MBA THESIS ON [MARKET POTENTIAL OF TATA AIG LIFE INSURANCE IN GWALIOR] A report submitted in partial fulfillment of the requirements of THE MBA PROGRAM (The Class of 2010) SUBMITTED TO SUBMITTED BY DR. SANJAY SHRIVASTAVA AMIT KAPASIYA CAMPUS HEAD 8NBGR024 INC GWALIOR MBA (2008-10) MR. K.S. RATHOR FACULTY SUPERVISOR INC GWALIOR CERTIFICATE This is to certify that this Management Thesis Report Submitted in partial fulfillment of the requirement for the award of Master of Business Administration of ICFAI University is a bona fide record of original word done by Amit Kapasiya, Enrollment no 8NBGR024 Date: Signature of faculty Place: ICFAI National College DECLARATION We hereby declare that project work on final report was carried out by us under the guidance of Mr. K.S. Rathore (Faculty Supervisor) ICFAI National College Study project work is an original one and has not been submitted earlier either to this university or any other institution for fulfillment of the course. (Amit Kapasiya) ICFAI National College ACKNOWLEDGEMENT This project has greatly been a collaborative effort. I take this opportunity to thank all who have helped in the preparation and successful completion of this project work. I oblige by deep sense of gratitude to the management of Tata Aig Life Insurance ltd Gwalior for their kind consent given to me to undertake in the organization. I express my deep reverences and sincere thanks to Mr. M. S. Rathore, for his reference to get the project in Tata Aig Life Insurance Ltd. I express my deep reverences and sincere thanks to Mr. Mahendra Manager of Tata Aig Life Insurance In Gwalior branch for their advice and supervision of this project report and all other executives and the staff in Tata Aig Life Insurance Ltd who have participated and supported in this study sparing their most valuable time and also for reaching to me in the most positive way in giving me the required information. I express my sincere thanks and deep sense of gratitude to faculties and to the management of INC College, Gwalior for their kind cooperation and encouragement. Last but not least I would like to thank my friends for their support to complete my project report. (AMIT KAPASIYA) TABLE & CONTENT PREFACE EXECUTIVE SUMMARY CHAPTER 1 INTRODUCTION TO INSURANCE 1.1 INTRODUCTION CHAPTER 4 1.2 INTRODUCTION TO THE RESEARCH STUDY FUNCTION OF LIFE INSURANCE 1.3 4.1 LIFE INSURANCE OBJECTIVE OF THE PROJECT 1.4 4.2 ROLE OF INSURANCE DATA ANALYSING 1.5 4.3 IMPORTANT OF INSURANCE METHODOLOGY 1.6 4.4 INSURANCE CYCLE QUESTIONAIRE DESIGNING CHAPTER 2 4.5 LIMITATION OF INSURANCE INTRODUCTION TO INDIAN THE STUDY INDUSTRY 2.1 CHAPTER 5 INDIAN INSURANCE & BENIFIT RECOMMENDATIONINDUSTRY 2.2 5.1 BRIEF HISTORY OF INSURANCE SECTOR A RECOMMENDATION TO THE COMPANY 2.3 5.2 HOW BIG INSURANCE MARKET IS BENEFITS TO THE COMPANY AND US 2.4 CHAPTER 6 INDIAN SCENERIO CONCLUSION & REFRENCE CHAPTER 3 6.1 INTRODUCTION OF TATA AIG CONCLUSION 3.1 6.2 TATA GROUP REFERENCE 3.2 TATA GROUP IN INSURANCE QUESTIONAIRE 3.3 AIG 3.4 THE JOINT VENTURE 3.5 ABOUT THE TATA AIG 3.6 ORGANIZATION OF TATA AIG PREFACE The liberalization of the Indian insurance sector has been the subject of much heated debate for some years. The policy makers where in the catch 22 situation wherein for one they wanted competition, development and growth of this insurance sector which is extremely essential for channeling the investments in to the infrastructure sector. At the other end the policy makers had the fears that the insurance premium, which are substantial, would seep out of the country; and wanted to have a cautious approach of opening for foreign participation in the sector. As one of the rare occurrences the entire debate was put on the back burner and the IRDA saw the day of the light thanks to the maturing polity emerging consensus among factions of different political parties. Though some changes and some restrictive clauses as regards to the foreign participation were included the IRDA has opened the doors for the private entry into insurance. Whether the insurer is old or new, private or public, expanding the market will present multitude of challenges and opportunities. But the key issues, possible trends, opportunities and challenges that insurance sector will have still remains under the realms of the possibilities and speculation. What is the likely impact of opening up India’s insurance sector? he large scale of operations, public sector bureaucracies and cumbersome procedures hampers nationalized insurers. Therefore, potential private entrants expect to score in the areas of customer service, speed and flexibility. They point out that their entry will mean better products and choice for the consumer. The critics counter that the benefit will be slim, because new players will concentrate on affluent, urban customers as foreign banks did until recently. This seems to be a logical strategy. Start-up costs-such as those of setting up a conventional distribution network-are large and high-end niches offer better returns. However, the middle- market segment too has great potential. Since insurance is a volumes game. Therefore, private insurers would be best served by a middle-market approach, targeting customer segments that are currently untapped. EXECUTIVE SUMMARY This project has been a great learning experience for me; at the same time it gave me enough scope to implement my analytical ability. Tata Group is one of the India's largest and most respected business groups. Tata Group's name is synonymous with India's industrialization. Tata AIG Insurance Solutions is one of the leading insurance companies that provide both life insurance as well as general insurance. This pioneer company is a joint collaboration between the American International Group, Inc. (AIG) and Tata Group. They own the company in the ratio of 26:74. It is a leading financial institution that has carved a niche for itself all over the world. Tata AIG Insurance Company is having different insurance policies. At the end of the project people will be knowledgeable about various insurance organizations and different products taking into considerations hundred sample sizes in Gwalior city. Project is on the market potential study of Tata AIG Insurance Company in Gwalior city. To get to know a questionnaire has been prepared which contains open ended and close ended questions. Firstly pilot study has been done through hundred questionnaires. For collecting the data field survey method, personal interview technique has been used. Secondary data has been collected from the company. The data collected are represented into suitable tabular forms for drawing inferences. Quantitative techniques like averages, percentages, range, two-way tables, chi- square tests analysis has been applied as per the requirement. The level of preference, perception of the customers about the product and company were identified by means of a scoring scheme. For the representation of data various charts and graphs are used as per requirement. . CHAPTER 1 INTRODUCTION TO INSURANCE 1.1. INTRODUCTION "Insurance is a contract between two parties whereby one party called insurer undertakes in exchange for a fixed sum called premiums, to pay the other party called insured a fixed amount of money on the happening of a certain event." Insurance may be described as a social device to reduce or eliminate risk of life and property. Under the plan of insurance, a large number of people associate themselves by sharing risk, attached to individual. With the help of Insurance, large number of people exposed to a similar risk makes contributions to a common fund out of which the losses suffered by the unfortunate few, due to accidental events, are made good. Insurance is a tool by which fatalities of a small number are compensated out of funds collected from plenteous. Gradually as competition increased benefits given by industry to its customers increased by leaps and bounds. Insurance is a basic form of risk management which provides protection against possible loss to life or physical assets. Person who seeks protection against such loss is termed as insured, and company that promises to honor claim, in case such loss is actually incurred by insured, is termed as Insurer. In order to get insurance, insured is required to pay to insurance company a certain amount called premium. Premium is collected by insurance companies which acts as trustee to pool created through contributions made by persons seeking to protect themselves from common risk. Any loss to the insured in case of happening of an uncertain event is paid out of this pool. Insurance business is divided into four classes: • Life Insurance • Fire • Marine • Miscellaneous Insurance. • Insurance provides: • Protection to investor. • Accumulation of savings. • Channeling these savings into sectors needing huge long term investment. 1.2. FUNCTION OF INSURANCE: Provide protection: The primary function of insurance is to provide protection against future risk, accidents and uncertainty. Insurance cannot check the happening of the risk, but can certainly provide for the losses of risk. Insurance is actually a protection against economic loss, by sharing the risk with others. Collective bearing of risk: Insurance is an instrument to share the financial loss of few among many others. Insurance is a mean by which few losses are shared among larger number of people. All the insured contribute the premiums towards a fund and out of which the persons exposed to a particular risk is paid. Assessment of risk: Insurance determines the probable volume of risk by evaluating various factors that give rise to risk. Risk is the basis for determining the premium rate also. Provide certainty: Insurance is a device, which helps to change from uncertainty to certainty. Insurance is device whereby the uncertain risks may be made more certain. Small capital to cover larger risk: Insurance relieves the businessmen from security investments, by paying small amount of premium against larger risks and uncertainty. Contributes towards the development of industries: Insurance provides development opportunity to those larger industries having more risks in their setting up. Even the financial institutions may be prepared to give credit to sick industrial units which have insured their assets including plant and machinery. Means of savings and investment: Insurance serves as savings and investment, insurance is a compulsory way of savings and it restricts the unnecessary expenses by the insured's For the purpose of availing income- tax exemptions also, people invest in insurance. Source of earning foreign exchange: Insurance is an international business. The country can earn foreign exchange by way of issue of marine insurance policies and various other ways. Risk free trade: Insurance promotes exports insurance, which makes the foreign trade risk free with the help of different types of policies under marine insurance cover. 1.3. LIFE INSURANCE: Life insurance is a contract under which the insurer (Insurance Company) in Consideration of a premium paid undertakes to pay a fixed sum of money on The death of the insured or on the expiry of a specified period of time Whichever is earlier. In case of life insurance, the payment for life insurance policy is certain. The Event insured against is sure to happen only the time of its happening is not known. So life insurance is known as „Life Assurance‟. The subject matter of insurance is life of human being. Life insurance provides risk coverage to the life of a person. On death of the person insurance offers protection against loss of income and compensate the titleholders of the policy. 1.4. ROLES OF THE LIFE INSURANCE: Life insurance as an investment: - Insurance products yield more than any other investment instruments and it also provides added incentives or bonus offered by insurance companies. Life insurance as risk cover: - Insurance is all about risk cover and protection of life. Insurance provides a unique sense of security that no other form of invest can provide. Life insurance as tax planning: - Insurance serves as an excellent tax saving mechanism 1.5. IMPORTANCE OF THE LIFE INSURANCE: Protection against untimely death: - Life insurance provides protection to the dependents of the life insured and the family of the assured in case of his untimely death. The dependents or family members get a fixed sum of money in case of death of the assured. Saving for old age: - After retirement the earning capacity of a person reduces. Life insurance enables a person to enjoy peace of mind and a sense of security in his/her old age. Promotion of savings: - Life insurance encourages people to save money compulsorily. When life policy is taken, the assured is to pay premiums regularly to keep the policy in force and he cannot get back the premiums, only surrender value can be returned to him. In case of surrender of policy, the policyholder gets the surrendered value only after the expiry of duration of the policy. Initiates investments: - Life Insurance Corporation encourages and mobilizes the public savings and canalizes the same in various investments for the economic development of the country. Life insurance is an important tool for the mobilization and investment of small savings. Credit worthiness: - Life insurance policy can be used as a security to raise loans. It improves the credit worthiness of business. Social Security: - Life insurance is important for the society as a whole also. Life insurance enables a person to provide for education and marriage of children and for construction of house. It helps a person to make financial base for future. Tax Benefit: - Under the Income Tax Act, premium paid is allowed as a deduction from the total income under section 80C. 1.6. INSURANCE CYCLE: Policy Renewal/Change Options/Application:- The Insurance Cycle begins each year with the insurance offer. Actuarial documents are published annually by the Risk Management Agency (RMA). The actuarial documents list the plan of insurance, crop, type, variety, and practice that may be insured in a state and county, and show the amounts of insurance, available insurance options, levels of coverage, price elections, applicable premium rates, and subsidy amounts. The Special Provisions of Insurance list program calendar dates, and general and special statements which may further define, limit, or modify coverage. Sales Closing/Cancellation/Termination Dates:- Insurance applications must be completed and signed no later than the sales closing date specified in the crop actuarial documents. Applications signed after the crop sales closing date may be rejected by the insurance provider. Insurance coverage is continuous and can be cancelled by either the insurance provider or the policyholder for the following crop year by providing a written notice to the other party no later than the cancellation date specified in the crop policy. For a policyholder insured the previous crop year, any changes he or she wishes to make to the policy coverage must be made on or before the crop sales closing date. The policy will automatically renew for the subsequent crop year unless the policyholder cancels the policy in writing on or before the crop cancellation date. Insurance coverage may be terminated by the insurance provider for the following crop year for nonpayment of outstanding debt by providing a written notice to the policyholder no later than the termination date specified in the crop policy. The insurance provider may terminate coverage on a crop if no premium is earned for three consecutive years. Acceptance:- Upon receipt of a properly completed and timely submitted insurance application, the insurance provider will accept and process the application, unless the applicant is determined to be ineligible under the contract or Federal statute or regulation. The insurance provider will issue a summary of coverage and the appropriate policy documents to the applicant. After the application is accepted, the policyholder may not cancel the policy for the initial crop year. Insurance Attaches: - For annual crops, insurance attaches annually when planting begins on the insurance unit. The crop must be planted on or before the crop's published final planting date unless late or prevented planting provisions apply. If prevented planting provisions apply, and the crop cannot be timely planted due to the causes specified in the crop provisions, such acreage may be eligible for a prevented planting payment. Acreage Reports:- The policyholder must annually report for each insured crop in the county the number of insurable and uninsurable acres planted or prevented from being planted if prevented planting is available for the crop, the date the acreage was planted, share in the crop, the acreage location, farming practices used, and types or varieties planted to the insurance provider on or before the applicable acreage reporting date specified in the crop actuarial documents. Summary of Coverage:- The insurance provider will process a properly completed and timely filed acreage report, and issue to the policyholder a summary of coverage that specifies the insured crop, the insured acres and amount of insurance or guarantee for each insurance unit. The policyholder may make changes to the filed acreage report, if permitted by the insurance provider. Premium Billing:- The annual premium is earned and payable at the time insurance coverage begins. The insurance provider shall issue a premium billing based upon the information contained in the acreage report no earlier than the premium billing date specified in the crop actuarial documents. The premium billing will specify the amount of premium and any administrative fees that may be due. If the premium or administrative fees are not paid by the date specified in the actuarial documents or policy, the insurance provider may assess interest on the outstanding premium balance. Notice of Damage or Loss: - A written notice of damage or loss for each unit is to be filed by the policyholder within 72 hours of the policyholder's initial discovery of damage or loss but not later than 15 days after the calendar date for the end of the insurance period unless otherwise stated in the individual crop policy. The policyholder should refer to the individual crop provisions for additional requirements in the event of damage or loss. These notifications provide the opportunity for the insurance provider to inspect the crop and determine the extent of damage or potential production before the crop is harvested or otherwise disposed of. Inspection:- After the insurance provider receives the written notice of damage or loss, it will be processed and, if necessary, a loss adjuster will be sent to inspect the damaged crop and gather pertinent information concerning the damage. If the policyholder wishes to destroy or not harvest the crop,the loss adjuster will gather the appropriate information, conduct an appraisal to establish the crop's remaining value and complete any forms needed. If the crop has been harvested or will not be harvested by the end of the insurance period, and the policyholder wishes to file a claim for indemnity, the loss adjuster will gather the appropriate information and assist the policyholder in filing the claim for indemnity. It is the policyholder's responsibility to establish the time, location, cause, and amount of any loss. Indemnity Claim:- After the claim for indemnity is processed by the insurance provider, an indemnity check and a summary of indemnity payment will be issued showing any deductions to the amount of indemnity for outstanding premium, interest, or administrative fees. Contract Change Date:- Changes to the insurance program may be made by RMA from one year to the next. The insurance provider will notify the policyholder in writing of any changes to the policy, actuarial documents, or the Special Provisions of Insurance prior to the calendar date for contract changes specified in the crop policy. The policyholder will have the opportunity to review the changes and, if he/she desires, continue the insurance coverage for the following crop year, change the policy coverage, or cancel the insurance coverage. Any changes to the policy coverage that the policyholder makes must be made no later than the crop sales closing date. If the policyholder wishes to cancel the policy, a written notice must be submitted to the insurance provider on or before the crop cancellation date. CHAPTER 2 INTRODUCTION TO INDIAN INSURANCE INDUSTRY 2.1. INDIAN INSURANCE INDUSTRY The Insurance sector in India governed by Insurance Act, 1938, the Life Insurance Corporation Act, 1956 and General Insurance Business (Nationalization) Act, 1972, Insurance Regulatory and Development Authority (IRDA) Act, 1999 and other related Acts. With such a large population and the untapped market area of this population Insurance happens to be a very big opportunity in India. Today it stands as a business growing at the rate of 15-20 per cent annually. Together with banking services, it adds about 7 per cent to the country‟s GDP .In spite of all this growth the statistics of the penetration of the insurance in the country is very poor. Nearly 80% of Indian populations are without Life insurance cover and the Health insurance. This is an indicator that growth potential for the insurance sector is immense in India. It was due to this immense growth that the regulations were introduced in the insurance sector and in continuation “Malhotra Committee” was constituted by the government in 1993 to examine the various aspects of the industry. The key element of the reform process was Participation of overseas insurance companies with 26% capital. Creating a more efficient and competitive financial system suitable for the requirements of the economy was the main idea behind this reform. Since then the insurance industry has gone through many sea changes .The competition LIC started facing from these companies were threatening to the existence of LIC .since the liberalization of the industry the insurance industry has never looked back and today stand as the one of the most competitive and exploring industry in India. The entry of the private players and the increased use of the new distribution are in the limelight today. The use of new distribution techniques and the IT tools has increased the scope of the industry in the longer run. 2.2. A BRIEF HISTORY OF THE INSURANCE SECTOR: The business of life insurance in India in its existing form started in India in the year 1818 with the establishment of the Oriental Life Insurance Company in Calcutta. Some of the important milestones in the life insurance business in India are given in the following table. Years Important milestones in the Indian life insurance business 1912: The Indian Life Assurance Companies Act came into force for regulating the life insurance business. The Indian Insurance Companies Act was enacted for enabling the government to collect statistical information on both life and non-life insurance businesses. The earlier legislation consolidated the Insurance Act with the aim of safeguarding the interests of the insuring public. 245 Indian and foreign insurers and provident societies were taken over by the central government and they got nationalized. LIC was formed by an Act of Parliament, viz. LIC Act, 1956. It started off with a capital of Rs. 5 crore and that too from the Government of India. Table: 1 The General insurance business in India, on the other hand, can trace its roots to the Triton Insurance Company Ltd., the first general insurance company established in the year 1850 in Calcutta by the British. Some of the important milestones in the general insurance business in India are given in the following table . Ye Important milestones in the Indian general insurance business ars 1907: The Indian Mercantile Insurance Ltd. was set up which was the first company of its type to transact all general insurance business. 1957: General Insurance Council, an arm of the Insurance Association of India, framed a code of conduct for guaranteeing fair conduct and sound business patterns. 1968: The Insurance Act improved for regulating investments and set minimal solvency levels and the Tariff Advisory Committee was set up. 1972: The General Insurance Business (Nationalization) Act, 1972 nationalized the general insurance business in India. It was with effect from 1st January 1973. Table: 2 1996 setting up of (interim) Insurance Regulatory Authority (IRA) Recommendations of the IRA. 1997 Mukherjee Committee Report submitted but not made public 1997 The Government gives greater autonomy to LIC, GIC and its subsidiaries with regard to the restructuring of boards and flexibility in investment norms aimed at channeling funds to the infrastructure sector. 1998 The cabinet decides to allow 40% foreign equity in private insurance companies-26% to foreign companies and 14% to NRI‟s, OCB‟s and FII‟s . 1999 The Standing Committee headed by Murali Deora decides that foreign equity in private insurance should be limited to 26%. The IRA bill is renamed the Insurance Regulatory and Development Authority (IRDA) Bill. 1999 Cabinet clears IRDA Bill. 2000 President gives Assent to the IRDA Bill. 2.3. INDIAN INSURANCE MARKET (HISTORY): Insurance has a long history in India. Life Insurance in its current form was introduced in 1818 when Oriental Life Insurance Company began its operations in India. General Insurance was however a comparatively late entrant in 1850 when Triton Insurance company set up its base in Kolkata. History of Insurance in India can be broadly bifurcated into three eras: a) Pre Nationalization b) Nationalization and c) Post Nationalization. Life Insurance was the first to be nationalized in 1956. Life Insurance Corporation of India was formed by consolidating the operations of various insurance companies. General Insurance followed suit and was nationalized in 1973. General Insurance Corporation of India was set up as the controlling body with New India, United India, National and Oriental as its subsidiaries. The process of opening up the insurance sector was initiated against the background of Economic Reform process which commenced from 1991. For this purpose Malhotra Committee was formed during this year who submitted their report in 1994 and Insurance Regulatory Development Act (IRDA) was passed in 999. Resultantly Indian Insurance was opened for private companies and Private Insurance Company effectively started operations from 2001. 2.4. HOW BIG IS THE INSURANCE MARKET? The insurance sector was opened up for private participation four years ago. For years now, the private players are active in the liberalized environment. The insurance market have witnessed dynamic changes which includes presence of a fairly large number of insurers both life and non-life segment. Most of the private insurance companies have formed joint venture partnering well recognized foreign players across the globe. There are now 29 insurance companies operating in the Indian market – 14 private life insurers, nine private non-life insurers and six public sector companies. With many more joint ventures in the offing, the insurance industry in India today stands at a crossroads as competition intensifies and companies prepare survival strategies in a detariffed scenario. There is pressure from both within the country and outside on the Government to increase the foreign direct investment (FDI) limit from the current 26% to 49%, which would help JV partners to bring in funds for expansion. There are opportunities in the pensions sector where regulations are being framed. Less than 10 % of Indians above the age of 60 receive pensions. The IRDA has issued the first license for a standalone health company in the country as many more players wait to enter. The health insurance sector has tremendous growth potential, and as it matures and new players enter, product innovation and enhancement will increase. The deepening of the health database over time will also allow players to develop and price products for larger segments of society. Insurance is a Rs.400 billion business in India, and together with banking services adds about 7% to India's Gap. 2.5 INDIAN SCENERIO:- Indian economy is the 12th largest in the world, with a GDP of $1.25 trillion and 3rd largest in terms of purchasing power parity. With factors like a stable 8-9 per cent annual growth, rising foreign exchange reserves, a booming capital market and a rapidly expanding FDI inflows, it is on the hinge of an ever increasing growth curve. Indians have a tendency to invest in properties and gold followed by bank deposits. They selectively invest in shares also but the percentage is very small--4-5%. This in itself is an indicator that growth potential for the insurance sector is immense. It‟s a business growing at the rate of 15-20% per annum and presently is of the order of $47.9 billion. India is a vast market for life insurance that is directly proportional to the growth in premiums and an increase in life density. With the entry of private sector players backed by foreign expertise, Indian insurance market has become more vibrant.Competition in this market is increasing with company‟s continuous effort to lure the customers with new product offerings. However, the market share of private insurance companies remains very low -- in the 10-15% range. Even to this day, Life Insurance Corporation (LIC) of India dominates Indian insurance sector. The heavy hand of government still dominates the market, with price controls, limits on ownership, and other restraints. The upward growth trend started from 2000 was mainly due to economic policies adopted by the then Indian government. This year saw initiation of an era of economic liberalization and globalization in the Indian economy followed by several reforms and long-term policies that created a perfect roadmap for the success of Indian financial markets. Figure: 1 The general insurance industry grew by 16% in 2006-07 as private insurers continued their robust performance, while public sector players like New India Assurance and Oriental Insurance improved their show. Despite continuous fall in business of government-owned National Insurance, the 12 non-life insurers collected Rs 20,378 crore in first year premium in the last fiscal compared to Rs 17,531 crore collected in 2005-06, according to data compiled by regulator IRDA. New India Assurance collected Rs 4,762 crore in premium and continued to lead the non-life sector by cornering 23.36% of the market. National Insurance was at the second spot by collecting Rs 3,524 crore in premium, a decline of 7%, but had a market pie of 17.29%. Oriental Insurance mopped up Rs 3,518 crore in premium income after logging 16.6% growth in business to corner a market share of 17.26%. Another PSU insurer United India grew by a modest 6.8% to collect Rs 3,147 crore in premium and had 15.44% of the market. The eight private players expanded their business by 52% to collect Rs 5,427 crore in premium income and increased their combined market share to 26.6% from 20.2% a year ago. ICICI Lombard led the private players by logging 80% growth in premium at Rs 1,592crore, followed by Bajaj Allianz, which grew by 50% to collect Rs 1,287 crore in premium. ICICI Lombard had a market share of 7.81% and Bajaj Allianz had 6.31% of the market. CHAPTER 3 INTRODUCTION TO TATA AIG 3.1 TATA AIG INSURANCE COMPANY Tata Enterprises with 82 companies, spread over seven sectors and with an annual turnover exceeding US $ 8.8 billion, employs more than 262,000 people. Tata Group has shown over years that it is a value driven company and has pioneering contributions in various fields including insurance, aviation, iron and steel. In terms of capital market performance as many as 40 listed Tata companies account for nearly 5% of the total market capitalization of all listed companies. The Group has had a long association with India's insurance sector having been the largest insurance company in India prior to the nationalization of insurance. 3.2. TATA GROUP IN INSURANCE: Tata AIG General Insurance Company Ltd, and Tata AIG Life Insurance Company Ltd., (collectively "Tata AIG") are joint venture companies between the Tata group India's most trusted industrial house and American International Group, Inc. (AIG), the leading U. S. based international insurance and financial services organization. The Late Sir Dorab Tata, was the founder Chairman of New India Assurance Co. Ltd., a group company incorporated way back in 1919. Government of India took over the management of this company as a part of nationalization of general insurance companies in 1972. Not deterred by the move, Tata group have ventured into risk management services having tied up with AIG group, back in 1977, with the incorporation of Tata AIG Risk Management Services Pvt. Ltd. The Tata Group is one of India's largest and most respected business conglomerates, with revenues in 2006-07 of $28.8 billion (Rs129,994 crore), the equivalent of about 3.2 per cent of the country's GDP, and a market capitalization of $72.2 billion as on December 6, 2007. Tata companies together employ some 289,500 people. 3.3. AIG: American International Group, Inc. (AIG), is a major American insurance corporation based at the American International Building in New York City. The British headquarters are located on Fenchurch Street in London, continental Europe operations are based in La Defense, Paris, and its Asian HQ is in Hong Kong. According to the 2008 Forbes Global 2000 list, AIG was the 18th-largest company in the world. Company Background: AIG’s history dates back to 1919, when Cornelius Vander Starr established an insurance agency in Shanghai, China. Starr was the first Westerner in Shanghai to sell insurance to the Chinese. • In 1962, Starr gave management of the company's less than successful U.S. holdings to Maurice R. \"Hank\" Greenberg, who shifted the company's U.S. focus from personal insurance to high.1969. American International Group, Inc is the leading U.S. based international insurance and financial services organization and the largest underwriter of commercial and industrial insurance in the United States. Its member companies write a wide range of commercial and personal insurance products through a variety of distribution channels in over 130 countries and jurisdictions throughout the world. AIG's Life Insurance operations comprise of the most extensive worldwide network of any life insurer. AIG's global businesses also include financial services and asset management, including aircraft leasing, financial products, trading and market making, consumer finance, savings products. 3.4. THE JOINT VENTURE: Tata AIG Life Insurance Co. Ltd. is capitalized at Rs. 185 crores of which 74 per cent has been brought in by Tata Sons and the American partner brings in the balance 26 per cent. Mr. George Oommen has been named managing director of Tata AIG Life. Tata-AIG plans to provide broad array of life insurance plans to cover to both individuals and groups. The company headquartered in Mumbai, with branch operations in Delhi, Chennai, Hyderabad, Bangalore Calcutta, Pune and Chandigarh. 3.5. ABOUT TATA-AIG: Tata AIG Insurance Solutions is one of the leading insurance companies that provide both life insurance as well as general insurance. This pioneer company is a joint collaboration between the American International Group, Inc. (AIG) and Tata Group. They own the company in the ratio of 26:74. It is a leading financial institution that has carved a niche for itself all over the world. Tata AIG Insurance provides facilities to both corporate and individuals. Starting its operations on April 1, 2001, it seeks to serve different categories of people. It acquired its license for carrying out operations in India on February 12, 2001. Tata AIG Insurance Solutions is one of the most prestigious organizations in the business world. It employs thousands of employees and offers various opportunities to people to build a prospective career. As a leading name in the financial world, it identifies the potential and experience of the individual. This insurance company identifies the clients‟ needs and works accordingly. It stresses on innovative aspect and opening of new markets. It believes in new economy and latest Internet technology. Tata AIG Insurance offers a number of products for the General Insurance holders. General insurance products include: • Individual insurance • Small business insurance • Corporate insurance Tata AIG Insurance offers flexible life insurance to the individuals, business organization and other association. For the corporate, there are various insurance products like group pensions, employee benefits, work place solutions and credit life. For the individuals, Tata AIG Insurance offers various products for adults, children and for retirement planning. 3.6 ORGANIZATION STRUCTURE OF TATA AIG:- CHAPTER 4 INTRODUCTION OF THE RESEARCH STUDY 4.1. OBJECTIVE OF THE PROJECT:- Main objective of the project is to find out the market potentialility of Tata AIG in Gwalior city. Project is about to find out the competitors Tata AIG Life Insurance company. Nowadays all the insurance companies in India are trying to establish themselves in the competitive market. They are introducing innovative marketing strategies to survive in the market. Many other private companies are looking to enter in the Indian insurance market. To find out the market potentiality of Tata AIG in Gwalior city. • Main competitors of Tata AIG. • Which type of policies is preferable? • Most preferable plans in Gwalior city. • Which sector is most preferable public or private • Targeting the right and potential customers • Differentiating from other companies DATA ANALYSING a. Age wise classification: Age No Of Respondent 18 – 25 11 26 – 30 22 31 – 45 44 46 – to above 23 50 40 30 No Of respondent 20 10 0 18 – 26 – 31 – 46 – to 25 30 45 above year Interpretation: - This chart shows that 44 people belong to age group of 31-45. So we can say adult more prefer insurance. b) Gender wise classification: Gender No Of Respondent Male 66 Female 34 80 60 40 No of Respondent 20 0 Male Female Interpretation: - This chart shows gender by classification that 66% male and 34% female have respondent . a. Occupation Wise classification: Occupation No Of Respondent Serviceman 40 Businessman 25 Student 20 Housewive 15 A OCCUP TION seviceman Businessman STUDENT HOUSEWIVE 15% 45% 17% 23% Interpretation: - This charts depicts that 40% servicemen and25% business men are respondent in my report. b. Income wise classification: Income No of Members 40k – 70k 17 70k – 1 Lake 41 1 Lake to 3 Lakes 28 3 Lacks 14 INCOME 14% 17% 40k – 70k 70k – 1 Lake 28% e 1 Lak to 3 Lakes 3 Lacks 41% Interpretation: - 41% of people have tack insurance and is ranked number one by that percent of respondent. Que. 1 Are you Insured? INSURED N0 of respondent YES 72 NO 28 TOTAL 100 INSURED 80 70 60 50 40 30 A T x e s t l i 20 10 0 YES NO Series 1 72 28 Interpretation: - That The 72% Respondent Have Insured It’s Mean People Have Aware To The Insurance. Que. 2 Which kind of policies do you have? NO POLICIES N0 of Respondent PARCENTAGE 1 LIFE INSURANCE 18 25% 2 HEALTH 8 11% INSURANCE 3 GENERAL 10 14% INSURANCE 4 ALL OF THEM 36 50% 5 TOTAL 72 100% Interpretation: - It is clear from the chart that 50% people come to take all policies it’s mean customer have more aware to the all type of insurance. Que. 3 Are you aware all the plans and updates from company? PLANS AND UPDATES N0 of Respondent PARCENTAGE YES 48 67% NO 24 33% TOTAL 72 100% Interpretation: - It is clear from the chart that 48 people say yes and 24say no . It’s mean customer have more aware to the all plans and updates for the company. Que. 4 Are you satisfy of the plans these company? SATISFACTION N0 of Respondent PARCENTAGE YES 56 78% NO 16 22% TOTAL 72 100% Interpretation: - It is clear from the chart that 78% people say yes and 22% say no . It’s mean customer have more satisfy to the plans for the company. Que. 5 How do you come to know about these company product? NO SOURCE NO OF PARCENTAGE RESPONDENT 1 NEWS PAPER 14 19% 2 AGENT 32 45% 3 ADVERTISMENT 14 19% 4 MOUTH OF 12 17% SPREAD 5 TOTAL 72 100% 35 30 25 20 15 10 5 0 News paper Agent Advertisment Mouth of spread Series 1 14 32 14 12 Interpretation: - This chart shows that agent is the most communicational tool for insurance company. 4.3. METHODOLOGY: Research is totally based on primary data. Secondary data can be used only for the reference. Research has been done by primary data collection, and primary data has been collected by meeting with the people in Gwalior. Data collection has been done through by giving structured questioner. This study will be based on sampling. This is an exploratory type of research. The study was aimed at measuring the customer’s preference for life insurance companies and the comparison of various insurance policies of the various companies on basis of various parameters based on customer’s responses in Gwalior region only. The survey was done on hundred general residents of the selected region.Methods adopted for surveys 1. Field survey method 2. Personal interview technique 3. Secondary sources viz company database. The data collected are represented into suitable tabular forms for drawing inferences. Quantitative techniques like averages, percentages, range, two-way tables, chi- square tests analysis are applied as per the requirement.Thelevel of preference, perception of the customers about the product and company. 4.4. Questionnaire Designing: The project is on “Market Potential Study of Tata AIG in Gwalior city”. To know the market potentiality of Tata AIG a questionnaire has been prepared. The questionnaire is having both open ended and close ended questions. It is also having ranking, multiple choice and check list type of questions. First part of the questionnaire is the demographic part. Questionnaire has been prepared in such a way that we can understand insurance policies are dependable on the occupation of a person or income level of a person. Which type of investment do they prefer? For it cluster analysis will be used. Nowadays private players are giving a good rate of return rather than the public player. So in which sector (private or public) do they like to invest and what is the reason behind that? To get to know the reason Likert scale has been used. To get to know how much Tata AIG is preferable in Gwalior city a ranking scale has been used where name of different major Insurance Companies have been given and according to the ranking given by citizen we can get to know the potentiality of Tata AIG in Gwalior city. There is different type of insurance policies in the market. Which type of policies do they prefer can understand from the questionnaire. Which life insurance policies of Tata AIG are most preferable we can get from it. To know all of these cluster analysis will be used. Sample questionnaire has been attached with 4.5. LIMITATION OF THE STUDY: • Time limitation • Research has been done only in Gwalior. • Companies did not disclose their secrets data and strategies. • Possibility of Error in data collection. • Possibility of Error in analysis of data due to small sample size. • Respondents error • Limited resources CHAPTER 5 RECOMMENDATION AND BENEFIT 5.1. RECOMMENDATIONS TO THE COMPANY: Being the best product player in the private sector, but still survey TATA AIG needs to improvement regarding its premium charges and advertisement to its target customers. A) Premium charges Owing to its high premium charges (Tata AIG Apex Plan, Premium RS. 90000/-) customers perception about the company’s product has become that its only for the upper middle class people. Whereas TATA AIG do has some policy with low premium but the charges of allocation are too high. So we would like to suggest slowing down its premium charges to some extend by reducing administration charges and other charges. b) Advertisement: During survey we have found that due to lack of advertisements about the products and agents selling the products in which they get high commissions customers are somewhere mislead and they know about very few products though TATA AIG has wide range of variety of the products. So we would recommend TATA AIG to invest more in advertisement in form of TV commercials, pamphlets and hoardings. c) Wrong perception: AIG is on the edge of filing bankruptcy. So Tata AIG is also going to on the brink of filling bankruptcy. But insurance in India is a highly regulated industry. Any company that wants to set up an insurance business has to follow very stringent norms given by the Insurance Regulatory & Development Authority (IRDA). So company should take positive measure to remove this wrong perception from the people. d) Sample size: For this research study only hundred sample size has been taken. The result will be more appropriate if a large sample size is considered. 6.2. BENEFITS TO THE COMPANY AND US: During the survey time sales have been done. It is a win-win Situation for both company and me. The benefits of this summer internship program are discussed below. 1. Benefit to the company: a) This survey has been done in Gwalior region on comparison of TATAAIG‟s product and its competitor can give an idea of this position in the market. As TATA AIG leads in most of the parameters so it should continue to serve in the same manner. b) The survey also shows the customers perception about TATA AIG‟s life Insurance product with which it can improve its impression better than now. c) The recommendation has given in this report will help TATA AIG to position its product properly to the target customers d) Moreover the sales has been done during this internship have done a good business for the company. 2. Benefit to us: a) Doing internship in TATA AIG have given me immense experience in the insurance industry for these fourteen weeks. b) Interaction with the customers for survey and sales has developed our marketing skills. c) Working in the office premises has given exposure to corporate world and an experience in working in corporate pressure. CHAPTER 6 CONCLUSION AND REFERENCE 6.1 CONCLUSION Indian insurance sector is likely to register unprecedented growth of 200% and attain a size of Rs. 2000 billion ($51.2 billion) by 2009-10, in which a private sector insurance business will achieve a growth rate of 140% as a result of aggressive marketing technique being adopted by them against 35-40% growth rate of state owned insurance companies. The rural market offers tremendous growth opportunities for insurance companies and insurers should develop viable and cost-effective distribution channels; build consumer awareness and confidence. The state owned insurance companies such as LIC and GIC have limited number of policies to offer to their subscribers while in case of private insurance companies, their policy numbers are many more and the premium amount as well as the maturity period is much competitive as against those of government insurance companies. The private sector insurance players have started exploring the rural markets in which until recently, the state owned companies had the monopoly. Here it can be concluded that the summer internship program, done for partial fulfillment of the MBA course in ICFAI University, in TATA AIG Life Insurance Co. Ltd. has been completed successfully. Following are the achievements done during the summer internship from 24th February 2009 to 23rd May 2009. a) Survey done with interest of TATA AIG has been conducted successfully and results are discussed above. b) Sales done during the time have done great business to the company. c) The experience gained during the internship has sharpen my skills and given a corporate exposure. 6.2. RFERENCES For the references different books, journals, and newspapers have been used and different websites have been used. Name of websites: www.tata-aig.com/lifeinsurance, access on 8th April 2009 www.tata-aiggeneral.com, access on 8thApril 2009 www.tata-aig-life.com, access on 8thApril 2009 www.mouthshut.com/product-reviews/Tata_AIG_General_Insuranceaccess on 10th April 2009 www.irdaindia.org/duties/htmlaccess on 15 April 2009 www.mydigitalfc.com/tata-aig-eyes-10-growth-motor-insurance-556.htm, access on 16thApril 2009 www.economy watch.com/insurance-overviewaccess on 12 May 2009 www.managementparadise.com/29381-distribution-channels-tata-aig.html, access on 12 May 2009 www.andhra.net/27-Tata-AIG-General-60949.asp.htmaccess on 14th May 2009 www.marketresearch.com/product/disply.asp?productid=1475505access on 15thMay 2009 Name of book and journal: Insurance Industry (ICFAI Publication) Business Research Method (ICFAI publication) Tata AIG Life Insurance Company Ltd, India, CGAP Working Group on Micro insurance Good and Bad Practices, Case Study No 14, James Roth and Vijay Athreye-September 2005 Privatization of the Insurance Market in India: From the British Raj to Monopoly Raj to Swaraj, Tapen Sinha, CRIS Discussion Paper Series –2002.X Name of newspaper: Asia Economy Watch 21sr March 2008 Business Line 20th September 20008 The Hindu Editorial 23 rd, 24th, 26th March 2009 The Economic Times, 17th September 2008, 23rd March 2009 Business Standard 17 march 2009, 18th April 2009 The Financial Express 17thApril, 14th May 2009 QUESTIONNAIRE Market Potential study of Tata AIG in Gwalior City Dear Sir/Madam, We are conducting a survey on Market potential study of Tata AIG in Gwalior city by Insurance organizations. We hope for your kind coordination. Name: ……………………………………………………………………………………………… Age: ………………………… Sex: Male [ ] Female [ ] Name and address of the organization: ……………………………………………………………. ……………………………………………………………………………………..................................... ……………………………………………… Contact Number: ……………………………………… E-mail address: ……………………………………………………………………………………........... 1. Family Members: (Please tick) a)1-4 [ ] b) 4-8 [ ] c) 8-12 [ ] d) 12-16 [ ] e) 16> [ ] 2. Number of dependent family members: (Please Tick) a) 1-2 [ ] b) 2-4 [ ] c) 4-6 [ ] d) 6-8 [ ] e) More: ………………………… 3. Occupation: (Please Tick) a) Service [ ] b) Business [ ] c) Professional [ ] b) d) Any other: ………………………………………... 4. Annual Income: (Please Tick) a) 50000-100000 [ ] b) 100000-300000 [ ] c) 300000-500000 [ ] c) 500000-1000000 [ ] e) 1000000 [ ] 5. In which would you like to invest? (Please Tick) a) Fixed deposit [ ] b) Post office [ ] c) Mutual fund [ ] d) Share buying [ ] e) Insurance policy [ ] 6. Do you have any insurance policy? (Please Tick) a) Yes [ ] b) No [ ] 7. Which sector do you prefer? (Please Tick) a) Public Sector [ ] b) Private Players [ ] 8. Do you have any Insurance policy in the Following companies? (Please Tick) a) LIC [ ] b) Tata AIG [ ] c) Birla Sun life [ ] c) ICICI [ ] e) Max New York [ ] f) Any Other: ………… 9. Which type of policy do you prefer? (Please Tick) a) Life Insurance [ ] b) Vehicle Insurance [ ] c) Pension plan [ ] d) Medi claim [ ] e) Any Other: …………………… Que.10 How do you come to know about these company product? a. News paper b. Agent c. Advertisement d. Mouth of spread Que. 11 Are you satisfy of the plans these company? a. Yes b. No Any Comments: ………………………………………............………………………………................................…… …………………………………………………………………………….…………... ………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………… Thank you, for your kind co-operation. Signature: ………………………………….. Date: ………………………………………..