the job of enlightening people.

The problem of lack of knowledge of the product among the distributors
has already been solved by IRDA by making the 100 hrs training
compulsory for all the distributors. More and more stress should be
given on customer service and prompt payment of claim.

The 100 hours training at Tata-AIG proved to be the main source of
primary data. Also the guidance provided by Mr. Sidharth Saxena was
very beneficial in deriving conclusions.

I. Books

  o Service Marketing by:- Ravi Shankar
  o Insurance by:- M.J. Mathew
  o Life insurance IC-33.

II. Journals
  o ICFAI insurance industry vol. – III
  o 46 annual report of the LIC of India
  o Money outlook
  o Insurance chronicle

III. Websites

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