consumer satisfaction in tata AIG
Content
CHAPTER – I INTRODUCTION SUMMARY OF THE PROJECT The project entitled ―CONSUMER SATISFACTION WITH REFERENCE TO TATA-AIG - A STUDY IN VISHAKAPATNAM‖. Insurance means protection against financial loss which will happen in unexpected events such as fire, accident, illness, or death. Insurance divided into two types:
1. Life Insurance
2. General Insurance
Business of Life Insurance in India started in the year 1818 with the establishment of the Oriental Life Insurance Company in Calcutta. Insurance sector is commenced with the enhancement of the Insurance Regulatory and Development Authority Act 1999, which facilitated the entry of private insurance companies into the Indian Insurance market. Tata-AIG Life Insurance Company Private Limited entered the Private Life Insurance Industry in India in April 2001, and in pass of 6 years has established itself as a distinctive Life Insurance brand with an Innovate, attractive and customer friendly product portfolio and a professional advisor force. It also distributes products in close operation with the Tata network. Currently, it has over 10000, active advisors working from 46 branches in 30 cities across the country and over 1200 Employees. The company with a customer base of over 1, 65,000. This topic contains – what is insurance, what is the position of Tata-AIG, in what way Tata-AIG is differ from other private insurance players, what are the Tata-AIG products and what are its features, customer awareness about Tata-AIG, what is the market share of TataAIG, with compare to other private insurance players, how much percentage of customer have in Tata –AIG in present situation. It also includes study of-----
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The products offered by the top private insurance companies with compare to Tata-AIG. The need of the customers [protection, pension, investment, savings, tax effect, loan.] Acceptance of privatization of insurance companies without feel any insecurity.
All the above helps in differentiating the company through customers in terms of return, asset, services and satisfaction. It will help to the know the following:
Who is a close competitor, what products are they deal in, what features it has and how many customers really know the Tata-AIG Life Insurance Company. Primary data collection is with the help of survey through a questionnaire, by interacting with all individuals who have Insurance policies in different companies. Secondary data is collected through Web sites, News papers, Journals and Magazines etc….
The limitations of the study are there is possibility of collecting biased opinion from the customers and limited time period allocated for the survey is not sufficient to allocate the satisfaction levels of customers. Due to irrelevant sample and biased option the results derived may not be appropriate. The study done through only half of the questionnaire so it is not the represent of total concept.
Strategy To Recruit advisors collection of data regarding various fields like chartered accountants Pharma distributors, postal agents goldmercahants, retailer
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medical owners, cement and steel traders) those who are potential advisors of TATA AIG life insurance company. Make telecalling and take appointment their convenient time. Completions of telecalling go to their appointment places and explain the concept of financial advisor recruitment with the help of company flyers. Completion of concept explanation, give a company flyers with phone number.
Synopsis : After privatization of insurance companies, every insurance company entered into global market implementing various strategies to gain good market share. Every company is trying to outsmart others in fighting with changing business environment. And adaptability is the main thing followed by every insurance company. One insurance calibirize other competitor company it will put more efforts. Company to withstand in the competition, followed the strategies such as product differentiation, service quality, agent service satisfaction, maintaining good relationship with customers. Company withstood in the global market ready to anticipate challenges and immediately reacting to meet customers’ changing needs by establishing goals keeping customers needs and preferences in mind. . Value Addition to Self Through this project I had gained some exposure to real market conditions, gained some experience regarding company products and understood corporate culture. I am able to follow time management, stress management and developed communication skills and interpersonal relationship skills.
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Content and Scope of the Study
This project deals with a study of consumer begaviour in TATA-AIG LIFE INSURANCE COPMANY VISHAKAPATNAM. Under the esteemed guidance of C. JAGADISH, Branch Manager and Prof. G.SATYANARAYANA, Ph.D., Project Guide. The project started on Jan 17, 200, where our company guide provided details regarding the company and its products.
A service is any act of performance that one party can offer to another that is essentially intangible and does not result in the ownership of any thing .its production may or may be tied to a physical production, may or may not be tied to physical products.
The word insurance instills a sense of security in the minds of people .insurance is a part of financial system that takes care of the financial consequence of certain specific contingencies both incase of individuals and corporate bodies. Such contingencies are called risk and they cause losses when they take place .insurance neither prevents risk nor alters the probability of its occurrence. But reduces the extant of financial loses by transferring risk from one individual to a group.
Economic activity and growth are greatly facilated by the existence of a financial system. Developing in terms of efficiency of the market in mobilizing the savings and allocating them among competing user. Economy needs institutions that impartially enforce property rights and contracts. Economic growth depends on the existence of well functioning financial market. It is essential that the financial infrastructure is developed sufficiently so that the market operation is efficient
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Need for the Study: To know the Awareness levels of existing and new customers To analyses the customer satisfaction levels of customers of TATA-AIG LIFE INSURANCE COMPANY. To know the whether the customers are satisfied with the company services are not Objectives of the study To study customers awareness level regarding products of TATA-AIG. To find out changing needs and preferences of the customers of TATA_AIG To find out how the company is maintaining close relationship with the customers To study how the customers are benefiting out of the insurance products. To find out insurance agent service levels
Methodology TYPE AND SOURCES OF DATA. Proposed method of approach towards this project to collect primary data and secondary data on customer awareness and general information about life insurance companies in India. PRIMARY DATA: Primary data is the original data collection by market survey and Telecalling, through which data is collected from the questionnaires. QUESTIONNAIRE: The questionnaire was prepared on the basis of CUSTOMER BEGAVIOR.the questionnaire we have chosen both the open and
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close ended questions, which helps in collecting source information such as customer satisfaction and customer relationship management. MARKET SURVEY Conduct a market survey and telecalling the existing customer of the Tata AIG and take an opinion of the customer based on that questionnaire. SECONDARY DATA: For present project it has been collected data from journals and take little bit of opinions with official of the Tata Aig office. Sampling Technique; The random sampling technique was used in collecting data from 200 customers
Limitations of the study The respondent may not be aware of Tata Aig life insurance products .so response may not be fair. . The sampling technique like random sampling and satrified sampling adopted may not provide desire results. This survey restricted with in Andhra Pradesh boundaries only.(Existing customers of Tata AIG only.) . Some of the respondents are may hesitate to reveal the accurate information required for survey
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CHAPTER – II INDUSTRY PROFILE INSURANCE INDUSTRY : It is a plan in which individuals and organization who is concerned about potential risks will pay premiums to an insurance company, who in return, will reimburse them if there is loss. To generate profit, the insurer will invest the premiums he receives. Examples of the different types of insurance available are automobile, home, health and worker's compensation. Whereas in most cases the insured is paid for their loss, with life insurance a beneficiary is paid when the insured person passes away
policy: written contract or certificate of insurance; "you should have read the small print on your policy"
indemnity: protection against future loss The Buyer shall provide at its expense property damage insurance or ―all
risk‖ builder's risk insurance covering all of its property on the basis of full replacement cost value without depreciation which will name the Seller and any manufacturer of the Product(s) as additional insured with a waiver of subrogation against all insured parties there under Insurance, in law and economics, is a form of risk management primarily used to hedge against the risk of potential financial loss. Ideally, insurance is defined as the equitable transfer of the risk of a potential loss, from one entity to another, in exchange for a reasonable fee. ...
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Liberalisation of Insurance in India The eagerly awaited Insurance Regulatory and Development Authority (IRDA) Bill to open the insurance sector in India to private and foreign players, was passed by the Lok Sabha on December 2, 1999 and by the Rajya Sabha on December 7, 1999. The Bill seeks to grant statutory status to the interim Insurance Regulatory Authority and amend the 1938 Insurance Act, the 1956 Life Insurance Corporation Act and the 1972General Insurance Business (Nationalization) Act to end the public sector monopoly. The IRDA Bill incorporates the recommendations made by the parliamentary Standing Committee on Finance. “India is the fifth largest economy in the world and the country is expected to have 500million middle class consumers within next eight years. The demand for consumer and industrial product and services has been expanding rapidly and removal of some investment and trade barriers has given new momentum to this A
Brief history of Insurance Sector The business of life insurance in India in its existing form started in India in
the year1818 with the establishment of the Oriental Life Insurance Company in Calcutta. Some of the important milestones in the life insurance business in India are:
1912: The Indian Life Assurance Companies Act enacted as the first statute to regulate the life insurance business.
1928: The Indian Insurance Companies Act enacted to enable the government to collect Statistical information about both life and non-life insurance businesses.
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1938: Earlier legislation consolidated and amended to by the Insurance Act with the Objective of protecting the interests of the insuring public.
1956: 245 Indian and foreign insurers and provident fund societies taken over by the central government and nationalized. LIC formed by an Act of Parliament, viz. LIC Act,1956, with a capital contribution of Rs. 5 core from the Government of India. 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: Mercantile Insurance Ltd. set up, the first company to transact all Classes of general insurance business.
1957: General Insurance Council, a wing of the Insurance Association of India, frames a code of conduct for ensuring fair conduct and sound business practices.
1968: The Insurance Act amended to regulate investments and set minimum solvency margins and the Tariff Advisory Committee set up.
1972: The General Insurance Business (Nationalization) Act, 1972 nationalized the general insurance business in India with effect from 1st January 1973. 107 insurers amalgamated and grouped into four companies viz. the National
Insurance Company Ltd., the New India Assurance Company Ltd., the Oriental Insurance Company Ltd. and the United India Insurance Company. GIC incorporated as a company.
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PUBLIC AND PRIVATE PLAYERS IN INDIA LIFE INSURERS
Websites
Public Sector Life Insurance Corporation of India
www.licindia.com
Private Sector Allianz Bajaj Life Insurance Company Limited
www.allianzbajaj.co.in
Birla Sun-Life Insurance Company Limited
www.birlasunlife.com
HDFC Standard Life Insurance Co. Limited
www.hdfcinsurance.com
ICICI Prudential Life Insurance Co. Limited
www.iciciprulife.com
ING Vysya Life Insurance Company Limited
www.ingvysayalife.com
Max New York Life Insurance Co. Limited
www.maxnewyorklife.com
MetLife Insurance Company Limited
www.metlife.com
Om Kotak Mahindra Life Insurance Co. Ltd.
www.omkotakmahnidra.com
SBI Life Insurance Company Limited
www.sbilife.co.in
TATA AIG Life Insurance Company Limited
www.tata-aig.com
AMP Sanmar Assurance Company Limited
www.ampsanmar.com
Dabur CGU Life Insurance Co. Pvt. Limited
www.avivaindia.com
GENERAL INSURERS Public Sector National Insurance Company Limited
www.nationalinsuranceindia.co m
New India Assurance Company Limited
www.niacl.com
Oriental Insurance Company Limited
www.orientalinsurance.nic.in
United India Insurance Company Limited
www.uiic.co.in
Private Sector Bajaj Allianz General Insurance Co. Limited
www.bajajallianz.co.in
ICICI Lombard General Insurance Co. Ltd.
www.icicilombard.com
IFFCO-Tokio General Insurance Co. Ltd.
www.itgi.co.in
Reliance General Insurance Co. Limited
www.ril.com
Royal Sundaram Alliance Insurance Co. Ltd.
www.royalsun.com
TATA AIG General Insurance Co. Limited
www.tata-aig.com
Cholamandalam General Insurance Co. Ltd.
www.cholainsurance.com
Export Credit Guarantee Corporation
www.ecgcindia.com
HDFC Chubb General Insurance Co. Ltd. REINSURER General Insurance Corporation of India
www.gicindia.com
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INSURANCE COMPANIES IRDA has so far granted registration to 12 private life insurance companies and 9 general insurance companies. If the existing public sector insurance companies are included, there are currently 13 insurance companies in the life side and 13 companies operating in general insurance business. General Insurance Corporation has been approved as the "Indian reinsurer" for underwriting only reinsurance business. A particular of the life insurance companies and general insurance companies including their web address is given below: MARKET SHARE OF THE INSURANCE COMPANIES MARKET SHARE (%) 71.44 7.34 3.01 7.56 1.80 3.20 3.09 0.90 0.79 0.51 0.37 0.26 0.21
NAME OF THE PLAYER LIC ICICI PRUDENTIAL BIRLA SUN LIFE BAJA ALLIANZ SBI LIFE HDFC STANDARD TATA AIG MAX NEW YORK AVIVA OM KOTAK MAHINDRA ING VYASA AMP SANMAR METLIFE
Insurance is system by which the losses suffered by a few are spread over many, exposed to similar risks. Insurance is a protection against financial loss arising on the happening of an unexpected event. Insurance policy helps in not only mitigating risks but also provides a financia ushion against adverse financial burdens suffered. Insurance policies cover the risk of life as well as other assets
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and valuables such as home, automobiles, jewelry et al. On the basis of the risk they cover, insurance policies can be classified into two categories: 1. Life Insurance Policies 2 General Insurance Before insurance sector was opened to the private sector Life Insurance Corporation (LIC) was the only insurance company in India. After the opening up of Insurance sector in India there has been a glut of insurance companies in India. These companies have come up with innovative and flexible insurance policies to cater to varying needs of the individual. Opening up of the Insurance sector has also forced the Lic to tighten up its belt and deliver better service. All in all it has been a bonanza for the consumer. Major Life insurance Companies in India are: Aviva Life Insurance Bajaj Allianz Birla Sun Life Insurance HDFC Standard Life Insurance ICICI Prudential ING Vysya Kotak Mahindra LIC Max New York Life Insurance MetLife India Insurance Reliance Life Insurance SBI Life Insurance Shriram Life Insurance Tata AIG Life Insurance
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TYPES OF INSURANCE: Life Insurance Term Life Insurance: is life insurance for a set period of time. If the insured dies during this period, the beneficiary receives a lump sum of tax-free money. Term Insurance is ideal for young families with a limited budget where as much insurance as possible is required to secure the family's well being, or in business situations such as buy-sell agreements, for mortgage coverage, or to fulfill other temporary needs. Whole Life Insurance: provides permanent coverage with level premiums and a guaranteed death benefit. It is perfect for people who think long term and whish to have plan that is not subject to investment gains and losses. The policy also gains cash value over time, allowing for flexible cancellation options. Furthermore, though coverage is life-long, you do not have to pay premiums for life. You can purchase the insurance in a predefined number of payments: the shorter the payment period, the large the discount. Universal Life Insurance: is permanent insurance with the added feature of having a tax-sheltered investments portion built into the plan. Universal Life pays off precisely at the moment when significant costs and tax implications are triggered. This timing, along with the tax-sheltered savings feature, makes Universal Life Insurance a powerful financial tool in estate preservation, leveraging, buy-sell agreements, charitable giving, and pension maximization. The tax-sheltered status of its investments component can also allow it to help pay for itself. Disability Insurance provides an alternate income in case of injury or illness that leaves you unable to work for an extended period of time. It is ideal for anyone who earns an income and does not have disability insurance through their
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employer. Depending on your profession, it could provide income during times of inability to perform your "own occupation," even though other sources of income continue. More importantly, it can provide the family's income when you can't. Insurance: pays a lump sum of tax-free money 30 days after the diagnosis of a covered illness. It is like having your own private health care program: If you do not wish to wait in line for health care, you can seek professional services elsewhere. Insurance companies now cover up to 21 major illnesses, and you decide how to use the money (to pay down the mortgage, take a vacation, or provide family income). Long Term Care Insurance provides a daily benefit for in home or nursing home care. Ideal for those approaching retirement age, long term care insurance means peace of mind knowing that you will never be a burden to your loved ones. Long Term Care easily erodes one's life savings costing upwards of 40 to 60 thousand dollars a year, making this form of insurance a must for retirees. Health & Dental Insurance covers many common medical expenses that the Government Health Insurance Plan does not, such as dental work, prescription drugs, eyeglasses, private and semi-private hospital rooms. If you do not have an employer group health plan – and, therefore, are vulnerable to health care costs not covered by your Government Health Insurance Plan – supplemental health care coverage is important. Why to get a Life Insurance Policy? Planning for our own death or the death of a loved one is not something that many of us want to do. But having support in place when the unfortunate happens can help those left behind take care of arrangements and recover from the loss easier. A life insurance policy can be an important part of that support.
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Life Insurance basics A life insurance policy can help you:
Provide income to surviving family members so they can maintain their lifestyle.
Pay off the mortgage if an income earner were to die so the house is free and clear of debt.
Provide for a college education if there are dependent children in the household.
Pay for final expenses of a funeral or estate settlement costs.
Provide an emergency fund to handle an unexpected financial crisis.
Provide for settlement of personal debts.
Life Insurance in India Life is very fragile and death is a certainty. We cannot control the uncertainties of life. But, we can cover the risks surrounding us. Life insurance, simply put, is the cover for the risks that we run during our lives. It protects us from the contingencies that could affect us.
Life insurance is not for the person who passes away, it for those who survive. It is the responsibility of every bread earner to guard against the events that could affect the family in the unfortunate circumstance of his / her demise. Thus, having a life insurance policy is very vital. Before going for a life insurance policy it is imperative that you know about various types of life insurance policies. Major among them are: Endowment Policy
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Whole Life Policy Term Life Policy Money-back Policy Joint Life Policy Group Insurance Policy Loan Cover Term Assurance Policy Pension Plan or Annuities Unit Linked Insurance Plan
Life insurance sector grew by 41 per cent in 2005-06 due to better performance of country's largest life insurer, LIC, and private players like Bajaj Allianz and ICICI Prudential.
The 15 life insurance companies together collected Rs 35,898 crore in the fiscal ended March this year, compared to Rs 25,343 crore in the previous fiscal, according to data compiled by regulator IRDA. Life Insurance Corporation's premium income rose more than 28 per cent to Rs 25,645 crore after it sold 3.16 crore policies as against Rs 19,972 crore collected a year ago.
However, LIC's market share dipped by 6.63 per cent to 71.44 per cent from 78.07 per cent in the year ago period due to stiff competition and aggressive marketing of private life insurers. The 14 private players were able to steadily increase their market share from 21.93 per cent to 28.56 per cent in a year's time by collecting Rs 10,252 crore during the period under review.
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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 (US$10 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. The funds available with the state-owned Life Insurance Corporation (LIC) for investments are 8% of GDP.
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 year 1999 saw a revolution in the Indian insurance sector, as major structural changes took place with the ending of government monopoly and the passage of the Insurance Regulatory and Development Authority (IRDA) Bill, lifting all entry restrictions for private players and allowing foreign players to enter the market with some limits on direct foreign ownership. Though, the existing rule says that a foreign partner can hold 26% equity in an insurance company, a proposal to increase this limit to 49% is pending with the government. Since opening up of the insurance sector in 1999, foreign investments of Rs. 8.7 billion have poured into the Indian market and 21 private companies have been granted licenses.
Innovative products, smart marketing, and aggressive distribution have enabled fledgling private insurance companies to sign up Indian customers faster than anyone expected. Indians, who had always seen life insurance as a tax saving
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device, are now suddenly turning to the private sector and snapping up the new innovative products on offer.
The life insurance industry in India grew 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. RNCOS’s report, ―Indian Insurance Industry: New Avenues for Growth 2012‖, finds that the market share of the state behemoth, LIC, has clocked 21.87% growth in business at Rs.197.86 billion by selling 2.4 billion new policies in 2004-05. But this was still not enough to arrest the fall in its market share, as private players grew by 129% to mop up Rs. 55.57 billion in 2004-05 from Rs. 24.29 billion in 2003-04.
Though the total volume of LIC's business increased in the last fiscal year (2004-2005) compared to the previous one, its market share came down from 87.04 to 78.07%. The 14 private insurers increased their market share from about 13% to about 22% in a year's time. The figures for the first two months of the fiscal year 2005-06 also speak of the growing share of the private insurers. 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 insurance market.
Though the focus of this market research report is on the potential growth on the Indian Insurance Sector, it also talks about the market size, market segmentation, and key developments in the market after 1999. The report gives an instant overview of the Indian non-life insurance market, and covers fire, marine, and other non-life insurance. The data is supplied in both graphical and 18
tabular format for ease of interpretation and analysis. This report also provides company profiles of the major private insurance companies. GENERAL INSURANCE General Insurance provides much-needed protection against unforeseen events such as accidents, illness, fire, burglary et al. Unlike Life Insurance, General Insurance is not meant to offer returns but is a protection against contingencies. Almost everything that has a financial value in life and has a probability of getting lost, stolen or damaged can be covered through General Insurance policy. Property (both movable and immovable), vehicle, cash, household goods, health, dishonesty and also one's liability towards others can be covered under general insurance policy. Under certain Acts of Parliament, some types of insurance like Motor Insurance and Public Liability Insurance have been made compulsory. Major insurance policies that are covered under General Insurance are: HOMEINSURANCE HEALTH INSURANCE MOTOR INSURANCE TRAVEL INSURANCE
Today the Indian general insurance market is valued at Rs 14,000 crore. It is growing at a rate of 20 per cent and is expected to reach Rs 45,000 crore in about 10 years. Private players have already gained a 10 per cent share in three years. No mean achievement when compared to the growth rates of countries like South Korea and Thailand, where the private sector took 15 years to gain a 15 per
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cent share of the market. India has 14 private players in life insurance and 12 players in the general insurance sector. CURRENT SCENARIO OF THE INDUSTRY Composition of Household Financial Savings Currency Deposits Of which Deposits with non banking companies Shares and debentures Small savings (central govt .schemes) Life insurance Provident and pension funds
1991 10.6% 33.3% 2.2% 14.3% 13.2% 9.5% 16.9%
1996-97 8.6% 48.2% 16.4% 6.6% 7% 10.1% 19.1%
2005-06 8.5% 41.5% 1.6% 2.7% 14.3% 15.5% 14.3%
INSURANCE MARKET IN INDIA India with about 200 million middle class household shows a huge untapped potential for players in the insurance industry. Saturation of markets in many developed economies has made the Indian market even more attractive for global insurance majors. The insurance sector in India has come to a position of very high potential and competitiveness in the market.
Innovative products and aggressive distribution have become the say of the day. Indians, have always seen life insurance as a tax saving device, are now suddenly turning to the private sector that are providing them new products and variety for their choice. Life insurance industry is waiting for a big growth as many Indian and foreign companies are waiting in the line for the green signal to start their operations. The Indian consumer should be ready now because the market is going to give them an array of products, different in price, features and benefits. How the customer is going to make his choice will determine the future of the industry.
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CUSTOMER SERVICE Consumers remain the most important centre of the insurance sector. After the entry of the foreign players the industry is seeing a lot of competition and thus improvement of the customer service in the industry. Computerization of operations and updating of technology has become imperative in the current scenario. Foreign players are bringing in international best practices in service through use of latest technologies. The one time monopoly of the LIC and its agents are now going through a through revision and training programmes to catch up with the other private players. Though lot is being done for the increased customer service and adding technology to it but there is a long way to go and various customer surveys indicate that the standards are still below customer expectation levels. DISTRIBUTION CHANNELS Till date insurance agents still remain the main source through which insurance products are sold. The concept is very well established in the country like India but still the increasing use of other sources is imperative. It therefore makes sense to look at well balanced, alternative channels of distribution. LIC has already well established and have an extensive distribution channel and presence. New players may find it expensive and time consuming to bring up a distribution network to such standards. Therefore they are looking to the diverse areas of distribution channel to have an advantage. At present the distribution channels that are available in the market are: DIRECT SELLING Corporate Agents Group Selling Brokers and Cooperative Societies Bancassurance
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To make all these channels a success the companies have to be very alert and skillful to Know how to use these channels in a proper way. Banc assurance is on of the most upcoming channels of distribution and therefore is being discussed in details.
BANCASSURANCE
India has an extensive bank network established over the years. What Insurance companies have to do is to just take advantage of the customers' longstanding trust and relationships with banks. This is a mutually beneficial situation as banks can also expand their range of products on offer to customers, while the insurance company will also earn profits from the exposure. Another advantage is that banks, with their network in rural areas, help to fulfill rural and social obligations stipulated by the Insurance Regulatory and Development Authority (IRDA) recently. Insurance companies should see banc assurance as a tool for increasing their market penetration in India. It is also good for the one who sees banc assurance in terms of reduced price, high quality product and delivery at doorsteps. Everybody is a winner here. The creation of banc assurance operations has made an important impact on the financial services industry at large. This is though a new concept but it has gained a lot of importance in the industry at present and has a great future.
PRODUCT INNOVATION There has been a plethora of new and innovative products offered by the new players. Customers have tremendous choice from a large variety of products from pure term (risk) Insurance to unit-linked investment products. Customers are offered unbundled products with a variety of benefits as riders from which they can choose. More customers are buying products and services based on their true needs and not just traditional 22
money back policies, which is not considered very appropriate for long-term protection and savings. There is lots of saving and investment plans in the market. However, there are still some key new products yet to be introduced - e.g. health products.
RURAL MARKETING
Rural India seems to have an appetite for mobile phones, computers, and cars and to add to it we have insurance. In India with the private players having entered into the insurance industry, the expected explosion in job opportunities may not actually happen but for them the catchments area is the opportunities in the rural India. In India the insurance business can be said to be "a marathon, not a sprint". This is because of the nature of the business being long term. With merely two years of the industry being opened, not surprisingly, the new comers are making losses. The public sector companies, notably the LIC, have gained in strength, thanks to the deepening of the market consequent to the awareness created by the new companies. However this does not deterred the private sector, which knows know that the race is a marathon, not a sprint. However it seems that they if not anything, are only increasing their spending, though only out of the capital. Today, there are 18 insurance companies in India excluding the PSU’s, with 12 in the life insurance business and the rest in non-life .As insurance companies go more and more rural in search of business, there will be opportunities in the rural sector. Those who understand rural India better will be in demand. Already United India
The rural consumer is now exhibiting an increasing propensity for insurance products. A research conducted exhibited that the rural consumers are willing to dole out anything between Rs 3,500 and Rs 2,900 as premium each year. In the insurance the awareness level for life insurance is the highest in rural 23
India, but the consumers are also aware about motor, accidents and cattle insurance. In a study conducted by MART the results showed that nearly one third said that they had purchased some kind of insurance with the maximum penetration skewed in favor of life insurance. The study also pointed out the private companies have huge task to play in creating awareness and credibility among the rural populace. The perceived benefits of buying a life policy range from security of income bulk return in future, daughter's marriage, children's education and good return on savings, in that order, the study adds.
Regulatory and Development Authority (IRDA) have set stiff rural targets for insurance Companies. For the life sector, in the first year, 5 per cent of the total policies written Should come from the rural sector. This will go up to 15 per cent in five years. Similarly, for the non-life sector, two per cent of the total gross premium income should come from the rural sector going up to 5 per cent in five years, according to the regulation. All these Moves will make the investment the rural area a big start. IRDA ruling on `special discounts' — Insurance brokers, an unhappy lot IRDA’s latest ruling on the "special discount" given to insurance customers has been termed "Tughlaqian" by one broker. The allusion is to the flip-flop on the issue by IRDA, like Mohammad-bin-Tuglaq changed his Capital frequently. Four months ago, within a month of having issued licenses’, the IRDA came up with a notification saying that insurance companies could give either a `special discount' (of 5 per cent of the premium) to the customer, or (the 12.5 per cent) commission to the broker, but not both. This move sparked outrage among brokers. They argued that their business would be affected, as no customer would want to forgo the 5 per cent discount. Arguing that the ground rules of the game could not be changed within such a 24
short time of issuing the licenses, they managed to prevail upon the then IRDA Chairman, Mr. N. Rangachary, and got the order cancelled — on May 30. Now, the new Chairman, Mr. C.S. Rao, with a notification on July 16, has effectively cancelled the May 30 order and the brokers are back to square one. The Secretary of the Insurance Brokers Association deplored the decision and said it was a "death blow to fledgling insurance brokers business." He hoped that IRDA would reconsider the matter as over 80 brokers had obtained licenses at considerable cost and effort. Frequent changes in the law regulating the commissions would plunge the market into confusion and result in loss of confidence, he said. Some international brokers who had obtained licenses are also said to be reconsidering their decision to set up shop in India. Brokers point out that when the first ruling (saying `either a discount to the customer or a brokerage, but not both') was brought in, the IRDA argued that the idea was to force the brokers to provide value-added service, not just sell policies. The objective was that customers should find it worthwhile forgoing the discount and make use of the brokers. For example, if a broker with some deft risk management is able to help slash a company's premium expenditure from say, Rs 10 crores per year to Rs 8 crores, then the company would happily forgo the 5 per cent or Rs 50 lakhs discount, because by using the broker, it saves Rs 2 crores! Sound logic, but the ground realities are different, say brokers. There have been instances when the corporate customer took all the advice from the broker, then dumped him and went directly to the insurance company. Secondly, while the broker may be able to provide such an excellent, value-adding advice in the first year, it may be difficult for him to do that year after year. Mr. R. Thyagarajan, Chairman of the Shriram group, which owns of the broking firm Armour Consultants points out, that it is unrealistic to expect the nascent broking industry to provide such value-added services in the first few
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years of the industry's birth. The broking industry is a baby of 4-months and the community should allow some time for it to develop expertise. And till such time, it should be ensured that the brokers first survive. "We feel like orphans," says Mr. N. Raveendran, Director, Alegion Insurance Services Ltd, a Chennai-based broking firm. "The law is not helpful, the regulator is not helpful, the insurance companies do not want us, and the customers do not want us." Above all, brokers complain of the "air of uncertainty," given that the policies are frequently changed. . Indian Insurance Industry Forecast (2007-2009) The market research report ―Indian Insurance Industry Forecast (20072009)‖ gives an in-depth analysis of the present and future of the Indian Insurance Industry. The market research report looks in to the details as well as gives an overview of the Indian insurance market with focus on the performance of the key players. With the initiation of the deregulation in the Indian insurance market, the monopoly of big public sector companies in life insurance as well as general (non-life insurance) market has been broken. New private players have entered the market and with their innovative approaches and better use of distribution channels and technology, they are eating in to the shares of established public sector companies in Indian Insurance Market. Since the deregulations have been put in to place, the market share of LIC has come down to 71.4% in life insurance market while the private players have captured around 17% market in the general insurance segment. Having said that, public sector insurance companies such as LIC and New India Assurance are registered impressive double-digit growths, which reflects on the overall health of the Indian insurance sector.
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This report includes the key private players in the insurance market such as ICICI Prudential, Bajaj Allianz, Birla Sun life, ICICI Lombard and TATA AIG. It also includes the leading competitors in the life insurance and general insurance segments along with their market shares.
Wage and salary employment in the insurance industry is projected to grow about 10 percent between 2004 and 2014, compared to the 14 percent growth projected for wage and salary employment in all industries combined. While demand for insurance is expected to rise, corporate downsizing, productivity increases due to new technology, and increasing use of direct mail, telephone, and Internet sales will limit job growth. However, some job growth will result from the industry’s expansion into the broader financial services field, and employment in the medical service and health insurance areas is anticipated to grow. Also, thousands of openings are expected to arise in this large industry to replace workers who leave the industry, retire, or stop working for other reasons. Medical service and health insurance is the fastest growing sector of the insurance industry. In recent years, increasing health insurance premiums and relatively high unemployment have left some unable to afford health insurance, but over the long term, significant growth is expected. As the share of the elderly population rises, more people are expected to buy health insurance and long-termcare insurance, as well as annuities and other types of pension products sold by insurance sales agents. If legislation is passed to make health insurance affordable to more people, demand should increase further for this type of insurance. Population growth will stimulate demand for auto insurance and homeowners insurance. Population growth also will create demand for businesses to service the needs of more people, and these businesses will need insurance as well. Moreover, large liability awards are motivating growing numbers of individuals and businesses to purchase liability policies to protect against lawsuits brought by people claiming injury or damage from a product. 27
Many successful insurance companies will 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, employment in some occupations, such as insurance sales agent, could be adversely affected. 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. Also, auto premiums tend to cost more per year than do other types of policies, so people are more likely to shop around for the best price. The Internet makes it easier to compare rates among companies. 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
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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 and by allowing investigators to handle an increasing number of cases, thus limiting their employment growth. 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.
IMPACT OF BUDGET IN INSURANCE
The 2005-06 Budget has dampened the spirit of insurance companies. Hardly any changes have been made in the general insurance sector. The change in the tax structure may have some impact on the life insurers. With the removal of the Section 88 relief there is not much for the insurance players to cheer for.
FDI hike in Insurance Sector:
The Finance Minister commended on the growth in the insurance sector, there was no mention of the steps being taken for increasing FDI in insurance sector. There is a dire need to attract more foreign capital in the sector. However it seems that the Union Finance Ministry is looking at proposals to decline the FDI limit from the Insurance Act, when it is amended. This move would empower any
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future government to increase the FDI limit through an executive order without taking the issue to the Parliament. Removal of Sec 88 tax relief: With the removal of the Section 88 tax relief on life insurance products there would be a sever blow on the life insurance companies. Removal of tax relief will have an adverse impact on the flow of investments into life Continuation of Sec 10(10) (d): The continuations of this section create sever blow for the insurance players. Here by the life insurance companies for availing the optimum benefit under this section need to change their strategy. Till now, life insurers were selling life insurance products mostly on tax-benefit grounds. However, now they will have to sell products with an investment pitch.
The investment limit in pension plans is unaltered at Rs 10,000 so these plans may not enjoy the luxury of the expanded limit of Rs 1 lakh allowed for investments/expenditures that could be claimed as a deduction from income. This is likely to have an adverse impact on the overall growth of the sector. Pension plans are the only Investment Avenue where specific limits continue to apply.
BPO Industry in India- IT WILL HELP INSURANCE SECTOR BY WAY OF 1. Insurance Processing Our insurance processing services provide specialized solutions to the insurance sector and support critical business processes applicable to the industry right from new business acquisition to policy maintenance to claims processing.
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INSURANCE SECTOR BY 2012
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 (2005-06) is estimated at Rs. 450 billion (US$10 billion). According to government sources, the insurance and banking services' contribution to the country's gross domestic product (GDP) is 7.5% out of which the gross premium collection forms a significant part. The funds available with the state-owned Life Insurance Corporation (LIC) for investments are 8% of GDP. 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 year 1999 saw a revolution in the Indian insurance sector, as major structural changes took place with the ending of government monopoly and the passage of the Insurance Regulatory and Development Authority (IRDA) Bill, lifting all entry restrictions for private players and allowing foreign players to enter the market with some limits on direct foreign ownership.
Though, the existing rule says that a foreign partner can hold 26% equity in an insurance company, a proposal to increase this limit to 49% is pending with the government. Since opening up of the insurance sector in 1999, foreign investments of Rs. 8.7 billion have poured into the Indian market and 21 private companies have been granted licenses.
Innovative products, smart marketing, and aggressive distribution have enabled fledgling private insurance companies to sign up Indian customers faster than anyone expected. Indians, who had always seen life insurance as a tax saving 31
device, are now suddenly turning to the private sector and snapping up the new innovative products on offer.
The life insurance industry in India grew 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. This report "Indian Insurance Industry: New Avenues for Growth 2012", finds that the market share of the state behemoth, LIC, has clocked 21.87% growth in business at Rs.197.86 billion by selling 2.4 billion new policies in 2004-05. But this was still not enough to arrest the fall in its market share, as private players grew by 129% to mop up Rs. 55.57 billion in 2004-05 from Rs. 24.29 billion in 2003-04.
Though the total volume of LIC's business increased in the last fiscal year (2004-2005) compared to the previous one, its market share came down from 87.04 to 78.07%. The 14 private insurers increased their market share from about 13% to about 22% in a year's time. The figures for the first two months of the fiscal year 2005-06 also speak of the growing share of the private insurers. 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 insurance market.
Though the focus of this market research report is on the potential growth on the Indian Insurance Sector, it also talks about the market size, market segmentation, and key developments in the market after 1999. The report gives an instant overview of the Indian non-life insurance market, and covers fire, marine, and other non-life insurance. The data is supplied in both graphical and tabular
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format for ease of interpretation and analysis. This report also provides company profiles of the major private insurance companies.
Now with real competition coming in with most of the global insurance players setting footprints here, it is felt that the time for merger has come and to enjoy the benefits if the size. It is to be sated that size does matter in insurance business. All over the world’s mergers and acquisitions in the risk-underwriting sector is common. The benefits if the four insurance companies merge will be enormous. The merged entity will enjoy higher underwriting and risk retention capacity; increase in reinsurance premium, reduction in reinsurance outflow, healthy solvency margins, setting right the asset –liability mismatch and reduction in cost. The insurance market thus becomes a gambling place. Had the public sector companies made into a single entity, perhaps the total premium of the four public sector companies in the year 2003-04 would have gone up but 25 percent. But the public sector alone is forced to underwrite the loss making motor third party liability (TPL) insurance. The public insurance companies insured a loss of Rs 1943 crore on this portfolio on just one year (03-04). The cumulative loss under this portfolio is astronomical. The loss of profitable business in view of undeserved competition among the public sector companies is hampering the subsidization of social insurance including the motor TPL.
It is thus clear that it is good for the public sector companies to merge immediately when they are still strong, lest a merger becomes inevitable later after the independent public sector companies fail one after another. This does not bid well for the public sector, nor fort he insuring public and not for the economic development either. For a progress me require merger of strong public sector companies. Else it would render public sector companies weak and destroy them.
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CHAPTER – III COMPANY PROFILE Tata AIG Life Insurance Company Limited is a joint venture between Tata Group and American International Group, Inc. (AIG). Tata Group is one of the oldest and leading business groups of India. Tata 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. The Late Sir Dorab Tata was the founder Chairman of New India Assurance Co. Ltd., a group company incorporated way back in 1919.
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. AIG has one of the most extensive life insurance networks in the world.
Tata-AIG Life Insurance Company Ltd. "Tata AIG Life" offers a broad array of life insurance products to individuals, associations and businesses of all sizes, with a wide variety of additional coverage to ensure our customers can findinsuranceproducttomeettheirneeds.
Tata AIG is a joint venture of the Tata Group and American International Group, Inc. (AIG).
THE TATA GROUP
The Tata Group is one of India's best-known industrial groups with an estimated turnover of around US $14.25 billion (approximately 2.6% of India's
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GDP). With more than 220,000 employees across 91 major companies, it is also India's largest employer in the private sector. The Tata Group pioneered several firsts in Indian industry firsts, including: India's first private sector steel mill, first private sector power utility, first luxury hotel chain and first international airline, amongst others. Recently, the Tata Group's pioneering spirit has been showcased by companies such as Tata Consultancy Services (TCS), Asia's largest software and services company, and Tata Motors, the first car maker in a developing country to design and produce a car from the ground up.
The Tata Group stable of brands also includes many national and some internationally renowned product and service brands, including Tata Indica, Tata Indigo, Indigo Marina, Tata Safari, Tata Indicom, the Taj Group of Hotels (Luxury, Business and Leisure), indiOne, Tata Tea, Tetley, Tata Salt, Tata Steelium, Tata Shaktee, Tata Tiscon, By combining ethical values with business acumen, globalization with national interests and core businesses with emerging ones, the Tata Group aims to be the largest and most respected global brand from India whilst fulfilling its long-standing commitment to improving the quality of life of its stakeholders
AIG :
American International Group, Inc. is the world's leading international insurance and financial services organization, with operations in more than 130 countries and jurisdictions. AIG member companies serve commercial, institutional and individual customers through the most extensive worldwide property-casualty and life insurance networks of any insurer. In the United States, AIG companies are the largest underwriters of commercial and industrial insurance and AIG American General is a top-ranked insurer. AIG's global businesses also include retirement services, financial services, and asset in asset 35
management for the individual and institutional markets, with specialized investment management capabilities in equities, fixed income, alternative investments and real estate. AIG's common stock is listed in the New York Stock Exchange and ArcaEx, as well as the stock exchanges in London, Paris, Switzerland and Tokyo.
Management
Trevor Bull Managing Director TATA AIG LIFE INSURANCE COMPANY
Mr. Dalip Verma, Managing Director, Tata AIG General Insurance company. Mr. Trevor Bull joined Tata AIG Life as Managing Director in January 2006. Prior to this, Trevor was Senior Vice President and General Manager at American International Assurance in Korea. Trevor has over 28 years of experience in the life insurance industry and has spent considerable time working in Japan and Britain. His experience covers an array of skills at various authority levels including Director, Regional Executive, Senior Line Management and Project Management. Additionally, Trevor has acquired keen insights into Unit Linked, conventional life and health insurance/ reinsurance and all major products & distribution channels.
Tata AIG Life Insurance Company adopts a new brand identity Anticipation, innovation and infinity reflects "A new look at life" Tata AIG Life's new brand identity The new baseline represents 'A new look at life'
Anticipation of present and future requirements of the insured
Innovative and path breaking products that fulfils the anticipated needs of the insured 36
Opening the upper and lower boundaries of the Tata AIG logo represents
Infinite space for product innovation
Product development will not be confined to definite boundaries Launches a multimedia brand campaign to communicate the new identity.
India's premier private life insurance company, Tata AIG Life Insurance Company Limited today announced the launch of its new brand logo and corporate baseline - A new look at life - simultaneously with a new multimedia brand campaign. The act of opening the upper and lower borders of its logo aptly reinforces Tata AIG Life's corporate ethos and philosophy of being an innovator. The company will leverage its unique capability of anticipating the present and future needs of the insurable population of India and will look beyond the regular realm while designing its product offerings.
Announcing the new brand identity of Tata AIG Life Insurance Company Limited, its managing director, Ian J. Watts said, "It gives me great pleasure in announcing the new brand identity of Tata AIG Life Insurance Company - A new look at life. We stand committed to our customers and also the Indian population that even as Tata AIG Life is taking 'A new look at life', it will remain 'With you always' and our product suite will be designed taking into consideration our consumers present and future insurable and savings needs." "The opening-up of the upper and lower boundaries of our logo endorses our commitment that we will go beyond the usual boundaries to find solutions that meet the present and future insurance and savings needs of the Indian customers and will design products which are not hitherto available in India. Going forward,
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'Anticipation' and 'Innovation' will be integral parts of our corporate philosophy and ethos." Tata AIG Life Insurance Company combines the strength and integrity of the Tata Group with the international expertise and financial strength of the member companies of AIG Inc- the leading U.S. based international insurance and financial services organization. On the backing of this strong foundation and keeping in mind the long-term aspect of the insurance industry, Tata AIG Life commenced operations in India in April 1, 2001, with its base line of 'With you always' signifying Tata AIG Life would always be there to take care of the insurance and financial needsoftheir customers. Having established the same, the new corporate identity - A new look at life - is the next logical step forward to the endorsement of the fact that it is walking the talk of its commitment and will continue to offer path-breaking products to its customers. To support its new identity the company is launching a multimedia brand campaign across television, press, outdoor, cinema and the Internet. Over the past three years since the company commenced its operations in India, Tata AIG Life Insurance Company has designed its insurance, pension and superannuation products by anticipating the present and more importantly the future savings and insurance requirements of the insurable population of this country. Tata AIG Life has carved out a differentiated position in the Indian insurance market and is a leader in the insurance sector for introducing innovative insurance and pension products. These unique products have not been just the building blocks for the company but have redefined the way insurance, savings and pension needs are understood, keeping both the present and future needs of the insured in mind. 38
In the past Tata AIG Life has introduced several innovative products in India. Mahalife Gold - synonymous with the whole life market, and where it owns over half the market. Heath First - where Tata AIG Life was the first off the block with a unique health product, in fact the first from any life company. And Nirvana - which continues to be the only guaranteed pension product in the market today. The company has also launched unique juvenile endowment products and was the first life insurance company to introduce simplified products including Special Life.
Recently, Tata AIG Life also launched its ULIP - Invest Assure - which is a unique unit linked insurance plan, which has the option to invest in five funds plus the security of a life cover. TATA-AIG products: Tata AIG has a range of flexible insurance products to help you secure your children’s financial future. Our products include: AssurecreerBuilder This money-back policy provides financial assistance at key stages of your child’s life, from education to their first steps into a new career. Assure Educare This first of its kind juvenile endowment policy is geared toward funding your child’s education. You can choose between Educare 18 and Educare 21, depending on your child’s needs. Assure Money Saver This savings plan provides you with cash payments in the form of survival benefits at regular intervals to fund your child’s needs at critical milestones or
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support your financial obligations. You get the dual benefits of life insurance coverage plus the flexibility of periodic payments. Tata AIG Life Insurance Company Limited is a joint venture between Tata Group and American International Group, This exceptional policy ensures that you have a steady income and insurance coverage for life! Premiums are payable only for the first 12 years. You can even use this to create a steady stream of post retirement income. To learn more, MahaLifeGold This unique policy ensures that your child will have a steady income and insurance coverage for life! Premiums are payable only for the first 15 years. NirbhayLife Tata AIG Life has a whole new participating plan which will surprise you continually with its remarkable benefits. Premiums are payable only for the first 9 years, after which you will receive all your money and much more! STARKID An exceptional endowment policy that ensures you can afford to give your child the very best for his career & marriage. ADULTS: Assure Lifeline
You get the luxury of high coverage but at an affordable cost. You also get automatic renewals and the flexibility to choose the term of cover
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Assure Money Saver
This plan offers you cash payments at the end of every 3 years during the term of the policy. You also get the dual benefits of life insurance coverage plus the flexibility of periodic payments.
Assure Security & Growth
This amazing endowment policy enables you keep your money safe and have it grow. In the unfortunate event you die while under this cover, your dependants will get the sum assured. However, if you outlive the term, you still get the sum assured along with a whole range of bonuses
Assure Golden Years This endowment policy gives you safety AND returns. In case of death, your dependants get the sum assured otherwise your savings grow. If you live past the term you still get that sum assured along with a whole host of bonuses.
Health Protector The average cost for a major surgery or treatment in hospital is between three to five lakh. Health Protector is the first product of its kind in India that offers you protection in case ANYONE in your family has an accident or falls ill. Life plus
This plan lets you win no matter what happens. Get your premiums back if you outlive the term. Get sum assured in case of death by natural causes. Get DOUBLE the sum assured in case of death by accidental causes.
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MahaLife
This exceptional policy ensures that you have a steady income and insurance coverage for life! Premiums are payable only for the first 12 years. You can even use this to create a steady stream of post retirement income.
MahaLifeGold
This is the ideal planning vehicle for your retirement. It provides you a steady income and insurance coverage for life! Premiums are payable only for the first 15 years. You can even use this to cover future expenses of your children.
NirbhayLife
Tata AIG Life has a whole new participating plan which will surprise you continually with its remarkable benefits. Premiums are payable only for the first 9 years, after which you will receive all your money and much more! To
ShubhLife
This plan provides you 100% life insurance protection and high returns on your investment but the premiums you pay are among the lowest of any similar endowment policy
Health First
Quality healthcare is incredibly expensive. You need a policy that covers all contingencies including prolonged hospitalization, major surgery, critical illness, post hospitalization fees and even the unfortunate event of your death. 42
Invest Assure This highly flexible plan gives you full life cover AND high returns AND the flexibility of deciding the Length of your life cover term, the amount of Cover you receive & where the rest of your premium is invested For Retirement:
Keep your capital safe and growing with Assure Golden Years.
Provide a stable, lifetime income for you and your family with MahaLife Gold.
Give you the flexibility to choose when to retire and where to invest with Nirvana.
Guarantee additions to your sum assured with Nirvana Plus.
Most popular products in TATA-AIG: In 2004, the first year of its launch, Invest Assure accounted for 38 per cent of the total premiums issued. Maha Life made up 30 per cent of the total number of policies sold so far this year. Health First and Health Protector were unique since these were the first healthrelated products introduced by a private life insurance company in India. These two (products) take care of the entire gamut from hospitalization to surgery. Nirvana Plus is a pension planning solution and MahaLife Gold has also been received very well. Tata AIG Life Insurance - winner of customer satisfaction A recent survey conducted by the Voluntary Organization in Interest of Consumer Education (VOICE) revealed Tata AIG Life Insurance Company (Tata AIG Life) as the clear winner in terms of customer satisfaction in the life
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insurance category. This is India's first-ever customer satisfaction study for the insurance sector. The survey also revealed that Tata AIG Life had a high recall as a reputed brand name. The ability to provide innovative and customer-focused service such as allowing the maximum grace period for premium payment has not only further distinguished Tata AIG Life from other life insurance companies but also appealed to consumers. Commenting on the survey results, Trevor Bull, managing director, Tata AIG Life Insurance Company, said, "The quest of the company has always been to be the best at what we do rather than adopting a simplistic market share at all costs approach. Achieving this VOICE recognition required huge effort from Tata AIG Life team; however retaining the number one position will be tougher. Being ranked the best in the life insurance category by an independent consumer group is an encouraging and fitting manifestation of our successful completion of five years of service in the insurance industry. We look forward to the challenges that lie ahead and are confident of maintaining and improving further our current standards of service and efficiency." The survey, which was conducted across eight cities and covered around 1,250 life insurance customers, evaluated the different life insurance companies on the parameters of tangibility, problem solving ability, reliability, responsiveness, assurance and empathy. The objective of the survey was to understand and measure overall customer satisfaction within the insurance sector. The Voluntary Organization in Interest of Consumer Education (VOICE) is a voluntary action group, whose objective is to protect and further the interests of the consumer.
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Tata AIG eyes 90% rise in premium income (Business Standard — June 6, 2006) Tata AIG Life Insurance Company Ltd is expecting an 85-90 per cent growth in its premium incoming 2006-07.
"We will be looking at an 85-90 per cent increase in total premium income. Increase in the first year premium income (FPI) is expected to be around 70 per cent this year," said Joydeep Roy, director, alternate channels/chief distribution officer, Tata AIG
Life Insurance. The company had targeted 100 per cent
increase in premium income to more than Rs 800 crorein 2005-06. During the first eight months of 2005-06, it recorded a 102 per cent year-on-year growth in total premium income at Rs 678 crore whereas FPI grew by 79 per cent at Rs351crores. The company was all set to launch around six products during the current financial year.
"Two products are likely to be unit linked insurance product (ULIP), two would be rural products and remaining two would be accident health product or rider. We have already applied to the Insurance Regulatory and Development Authority (IrDA)
fort heir approval. The company would shortly apply to the
IrDA for approval for another couple of products, he noted. Meanwhile, the company is very comfortable with its exposure in capital market. "IRDA has strong rules about investments in capital market. Currently, we are very comfortable with our investments in the capital market. The company had firmed up significant network expansion plans. The company would be opening 2025newofficesduring2006-07.
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"Currently, we have 85 offices in cities. We will be adding 20-25 new offices at strategic locations to cater to a large customer base. Among the states to get new offices will be Madhya Pradesh, Rajasthan, TamilNadu. Tata AIG Life will also be doubling its 'mobile vans' for reaching to Remote customers.
"The company has experienced tremendous response with its mobile vans that are being used for selling products as well as collecting premiums. We are planning to double the number of vans to eight vans during the year," added Roy.
Currently, 35-40 per cent of the company's business comes from banc assurance, 45 per cent form agencies and remaining from other channels including corporate agents.
Tata-AIG simplifies claims processing
Tata AIG Life Insurance has simplified the claims processing system for policyholders. The company's staff is visiting major hospitals and advising people on how to expedite claims. Tata AIG's customers can also call the 24-hour toll-free help line and get immediate assistance and advice on the claims process. A special 24-hour help line has also been set up. Mr. Sunil Mehta, Country Head and Chief Executive, American International Group (AIG), said Tata AIG had activated the Claims Catastrophe Management Plan (CCMP) that was envisaged to meet claims under such calamities.
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Tata AIG Life Insurance appoints Vivek Sood as CFO Tata group company, Tata AIG Life Insurance Company Limited (Tata AIG Life), has announced the appointment of Vivek Sood as the Chief Financial Officer (CFO) of the company. Prior to this appointment, Sood was the Vice-President, Finance, at Hutchison Essar for the southern region, a release issued here today stated. Sood will provide guidance to the financial team at Tata AIG Life in managing and taking financial decisions, as also responsible for formulating and managing the financial strategy of the company. Service tax effects on policy TATA –AIG life insurance start charging service tax from the policy holders as renewal premium due paid or after June 5th 2006. Service tax paid along with under section 80/80ccc and 80 current tax laws. Service tax rate depend upon type of policy.
Segmentation of customers
Tata AIG Life Insurance Company Ltd. "Tata AIG Life" offers a broad array of life insurance products.
To suit individuals
Employees
Associations
Businesses of all sizes, with a wide variety of additional coverage to ensure our customers can find an insurance product to meet their needs
Objectives Goal finders A unique that tool that helps us understand your goals and needs. Helps you understand your current financial position Ensure recommendation that fits your needs and priorities. 47
Market share of TATA AIG in the year of 2006 march the market share of the TATA AIG IS 3.09 COMPETITORS OF TATA-AIG
Main Competitors
Market share (%)
LIC
71.44
ICICI PRUDENTIAL
7.34
BIRLA SUN LIFE
3.01
BAJAJ ALLIANZ
7.56
HDFC STANDARD
2.86
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CHAPTER – IV ANALYSIS OF THE STUDY TABLE- 1 POLICY AND CATEGERY OF RESPONDENTS TYPE POLICY
OF EMPLOYEES
BUSINESS PEOPLE
OTHER PEOPLE
HEALTH
21
29
5
CHIDRENS EDUCATION
14
12
7
RETIREMENT PLANNING
26
36
14
OTHER POLICIES
11
15
12
TOTAL
72
92
49
36
POLICY AND CATEGERY OF PEOPLE Health 40 30 NO OF PEOPLE 20 10
26
21 14 11
29
36
12 15
Childrens education
57
1412
Retirement planning Other policies
0 Employees Business people
Others
DIFFRENT CATAGERIES OF PEOPLE
CHART – I Inferences: 92 members of the business people preferred all the types of the policies. So in the near future most of the business people are potential customers of the TATA AIG life insurance company. Second category of customers like employees (72) preferred both retirement planning and health policy because these type policies will give tax benefits and life long returns to the policy holder. 36 members of the respondents like rural people mostly preferred retirement planning they want some monthly returns.
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TABLE-2 AGE AND PREFERENCE OF POLICY RETIREMEN OTHER T PLANNING POLICIES
2O-30
CHILDREN S HEALTH EDUCATIO N 8 14
8
11
31-40
14
22
19
13
41-50
22
11
26
10
50 ABOVE
12
9
7
6
TOTAL
56
44
60
40
AGE
CHART - 2
AGE AND PREFERENCE OF POLICY
30
26
25
22
22 19
20
20-30 NO OF RESPONDENTS 15 10
14
12
8
14 11 9
8
13 11 10 7
6
5 0 Health
childerns education
Retirement planning
Other policies
DIFFRENT POLICIES
51
31-40 41-50 ABOVE 50
Inferences: o Above table shows that 56 members of the customers take health policy, in that 56 included all ages of the customers .41-50 years of age of the customers preferred health policy heavily .so these customers are high net worth value customers of the TATA –AIG o 44 members of the customers preferred children’s education policy .most of 31-40 years age of the customers preferred children’s education policy.beacuse they are just entered in to the life and they want to more investment and financial plans. o 60 members of the respondents are preferred Retirement planning, 41-50 Middle Ages of the people preferred heavily, this type of policy helpful in future needs and wants. o 31-40 ages of the respondents are take other policies like invest assure and Nirvana plus.
52
TABLE-3 MODE OF PREMIUM PAYMENT MODE OF PREMIUM PAYMENT MONTHLY QUATERLY HALFYEARLY YEARLY TOTAL
NO RESPONDENTS 43 63 42 52 200
OF
MODE OF PREMIUM PAYMENT
63
70 60
43
52 42
50 MONTHLY
40 NO OF RESPONDENTS 30
QUARTERLY HALFYEARLY
20
YEARLY
10 0 1 MODE OF PREMIUM
Inferences 43 respondents are satisfied with monthly mode of premium for the reason that they felt that easy to pay premium. 63 of the respondents are satisfied with their quarterly yearly premium payment 42 of the respondents are satisfied with their half yearly premium payment 42 of the respondents are satisfied with their yearly premium payment 53
TABLE-4 OTHER COMPANY POLICIES OF THE TATA-AIG CUSTOMERS DIFFERENT HEALTH COMPANIES
RETIREMENT CHILDRENS PLANNING EDUCATION
OTHERS
LIC
18
18
10
7
TATA AIG
21
22
9
5
14
15
12
12
12
3
66
46
27
13
BAJAJ ALLIANZ BIRLA SUNLIFE
9 61
TOTAL
OTHER COMPANY POLICIES OF TATA AIG CUSTOMERS 25 20 NO OF CUSTOMER 15 IN EACH 10 COMPANY 5
2122
1818 10 7
5 1315112 12 9 911 5 3
0 LIC
TATA AIG BAJAJ BIRLA ALLIANZ SUN LIFE DIFFRENT COMPANIES
54
HEALTH RETIREMENT PLANNING CHILDRENS EDUCATION OTHERS
Inferences 61 members of the TATA AIG HEALTH policy customers taken other company policies, most of the customers preferred LIC. 66 members of the TATA AIG RETIREMENT PLANNING customers contain other company policies. They are also mostly invested in LIC because they felt that it gives more security compare other insurance companies 46 members of the TATA AIG CHILDERNS EDUCATION customers have other company policies.
policy
27 members of the TATA AIG policies different policy customers contain other company
]
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TABLE -5
REASONS FOR SELECTING TATA-AIG LIFE INSURANCE REASONS
NO OF RESPONDENTS
Brand Name
98
Good Relationship Customers More Returns
with 58 44
TOTAL
200
CHART- 5
98 58
44 BRAND NAME
GET MORE RETURNS
GOOD RELATIONSHIP
120 100 80 60 40 20 0
BRAND NAME
NO OF RESPONDENTS
REASONS FOR SELECTING TATA-AIG
REASONS
56
GOOD RELATIONSHIP WITH CUSTOMRERS GET MORE RETURNS
Inferences 98 of the respondents are opting for TATA-AIG is to have good brand name. 58 of the respondents are said to TATA-AIG maintain good relationship with customer 44 of the respondents are said to be it gives good returns to their investment
57
TABLE-6 MODE OF RESPONSE ON PRODUCT DOUBTS RECEIVED
MODES OF RESPONSE
NO OF RESPONDENTS
PHONE
78
PERSONAL INTERACTION WEBSITES
104 18
TOTAL
200
CHART - 6
NO OF RESPONDENTS
PRODUCT DOUBTS AND WAY OF RESPONSE RECEIVED 120 100 80 60 40 20 0
78
104 PHONE
18 Phone
personal interaction
websites
PERSONAL INTERACTION WEBSITES
WAY OF RESPOSE
Inferences 104 numbers of existing customers are clarifying their doubts regarding policy and their mode of premium through personal interaction. 78 members of existing customers are clarify their doubts through phones because they living in far away from the office. 18 of the respondents are daily visit company websites and they will see what are the happened in the company policies and clarify their doubts. 58
TABLE-7 COMPANY SERVICE LEVELS DIFFERENT RANKS
NO OF RESPONDENTS
GOOD
102
AVERAGE
67
POOR
31
TOTAL
200
CHART - 7
COMPANY SERVICE LEVELS
120 100 80 NO OF 60 RESPONDENTS 40 20 0
102
67 31
Good Average Poor
GOOD AVERAGE POOR DIFFRENT RANK
Inferences In this survey 102 numbers of respondents are said to be company service levels are good like they provide on time training to newly joining of advisors. In this survey 67 respondents are said to be company service levels are average In this survey 31 respondents are said to be company service levels are poor 59
TABLE -8 ADVISORS EXPLANATION REGARDING POLICY NO OF RESPONDENTS EXPLANATION GOOD
69
SATISFIED
112
UN SATISFIED
21
TOTAL
200 CHART – 8
ADVISORS EXPLANATION REGARDING POLICY
120 100 80 NO OF 60 RESPONDENTS 40 20 0
112 69 21
Good Satisfied Un satisfied
GOOD SATISFIED UNSATISFIED DIFFRENT RANKS
Inferences 112 members of the of a TATA AIG existing customer are said to be they are satisfied with advisor explanation. Advisors have enough knowledge and skills regarding policy 69 members of TATA AIG of the existing customer are said Advisors explanations are good. 21 members of members of TATA AIG of the existing customer are said Advisors explanations are poor. Because they are not provided exact requirements of the customer
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TABLE-9 TOTAL CUSTOMER SATISFACTION LEVELS DIFFERENT RANKS
NO OF RESPONDENTS
GOOD
103
AVERAGE
69
POOR
28
TOTAL
200
CHART - 7
TOTAL CUSTOMER SATISFACTION LEVELS 200 NO OF RESPONDENTS
0 Series1
GOOD AVERA 103
69
POOR 28
DIFFRENT RANKS
Inferences In this survey 103 existing customers are satisfied regarding company service levels advisors explanation and different policies offered by the company. 69 members of the existing customers said to be company service levels advisors explanation are Average 28 members of the existing customers said to be company service levels advisors explanation are poor.
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CHAPTER – V FINDINGS AND SUGGESTIONS
FINDINGS : Most of the TATA AIG existing customers are aware of the all the products offered by the company With regard to occupation most of the respondents are business people Most of the respondents preferred both retirement planning and health protector policy because
health protector gives tax benefits .and
Retirement planning gives life long returns to the policy holders. To protect their income after retirement most of the respondents preferred to opt for the monthly income schemes. most of the respondents aware of the insurance and its benefits Most of the respondents felt that it is needed for the family. with regarding to arrangement of cash for medical expenses, most of the respondents prefer health protector Most of the respondents are satisfied with company service levels advisors explanation regarding policy
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As a whole total customer satisfaction is very in TATA AIG LIFE INSURANC COMPANY.
SUGGESITONS : Company should give more ads like hoardings , than only people should aware of the company
Before a policy is sold all the details of the policy should be clearly explained to the client so they should understand what the exact requirement of the customers is, it will helps in avoiding misunderstanding between customer and advisors.
Company should open online transaction facility so that the transaction need not take so
much of time
Company should train the advisors in the way of innovatively then all the potential customers are converted in to policyholders
It is cleared from the data collected the majority of the people believe in insurance therefore, the company may grab this opportunity in the near future to sell their products.
63
BIBLILOGRAPHY
Website visited: www .tata-aig.com www.tata-aiglife.com Www. the hindubusinessline www.irdaindia.org
List of books and other supplementary material referred to: Hindu’s market survey On Life Insurance by M .Anderson, Buist M.Anderson]
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ANNEXURE QUESTIONNAIRE OF THE PROJECT NAME: SEX
:
MALE
FEMALE.
OCCUPATION AGE A) 20-30 years
b) 31-40 years
c) 41-50 years. d) 50 above.
1) Which type of policy did you take? a) health insurance b) children education c) retirement planning d) Any other product. 2)
How much amount of policy did you take with respective to TATAAIG? a) 50000. b) 50000-100000 c) 100000 ABOVE.
3)
How much amount of premium do you pay? a) Below 10000 b) 10000 _15000 c 15000 above 4) Are you satisfied with the mode of premium payment? a) b) c) d)
Monthly quarterly half yearly yearly
Why please specify ………………………. 5) Do you have any other life insurance policy apart from TATA-AIG? If yes, with which insurance company. a) icici prudential b) Bajaj Allianz c) Birla sun life insurance d) Any other life insurance company. e) no 65
6) Why did you opt for TATA- AIG Life Insurance Company? a) brand name b) Good relationship with customers c) Get more returns. d) Any other reasons Please specify…………………….. 7) If you have any doubt regarding insurance service how do you receive the response? a) Phone b) Personal interaction c) Websites d) Any other 8) How do you define the company service levels? a) good b) average c) Poor. 9) Do you satisfy with the advisors explanation about our products? a) Good b) Satisfactory c) Unsatisfactory If no, please specify reasons for dissatisfaction. ………………………….. d) no 10) Do you get any additional benefits from our company? a) Incentives. b) Gifts/ gift vouchers. c) Conventions d) Any other benefits 11) How do you define the rank of the customer satisfaction levels? e) good f) average g) Poor.
66
1. Life Insurance
2. General Insurance
Business of Life Insurance in India started in the year 1818 with the establishment of the Oriental Life Insurance Company in Calcutta. Insurance sector is commenced with the enhancement of the Insurance Regulatory and Development Authority Act 1999, which facilitated the entry of private insurance companies into the Indian Insurance market. Tata-AIG Life Insurance Company Private Limited entered the Private Life Insurance Industry in India in April 2001, and in pass of 6 years has established itself as a distinctive Life Insurance brand with an Innovate, attractive and customer friendly product portfolio and a professional advisor force. It also distributes products in close operation with the Tata network. Currently, it has over 10000, active advisors working from 46 branches in 30 cities across the country and over 1200 Employees. The company with a customer base of over 1, 65,000. This topic contains – what is insurance, what is the position of Tata-AIG, in what way Tata-AIG is differ from other private insurance players, what are the Tata-AIG products and what are its features, customer awareness about Tata-AIG, what is the market share of TataAIG, with compare to other private insurance players, how much percentage of customer have in Tata –AIG in present situation. It also includes study of-----
1
The products offered by the top private insurance companies with compare to Tata-AIG. The need of the customers [protection, pension, investment, savings, tax effect, loan.] Acceptance of privatization of insurance companies without feel any insecurity.
All the above helps in differentiating the company through customers in terms of return, asset, services and satisfaction. It will help to the know the following:
Who is a close competitor, what products are they deal in, what features it has and how many customers really know the Tata-AIG Life Insurance Company. Primary data collection is with the help of survey through a questionnaire, by interacting with all individuals who have Insurance policies in different companies. Secondary data is collected through Web sites, News papers, Journals and Magazines etc….
The limitations of the study are there is possibility of collecting biased opinion from the customers and limited time period allocated for the survey is not sufficient to allocate the satisfaction levels of customers. Due to irrelevant sample and biased option the results derived may not be appropriate. The study done through only half of the questionnaire so it is not the represent of total concept.
Strategy To Recruit advisors collection of data regarding various fields like chartered accountants Pharma distributors, postal agents goldmercahants, retailer
2
medical owners, cement and steel traders) those who are potential advisors of TATA AIG life insurance company. Make telecalling and take appointment their convenient time. Completions of telecalling go to their appointment places and explain the concept of financial advisor recruitment with the help of company flyers. Completion of concept explanation, give a company flyers with phone number.
Synopsis : After privatization of insurance companies, every insurance company entered into global market implementing various strategies to gain good market share. Every company is trying to outsmart others in fighting with changing business environment. And adaptability is the main thing followed by every insurance company. One insurance calibirize other competitor company it will put more efforts. Company to withstand in the competition, followed the strategies such as product differentiation, service quality, agent service satisfaction, maintaining good relationship with customers. Company withstood in the global market ready to anticipate challenges and immediately reacting to meet customers’ changing needs by establishing goals keeping customers needs and preferences in mind. . Value Addition to Self Through this project I had gained some exposure to real market conditions, gained some experience regarding company products and understood corporate culture. I am able to follow time management, stress management and developed communication skills and interpersonal relationship skills.
3
Content and Scope of the Study
This project deals with a study of consumer begaviour in TATA-AIG LIFE INSURANCE COPMANY VISHAKAPATNAM. Under the esteemed guidance of C. JAGADISH, Branch Manager and Prof. G.SATYANARAYANA, Ph.D., Project Guide. The project started on Jan 17, 200, where our company guide provided details regarding the company and its products.
A service is any act of performance that one party can offer to another that is essentially intangible and does not result in the ownership of any thing .its production may or may be tied to a physical production, may or may not be tied to physical products.
The word insurance instills a sense of security in the minds of people .insurance is a part of financial system that takes care of the financial consequence of certain specific contingencies both incase of individuals and corporate bodies. Such contingencies are called risk and they cause losses when they take place .insurance neither prevents risk nor alters the probability of its occurrence. But reduces the extant of financial loses by transferring risk from one individual to a group.
Economic activity and growth are greatly facilated by the existence of a financial system. Developing in terms of efficiency of the market in mobilizing the savings and allocating them among competing user. Economy needs institutions that impartially enforce property rights and contracts. Economic growth depends on the existence of well functioning financial market. It is essential that the financial infrastructure is developed sufficiently so that the market operation is efficient
4
Need for the Study: To know the Awareness levels of existing and new customers To analyses the customer satisfaction levels of customers of TATA-AIG LIFE INSURANCE COMPANY. To know the whether the customers are satisfied with the company services are not Objectives of the study To study customers awareness level regarding products of TATA-AIG. To find out changing needs and preferences of the customers of TATA_AIG To find out how the company is maintaining close relationship with the customers To study how the customers are benefiting out of the insurance products. To find out insurance agent service levels
Methodology TYPE AND SOURCES OF DATA. Proposed method of approach towards this project to collect primary data and secondary data on customer awareness and general information about life insurance companies in India. PRIMARY DATA: Primary data is the original data collection by market survey and Telecalling, through which data is collected from the questionnaires. QUESTIONNAIRE: The questionnaire was prepared on the basis of CUSTOMER BEGAVIOR.the questionnaire we have chosen both the open and
5
close ended questions, which helps in collecting source information such as customer satisfaction and customer relationship management. MARKET SURVEY Conduct a market survey and telecalling the existing customer of the Tata AIG and take an opinion of the customer based on that questionnaire. SECONDARY DATA: For present project it has been collected data from journals and take little bit of opinions with official of the Tata Aig office. Sampling Technique; The random sampling technique was used in collecting data from 200 customers
Limitations of the study The respondent may not be aware of Tata Aig life insurance products .so response may not be fair. . The sampling technique like random sampling and satrified sampling adopted may not provide desire results. This survey restricted with in Andhra Pradesh boundaries only.(Existing customers of Tata AIG only.) . Some of the respondents are may hesitate to reveal the accurate information required for survey
6
CHAPTER – II INDUSTRY PROFILE INSURANCE INDUSTRY : It is a plan in which individuals and organization who is concerned about potential risks will pay premiums to an insurance company, who in return, will reimburse them if there is loss. To generate profit, the insurer will invest the premiums he receives. Examples of the different types of insurance available are automobile, home, health and worker's compensation. Whereas in most cases the insured is paid for their loss, with life insurance a beneficiary is paid when the insured person passes away
policy: written contract or certificate of insurance; "you should have read the small print on your policy"
indemnity: protection against future loss The Buyer shall provide at its expense property damage insurance or ―all
risk‖ builder's risk insurance covering all of its property on the basis of full replacement cost value without depreciation which will name the Seller and any manufacturer of the Product(s) as additional insured with a waiver of subrogation against all insured parties there under Insurance, in law and economics, is a form of risk management primarily used to hedge against the risk of potential financial loss. Ideally, insurance is defined as the equitable transfer of the risk of a potential loss, from one entity to another, in exchange for a reasonable fee. ...
7
Liberalisation of Insurance in India The eagerly awaited Insurance Regulatory and Development Authority (IRDA) Bill to open the insurance sector in India to private and foreign players, was passed by the Lok Sabha on December 2, 1999 and by the Rajya Sabha on December 7, 1999. The Bill seeks to grant statutory status to the interim Insurance Regulatory Authority and amend the 1938 Insurance Act, the 1956 Life Insurance Corporation Act and the 1972General Insurance Business (Nationalization) Act to end the public sector monopoly. The IRDA Bill incorporates the recommendations made by the parliamentary Standing Committee on Finance. “India is the fifth largest economy in the world and the country is expected to have 500million middle class consumers within next eight years. The demand for consumer and industrial product and services has been expanding rapidly and removal of some investment and trade barriers has given new momentum to this A
Brief history of Insurance Sector The business of life insurance in India in its existing form started in India in
the year1818 with the establishment of the Oriental Life Insurance Company in Calcutta. Some of the important milestones in the life insurance business in India are:
1912: The Indian Life Assurance Companies Act enacted as the first statute to regulate the life insurance business.
1928: The Indian Insurance Companies Act enacted to enable the government to collect Statistical information about both life and non-life insurance businesses.
8
1938: Earlier legislation consolidated and amended to by the Insurance Act with the Objective of protecting the interests of the insuring public.
1956: 245 Indian and foreign insurers and provident fund societies taken over by the central government and nationalized. LIC formed by an Act of Parliament, viz. LIC Act,1956, with a capital contribution of Rs. 5 core from the Government of India. 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: Mercantile Insurance Ltd. set up, the first company to transact all Classes of general insurance business.
1957: General Insurance Council, a wing of the Insurance Association of India, frames a code of conduct for ensuring fair conduct and sound business practices.
1968: The Insurance Act amended to regulate investments and set minimum solvency margins and the Tariff Advisory Committee set up.
1972: The General Insurance Business (Nationalization) Act, 1972 nationalized the general insurance business in India with effect from 1st January 1973. 107 insurers amalgamated and grouped into four companies viz. the National
Insurance Company Ltd., the New India Assurance Company Ltd., the Oriental Insurance Company Ltd. and the United India Insurance Company. GIC incorporated as a company.
9
PUBLIC AND PRIVATE PLAYERS IN INDIA LIFE INSURERS
Websites
Public Sector Life Insurance Corporation of India
www.licindia.com
Private Sector Allianz Bajaj Life Insurance Company Limited
www.allianzbajaj.co.in
Birla Sun-Life Insurance Company Limited
www.birlasunlife.com
HDFC Standard Life Insurance Co. Limited
www.hdfcinsurance.com
ICICI Prudential Life Insurance Co. Limited
www.iciciprulife.com
ING Vysya Life Insurance Company Limited
www.ingvysayalife.com
Max New York Life Insurance Co. Limited
www.maxnewyorklife.com
MetLife Insurance Company Limited
www.metlife.com
Om Kotak Mahindra Life Insurance Co. Ltd.
www.omkotakmahnidra.com
SBI Life Insurance Company Limited
www.sbilife.co.in
TATA AIG Life Insurance Company Limited
www.tata-aig.com
AMP Sanmar Assurance Company Limited
www.ampsanmar.com
Dabur CGU Life Insurance Co. Pvt. Limited
www.avivaindia.com
GENERAL INSURERS Public Sector National Insurance Company Limited
www.nationalinsuranceindia.co m
New India Assurance Company Limited
www.niacl.com
Oriental Insurance Company Limited
www.orientalinsurance.nic.in
United India Insurance Company Limited
www.uiic.co.in
Private Sector Bajaj Allianz General Insurance Co. Limited
www.bajajallianz.co.in
ICICI Lombard General Insurance Co. Ltd.
www.icicilombard.com
IFFCO-Tokio General Insurance Co. Ltd.
www.itgi.co.in
Reliance General Insurance Co. Limited
www.ril.com
Royal Sundaram Alliance Insurance Co. Ltd.
www.royalsun.com
TATA AIG General Insurance Co. Limited
www.tata-aig.com
Cholamandalam General Insurance Co. Ltd.
www.cholainsurance.com
Export Credit Guarantee Corporation
www.ecgcindia.com
HDFC Chubb General Insurance Co. Ltd. REINSURER General Insurance Corporation of India
www.gicindia.com
10
INSURANCE COMPANIES IRDA has so far granted registration to 12 private life insurance companies and 9 general insurance companies. If the existing public sector insurance companies are included, there are currently 13 insurance companies in the life side and 13 companies operating in general insurance business. General Insurance Corporation has been approved as the "Indian reinsurer" for underwriting only reinsurance business. A particular of the life insurance companies and general insurance companies including their web address is given below: MARKET SHARE OF THE INSURANCE COMPANIES MARKET SHARE (%) 71.44 7.34 3.01 7.56 1.80 3.20 3.09 0.90 0.79 0.51 0.37 0.26 0.21
NAME OF THE PLAYER LIC ICICI PRUDENTIAL BIRLA SUN LIFE BAJA ALLIANZ SBI LIFE HDFC STANDARD TATA AIG MAX NEW YORK AVIVA OM KOTAK MAHINDRA ING VYASA AMP SANMAR METLIFE
Insurance is system by which the losses suffered by a few are spread over many, exposed to similar risks. Insurance is a protection against financial loss arising on the happening of an unexpected event. Insurance policy helps in not only mitigating risks but also provides a financia ushion against adverse financial burdens suffered. Insurance policies cover the risk of life as well as other assets
11
and valuables such as home, automobiles, jewelry et al. On the basis of the risk they cover, insurance policies can be classified into two categories: 1. Life Insurance Policies 2 General Insurance Before insurance sector was opened to the private sector Life Insurance Corporation (LIC) was the only insurance company in India. After the opening up of Insurance sector in India there has been a glut of insurance companies in India. These companies have come up with innovative and flexible insurance policies to cater to varying needs of the individual. Opening up of the Insurance sector has also forced the Lic to tighten up its belt and deliver better service. All in all it has been a bonanza for the consumer. Major Life insurance Companies in India are: Aviva Life Insurance Bajaj Allianz Birla Sun Life Insurance HDFC Standard Life Insurance ICICI Prudential ING Vysya Kotak Mahindra LIC Max New York Life Insurance MetLife India Insurance Reliance Life Insurance SBI Life Insurance Shriram Life Insurance Tata AIG Life Insurance
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TYPES OF INSURANCE: Life Insurance Term Life Insurance: is life insurance for a set period of time. If the insured dies during this period, the beneficiary receives a lump sum of tax-free money. Term Insurance is ideal for young families with a limited budget where as much insurance as possible is required to secure the family's well being, or in business situations such as buy-sell agreements, for mortgage coverage, or to fulfill other temporary needs. Whole Life Insurance: provides permanent coverage with level premiums and a guaranteed death benefit. It is perfect for people who think long term and whish to have plan that is not subject to investment gains and losses. The policy also gains cash value over time, allowing for flexible cancellation options. Furthermore, though coverage is life-long, you do not have to pay premiums for life. You can purchase the insurance in a predefined number of payments: the shorter the payment period, the large the discount. Universal Life Insurance: is permanent insurance with the added feature of having a tax-sheltered investments portion built into the plan. Universal Life pays off precisely at the moment when significant costs and tax implications are triggered. This timing, along with the tax-sheltered savings feature, makes Universal Life Insurance a powerful financial tool in estate preservation, leveraging, buy-sell agreements, charitable giving, and pension maximization. The tax-sheltered status of its investments component can also allow it to help pay for itself. Disability Insurance provides an alternate income in case of injury or illness that leaves you unable to work for an extended period of time. It is ideal for anyone who earns an income and does not have disability insurance through their
13
employer. Depending on your profession, it could provide income during times of inability to perform your "own occupation," even though other sources of income continue. More importantly, it can provide the family's income when you can't. Insurance: pays a lump sum of tax-free money 30 days after the diagnosis of a covered illness. It is like having your own private health care program: If you do not wish to wait in line for health care, you can seek professional services elsewhere. Insurance companies now cover up to 21 major illnesses, and you decide how to use the money (to pay down the mortgage, take a vacation, or provide family income). Long Term Care Insurance provides a daily benefit for in home or nursing home care. Ideal for those approaching retirement age, long term care insurance means peace of mind knowing that you will never be a burden to your loved ones. Long Term Care easily erodes one's life savings costing upwards of 40 to 60 thousand dollars a year, making this form of insurance a must for retirees. Health & Dental Insurance covers many common medical expenses that the Government Health Insurance Plan does not, such as dental work, prescription drugs, eyeglasses, private and semi-private hospital rooms. If you do not have an employer group health plan – and, therefore, are vulnerable to health care costs not covered by your Government Health Insurance Plan – supplemental health care coverage is important. Why to get a Life Insurance Policy? Planning for our own death or the death of a loved one is not something that many of us want to do. But having support in place when the unfortunate happens can help those left behind take care of arrangements and recover from the loss easier. A life insurance policy can be an important part of that support.
14
Life Insurance basics A life insurance policy can help you:
Provide income to surviving family members so they can maintain their lifestyle.
Pay off the mortgage if an income earner were to die so the house is free and clear of debt.
Provide for a college education if there are dependent children in the household.
Pay for final expenses of a funeral or estate settlement costs.
Provide an emergency fund to handle an unexpected financial crisis.
Provide for settlement of personal debts.
Life Insurance in India Life is very fragile and death is a certainty. We cannot control the uncertainties of life. But, we can cover the risks surrounding us. Life insurance, simply put, is the cover for the risks that we run during our lives. It protects us from the contingencies that could affect us.
Life insurance is not for the person who passes away, it for those who survive. It is the responsibility of every bread earner to guard against the events that could affect the family in the unfortunate circumstance of his / her demise. Thus, having a life insurance policy is very vital. Before going for a life insurance policy it is imperative that you know about various types of life insurance policies. Major among them are: Endowment Policy
15
Whole Life Policy Term Life Policy Money-back Policy Joint Life Policy Group Insurance Policy Loan Cover Term Assurance Policy Pension Plan or Annuities Unit Linked Insurance Plan
Life insurance sector grew by 41 per cent in 2005-06 due to better performance of country's largest life insurer, LIC, and private players like Bajaj Allianz and ICICI Prudential.
The 15 life insurance companies together collected Rs 35,898 crore in the fiscal ended March this year, compared to Rs 25,343 crore in the previous fiscal, according to data compiled by regulator IRDA. Life Insurance Corporation's premium income rose more than 28 per cent to Rs 25,645 crore after it sold 3.16 crore policies as against Rs 19,972 crore collected a year ago.
However, LIC's market share dipped by 6.63 per cent to 71.44 per cent from 78.07 per cent in the year ago period due to stiff competition and aggressive marketing of private life insurers. The 14 private players were able to steadily increase their market share from 21.93 per cent to 28.56 per cent in a year's time by collecting Rs 10,252 crore during the period under review.
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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 (US$10 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. The funds available with the state-owned Life Insurance Corporation (LIC) for investments are 8% of GDP.
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 year 1999 saw a revolution in the Indian insurance sector, as major structural changes took place with the ending of government monopoly and the passage of the Insurance Regulatory and Development Authority (IRDA) Bill, lifting all entry restrictions for private players and allowing foreign players to enter the market with some limits on direct foreign ownership. Though, the existing rule says that a foreign partner can hold 26% equity in an insurance company, a proposal to increase this limit to 49% is pending with the government. Since opening up of the insurance sector in 1999, foreign investments of Rs. 8.7 billion have poured into the Indian market and 21 private companies have been granted licenses.
Innovative products, smart marketing, and aggressive distribution have enabled fledgling private insurance companies to sign up Indian customers faster than anyone expected. Indians, who had always seen life insurance as a tax saving
17
device, are now suddenly turning to the private sector and snapping up the new innovative products on offer.
The life insurance industry in India grew 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. RNCOS’s report, ―Indian Insurance Industry: New Avenues for Growth 2012‖, finds that the market share of the state behemoth, LIC, has clocked 21.87% growth in business at Rs.197.86 billion by selling 2.4 billion new policies in 2004-05. But this was still not enough to arrest the fall in its market share, as private players grew by 129% to mop up Rs. 55.57 billion in 2004-05 from Rs. 24.29 billion in 2003-04.
Though the total volume of LIC's business increased in the last fiscal year (2004-2005) compared to the previous one, its market share came down from 87.04 to 78.07%. The 14 private insurers increased their market share from about 13% to about 22% in a year's time. The figures for the first two months of the fiscal year 2005-06 also speak of the growing share of the private insurers. 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 insurance market.
Though the focus of this market research report is on the potential growth on the Indian Insurance Sector, it also talks about the market size, market segmentation, and key developments in the market after 1999. The report gives an instant overview of the Indian non-life insurance market, and covers fire, marine, and other non-life insurance. The data is supplied in both graphical and 18
tabular format for ease of interpretation and analysis. This report also provides company profiles of the major private insurance companies. GENERAL INSURANCE General Insurance provides much-needed protection against unforeseen events such as accidents, illness, fire, burglary et al. Unlike Life Insurance, General Insurance is not meant to offer returns but is a protection against contingencies. Almost everything that has a financial value in life and has a probability of getting lost, stolen or damaged can be covered through General Insurance policy. Property (both movable and immovable), vehicle, cash, household goods, health, dishonesty and also one's liability towards others can be covered under general insurance policy. Under certain Acts of Parliament, some types of insurance like Motor Insurance and Public Liability Insurance have been made compulsory. Major insurance policies that are covered under General Insurance are: HOMEINSURANCE HEALTH INSURANCE MOTOR INSURANCE TRAVEL INSURANCE
Today the Indian general insurance market is valued at Rs 14,000 crore. It is growing at a rate of 20 per cent and is expected to reach Rs 45,000 crore in about 10 years. Private players have already gained a 10 per cent share in three years. No mean achievement when compared to the growth rates of countries like South Korea and Thailand, where the private sector took 15 years to gain a 15 per
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cent share of the market. India has 14 private players in life insurance and 12 players in the general insurance sector. CURRENT SCENARIO OF THE INDUSTRY Composition of Household Financial Savings Currency Deposits Of which Deposits with non banking companies Shares and debentures Small savings (central govt .schemes) Life insurance Provident and pension funds
1991 10.6% 33.3% 2.2% 14.3% 13.2% 9.5% 16.9%
1996-97 8.6% 48.2% 16.4% 6.6% 7% 10.1% 19.1%
2005-06 8.5% 41.5% 1.6% 2.7% 14.3% 15.5% 14.3%
INSURANCE MARKET IN INDIA India with about 200 million middle class household shows a huge untapped potential for players in the insurance industry. Saturation of markets in many developed economies has made the Indian market even more attractive for global insurance majors. The insurance sector in India has come to a position of very high potential and competitiveness in the market.
Innovative products and aggressive distribution have become the say of the day. Indians, have always seen life insurance as a tax saving device, are now suddenly turning to the private sector that are providing them new products and variety for their choice. Life insurance industry is waiting for a big growth as many Indian and foreign companies are waiting in the line for the green signal to start their operations. The Indian consumer should be ready now because the market is going to give them an array of products, different in price, features and benefits. How the customer is going to make his choice will determine the future of the industry.
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CUSTOMER SERVICE Consumers remain the most important centre of the insurance sector. After the entry of the foreign players the industry is seeing a lot of competition and thus improvement of the customer service in the industry. Computerization of operations and updating of technology has become imperative in the current scenario. Foreign players are bringing in international best practices in service through use of latest technologies. The one time monopoly of the LIC and its agents are now going through a through revision and training programmes to catch up with the other private players. Though lot is being done for the increased customer service and adding technology to it but there is a long way to go and various customer surveys indicate that the standards are still below customer expectation levels. DISTRIBUTION CHANNELS Till date insurance agents still remain the main source through which insurance products are sold. The concept is very well established in the country like India but still the increasing use of other sources is imperative. It therefore makes sense to look at well balanced, alternative channels of distribution. LIC has already well established and have an extensive distribution channel and presence. New players may find it expensive and time consuming to bring up a distribution network to such standards. Therefore they are looking to the diverse areas of distribution channel to have an advantage. At present the distribution channels that are available in the market are: DIRECT SELLING Corporate Agents Group Selling Brokers and Cooperative Societies Bancassurance
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To make all these channels a success the companies have to be very alert and skillful to Know how to use these channels in a proper way. Banc assurance is on of the most upcoming channels of distribution and therefore is being discussed in details.
BANCASSURANCE
India has an extensive bank network established over the years. What Insurance companies have to do is to just take advantage of the customers' longstanding trust and relationships with banks. This is a mutually beneficial situation as banks can also expand their range of products on offer to customers, while the insurance company will also earn profits from the exposure. Another advantage is that banks, with their network in rural areas, help to fulfill rural and social obligations stipulated by the Insurance Regulatory and Development Authority (IRDA) recently. Insurance companies should see banc assurance as a tool for increasing their market penetration in India. It is also good for the one who sees banc assurance in terms of reduced price, high quality product and delivery at doorsteps. Everybody is a winner here. The creation of banc assurance operations has made an important impact on the financial services industry at large. This is though a new concept but it has gained a lot of importance in the industry at present and has a great future.
PRODUCT INNOVATION There has been a plethora of new and innovative products offered by the new players. Customers have tremendous choice from a large variety of products from pure term (risk) Insurance to unit-linked investment products. Customers are offered unbundled products with a variety of benefits as riders from which they can choose. More customers are buying products and services based on their true needs and not just traditional 22
money back policies, which is not considered very appropriate for long-term protection and savings. There is lots of saving and investment plans in the market. However, there are still some key new products yet to be introduced - e.g. health products.
RURAL MARKETING
Rural India seems to have an appetite for mobile phones, computers, and cars and to add to it we have insurance. In India with the private players having entered into the insurance industry, the expected explosion in job opportunities may not actually happen but for them the catchments area is the opportunities in the rural India. In India the insurance business can be said to be "a marathon, not a sprint". This is because of the nature of the business being long term. With merely two years of the industry being opened, not surprisingly, the new comers are making losses. The public sector companies, notably the LIC, have gained in strength, thanks to the deepening of the market consequent to the awareness created by the new companies. However this does not deterred the private sector, which knows know that the race is a marathon, not a sprint. However it seems that they if not anything, are only increasing their spending, though only out of the capital. Today, there are 18 insurance companies in India excluding the PSU’s, with 12 in the life insurance business and the rest in non-life .As insurance companies go more and more rural in search of business, there will be opportunities in the rural sector. Those who understand rural India better will be in demand. Already United India
The rural consumer is now exhibiting an increasing propensity for insurance products. A research conducted exhibited that the rural consumers are willing to dole out anything between Rs 3,500 and Rs 2,900 as premium each year. In the insurance the awareness level for life insurance is the highest in rural 23
India, but the consumers are also aware about motor, accidents and cattle insurance. In a study conducted by MART the results showed that nearly one third said that they had purchased some kind of insurance with the maximum penetration skewed in favor of life insurance. The study also pointed out the private companies have huge task to play in creating awareness and credibility among the rural populace. The perceived benefits of buying a life policy range from security of income bulk return in future, daughter's marriage, children's education and good return on savings, in that order, the study adds.
Regulatory and Development Authority (IRDA) have set stiff rural targets for insurance Companies. For the life sector, in the first year, 5 per cent of the total policies written Should come from the rural sector. This will go up to 15 per cent in five years. Similarly, for the non-life sector, two per cent of the total gross premium income should come from the rural sector going up to 5 per cent in five years, according to the regulation. All these Moves will make the investment the rural area a big start. IRDA ruling on `special discounts' — Insurance brokers, an unhappy lot IRDA’s latest ruling on the "special discount" given to insurance customers has been termed "Tughlaqian" by one broker. The allusion is to the flip-flop on the issue by IRDA, like Mohammad-bin-Tuglaq changed his Capital frequently. Four months ago, within a month of having issued licenses’, the IRDA came up with a notification saying that insurance companies could give either a `special discount' (of 5 per cent of the premium) to the customer, or (the 12.5 per cent) commission to the broker, but not both. This move sparked outrage among brokers. They argued that their business would be affected, as no customer would want to forgo the 5 per cent discount. Arguing that the ground rules of the game could not be changed within such a 24
short time of issuing the licenses, they managed to prevail upon the then IRDA Chairman, Mr. N. Rangachary, and got the order cancelled — on May 30. Now, the new Chairman, Mr. C.S. Rao, with a notification on July 16, has effectively cancelled the May 30 order and the brokers are back to square one. The Secretary of the Insurance Brokers Association deplored the decision and said it was a "death blow to fledgling insurance brokers business." He hoped that IRDA would reconsider the matter as over 80 brokers had obtained licenses at considerable cost and effort. Frequent changes in the law regulating the commissions would plunge the market into confusion and result in loss of confidence, he said. Some international brokers who had obtained licenses are also said to be reconsidering their decision to set up shop in India. Brokers point out that when the first ruling (saying `either a discount to the customer or a brokerage, but not both') was brought in, the IRDA argued that the idea was to force the brokers to provide value-added service, not just sell policies. The objective was that customers should find it worthwhile forgoing the discount and make use of the brokers. For example, if a broker with some deft risk management is able to help slash a company's premium expenditure from say, Rs 10 crores per year to Rs 8 crores, then the company would happily forgo the 5 per cent or Rs 50 lakhs discount, because by using the broker, it saves Rs 2 crores! Sound logic, but the ground realities are different, say brokers. There have been instances when the corporate customer took all the advice from the broker, then dumped him and went directly to the insurance company. Secondly, while the broker may be able to provide such an excellent, value-adding advice in the first year, it may be difficult for him to do that year after year. Mr. R. Thyagarajan, Chairman of the Shriram group, which owns of the broking firm Armour Consultants points out, that it is unrealistic to expect the nascent broking industry to provide such value-added services in the first few
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years of the industry's birth. The broking industry is a baby of 4-months and the community should allow some time for it to develop expertise. And till such time, it should be ensured that the brokers first survive. "We feel like orphans," says Mr. N. Raveendran, Director, Alegion Insurance Services Ltd, a Chennai-based broking firm. "The law is not helpful, the regulator is not helpful, the insurance companies do not want us, and the customers do not want us." Above all, brokers complain of the "air of uncertainty," given that the policies are frequently changed. . Indian Insurance Industry Forecast (2007-2009) The market research report ―Indian Insurance Industry Forecast (20072009)‖ gives an in-depth analysis of the present and future of the Indian Insurance Industry. The market research report looks in to the details as well as gives an overview of the Indian insurance market with focus on the performance of the key players. With the initiation of the deregulation in the Indian insurance market, the monopoly of big public sector companies in life insurance as well as general (non-life insurance) market has been broken. New private players have entered the market and with their innovative approaches and better use of distribution channels and technology, they are eating in to the shares of established public sector companies in Indian Insurance Market. Since the deregulations have been put in to place, the market share of LIC has come down to 71.4% in life insurance market while the private players have captured around 17% market in the general insurance segment. Having said that, public sector insurance companies such as LIC and New India Assurance are registered impressive double-digit growths, which reflects on the overall health of the Indian insurance sector.
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This report includes the key private players in the insurance market such as ICICI Prudential, Bajaj Allianz, Birla Sun life, ICICI Lombard and TATA AIG. It also includes the leading competitors in the life insurance and general insurance segments along with their market shares.
Wage and salary employment in the insurance industry is projected to grow about 10 percent between 2004 and 2014, compared to the 14 percent growth projected for wage and salary employment in all industries combined. While demand for insurance is expected to rise, corporate downsizing, productivity increases due to new technology, and increasing use of direct mail, telephone, and Internet sales will limit job growth. However, some job growth will result from the industry’s expansion into the broader financial services field, and employment in the medical service and health insurance areas is anticipated to grow. Also, thousands of openings are expected to arise in this large industry to replace workers who leave the industry, retire, or stop working for other reasons. Medical service and health insurance is the fastest growing sector of the insurance industry. In recent years, increasing health insurance premiums and relatively high unemployment have left some unable to afford health insurance, but over the long term, significant growth is expected. As the share of the elderly population rises, more people are expected to buy health insurance and long-termcare insurance, as well as annuities and other types of pension products sold by insurance sales agents. If legislation is passed to make health insurance affordable to more people, demand should increase further for this type of insurance. Population growth will stimulate demand for auto insurance and homeowners insurance. Population growth also will create demand for businesses to service the needs of more people, and these businesses will need insurance as well. Moreover, large liability awards are motivating growing numbers of individuals and businesses to purchase liability policies to protect against lawsuits brought by people claiming injury or damage from a product. 27
Many successful insurance companies will 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, employment in some occupations, such as insurance sales agent, could be adversely affected. 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. Also, auto premiums tend to cost more per year than do other types of policies, so people are more likely to shop around for the best price. The Internet makes it easier to compare rates among companies. 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
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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 and by allowing investigators to handle an increasing number of cases, thus limiting their employment growth. 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.
IMPACT OF BUDGET IN INSURANCE
The 2005-06 Budget has dampened the spirit of insurance companies. Hardly any changes have been made in the general insurance sector. The change in the tax structure may have some impact on the life insurers. With the removal of the Section 88 relief there is not much for the insurance players to cheer for.
FDI hike in Insurance Sector:
The Finance Minister commended on the growth in the insurance sector, there was no mention of the steps being taken for increasing FDI in insurance sector. There is a dire need to attract more foreign capital in the sector. However it seems that the Union Finance Ministry is looking at proposals to decline the FDI limit from the Insurance Act, when it is amended. This move would empower any
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future government to increase the FDI limit through an executive order without taking the issue to the Parliament. Removal of Sec 88 tax relief: With the removal of the Section 88 tax relief on life insurance products there would be a sever blow on the life insurance companies. Removal of tax relief will have an adverse impact on the flow of investments into life Continuation of Sec 10(10) (d): The continuations of this section create sever blow for the insurance players. Here by the life insurance companies for availing the optimum benefit under this section need to change their strategy. Till now, life insurers were selling life insurance products mostly on tax-benefit grounds. However, now they will have to sell products with an investment pitch.
The investment limit in pension plans is unaltered at Rs 10,000 so these plans may not enjoy the luxury of the expanded limit of Rs 1 lakh allowed for investments/expenditures that could be claimed as a deduction from income. This is likely to have an adverse impact on the overall growth of the sector. Pension plans are the only Investment Avenue where specific limits continue to apply.
BPO Industry in India- IT WILL HELP INSURANCE SECTOR BY WAY OF 1. Insurance Processing Our insurance processing services provide specialized solutions to the insurance sector and support critical business processes applicable to the industry right from new business acquisition to policy maintenance to claims processing.
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INSURANCE SECTOR BY 2012
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 (2005-06) is estimated at Rs. 450 billion (US$10 billion). According to government sources, the insurance and banking services' contribution to the country's gross domestic product (GDP) is 7.5% out of which the gross premium collection forms a significant part. The funds available with the state-owned Life Insurance Corporation (LIC) for investments are 8% of GDP. 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 year 1999 saw a revolution in the Indian insurance sector, as major structural changes took place with the ending of government monopoly and the passage of the Insurance Regulatory and Development Authority (IRDA) Bill, lifting all entry restrictions for private players and allowing foreign players to enter the market with some limits on direct foreign ownership.
Though, the existing rule says that a foreign partner can hold 26% equity in an insurance company, a proposal to increase this limit to 49% is pending with the government. Since opening up of the insurance sector in 1999, foreign investments of Rs. 8.7 billion have poured into the Indian market and 21 private companies have been granted licenses.
Innovative products, smart marketing, and aggressive distribution have enabled fledgling private insurance companies to sign up Indian customers faster than anyone expected. Indians, who had always seen life insurance as a tax saving 31
device, are now suddenly turning to the private sector and snapping up the new innovative products on offer.
The life insurance industry in India grew 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. This report "Indian Insurance Industry: New Avenues for Growth 2012", finds that the market share of the state behemoth, LIC, has clocked 21.87% growth in business at Rs.197.86 billion by selling 2.4 billion new policies in 2004-05. But this was still not enough to arrest the fall in its market share, as private players grew by 129% to mop up Rs. 55.57 billion in 2004-05 from Rs. 24.29 billion in 2003-04.
Though the total volume of LIC's business increased in the last fiscal year (2004-2005) compared to the previous one, its market share came down from 87.04 to 78.07%. The 14 private insurers increased their market share from about 13% to about 22% in a year's time. The figures for the first two months of the fiscal year 2005-06 also speak of the growing share of the private insurers. 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 insurance market.
Though the focus of this market research report is on the potential growth on the Indian Insurance Sector, it also talks about the market size, market segmentation, and key developments in the market after 1999. The report gives an instant overview of the Indian non-life insurance market, and covers fire, marine, and other non-life insurance. The data is supplied in both graphical and tabular
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format for ease of interpretation and analysis. This report also provides company profiles of the major private insurance companies.
Now with real competition coming in with most of the global insurance players setting footprints here, it is felt that the time for merger has come and to enjoy the benefits if the size. It is to be sated that size does matter in insurance business. All over the world’s mergers and acquisitions in the risk-underwriting sector is common. The benefits if the four insurance companies merge will be enormous. The merged entity will enjoy higher underwriting and risk retention capacity; increase in reinsurance premium, reduction in reinsurance outflow, healthy solvency margins, setting right the asset –liability mismatch and reduction in cost. The insurance market thus becomes a gambling place. Had the public sector companies made into a single entity, perhaps the total premium of the four public sector companies in the year 2003-04 would have gone up but 25 percent. But the public sector alone is forced to underwrite the loss making motor third party liability (TPL) insurance. The public insurance companies insured a loss of Rs 1943 crore on this portfolio on just one year (03-04). The cumulative loss under this portfolio is astronomical. The loss of profitable business in view of undeserved competition among the public sector companies is hampering the subsidization of social insurance including the motor TPL.
It is thus clear that it is good for the public sector companies to merge immediately when they are still strong, lest a merger becomes inevitable later after the independent public sector companies fail one after another. This does not bid well for the public sector, nor fort he insuring public and not for the economic development either. For a progress me require merger of strong public sector companies. Else it would render public sector companies weak and destroy them.
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CHAPTER – III COMPANY PROFILE Tata AIG Life Insurance Company Limited is a joint venture between Tata Group and American International Group, Inc. (AIG). Tata Group is one of the oldest and leading business groups of India. Tata 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. The Late Sir Dorab Tata was the founder Chairman of New India Assurance Co. Ltd., a group company incorporated way back in 1919.
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. AIG has one of the most extensive life insurance networks in the world.
Tata-AIG Life Insurance Company Ltd. "Tata AIG Life" offers a broad array of life insurance products to individuals, associations and businesses of all sizes, with a wide variety of additional coverage to ensure our customers can findinsuranceproducttomeettheirneeds.
Tata AIG is a joint venture of the Tata Group and American International Group, Inc. (AIG).
THE TATA GROUP
The Tata Group is one of India's best-known industrial groups with an estimated turnover of around US $14.25 billion (approximately 2.6% of India's
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GDP). With more than 220,000 employees across 91 major companies, it is also India's largest employer in the private sector. The Tata Group pioneered several firsts in Indian industry firsts, including: India's first private sector steel mill, first private sector power utility, first luxury hotel chain and first international airline, amongst others. Recently, the Tata Group's pioneering spirit has been showcased by companies such as Tata Consultancy Services (TCS), Asia's largest software and services company, and Tata Motors, the first car maker in a developing country to design and produce a car from the ground up.
The Tata Group stable of brands also includes many national and some internationally renowned product and service brands, including Tata Indica, Tata Indigo, Indigo Marina, Tata Safari, Tata Indicom, the Taj Group of Hotels (Luxury, Business and Leisure), indiOne, Tata Tea, Tetley, Tata Salt, Tata Steelium, Tata Shaktee, Tata Tiscon, By combining ethical values with business acumen, globalization with national interests and core businesses with emerging ones, the Tata Group aims to be the largest and most respected global brand from India whilst fulfilling its long-standing commitment to improving the quality of life of its stakeholders
AIG :
American International Group, Inc. is the world's leading international insurance and financial services organization, with operations in more than 130 countries and jurisdictions. AIG member companies serve commercial, institutional and individual customers through the most extensive worldwide property-casualty and life insurance networks of any insurer. In the United States, AIG companies are the largest underwriters of commercial and industrial insurance and AIG American General is a top-ranked insurer. AIG's global businesses also include retirement services, financial services, and asset in asset 35
management for the individual and institutional markets, with specialized investment management capabilities in equities, fixed income, alternative investments and real estate. AIG's common stock is listed in the New York Stock Exchange and ArcaEx, as well as the stock exchanges in London, Paris, Switzerland and Tokyo.
Management
Trevor Bull Managing Director TATA AIG LIFE INSURANCE COMPANY
Mr. Dalip Verma, Managing Director, Tata AIG General Insurance company. Mr. Trevor Bull joined Tata AIG Life as Managing Director in January 2006. Prior to this, Trevor was Senior Vice President and General Manager at American International Assurance in Korea. Trevor has over 28 years of experience in the life insurance industry and has spent considerable time working in Japan and Britain. His experience covers an array of skills at various authority levels including Director, Regional Executive, Senior Line Management and Project Management. Additionally, Trevor has acquired keen insights into Unit Linked, conventional life and health insurance/ reinsurance and all major products & distribution channels.
Tata AIG Life Insurance Company adopts a new brand identity Anticipation, innovation and infinity reflects "A new look at life" Tata AIG Life's new brand identity The new baseline represents 'A new look at life'
Anticipation of present and future requirements of the insured
Innovative and path breaking products that fulfils the anticipated needs of the insured 36
Opening the upper and lower boundaries of the Tata AIG logo represents
Infinite space for product innovation
Product development will not be confined to definite boundaries Launches a multimedia brand campaign to communicate the new identity.
India's premier private life insurance company, Tata AIG Life Insurance Company Limited today announced the launch of its new brand logo and corporate baseline - A new look at life - simultaneously with a new multimedia brand campaign. The act of opening the upper and lower borders of its logo aptly reinforces Tata AIG Life's corporate ethos and philosophy of being an innovator. The company will leverage its unique capability of anticipating the present and future needs of the insurable population of India and will look beyond the regular realm while designing its product offerings.
Announcing the new brand identity of Tata AIG Life Insurance Company Limited, its managing director, Ian J. Watts said, "It gives me great pleasure in announcing the new brand identity of Tata AIG Life Insurance Company - A new look at life. We stand committed to our customers and also the Indian population that even as Tata AIG Life is taking 'A new look at life', it will remain 'With you always' and our product suite will be designed taking into consideration our consumers present and future insurable and savings needs." "The opening-up of the upper and lower boundaries of our logo endorses our commitment that we will go beyond the usual boundaries to find solutions that meet the present and future insurance and savings needs of the Indian customers and will design products which are not hitherto available in India. Going forward,
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'Anticipation' and 'Innovation' will be integral parts of our corporate philosophy and ethos." Tata AIG Life Insurance Company combines the strength and integrity of the Tata Group with the international expertise and financial strength of the member companies of AIG Inc- the leading U.S. based international insurance and financial services organization. On the backing of this strong foundation and keeping in mind the long-term aspect of the insurance industry, Tata AIG Life commenced operations in India in April 1, 2001, with its base line of 'With you always' signifying Tata AIG Life would always be there to take care of the insurance and financial needsoftheir customers. Having established the same, the new corporate identity - A new look at life - is the next logical step forward to the endorsement of the fact that it is walking the talk of its commitment and will continue to offer path-breaking products to its customers. To support its new identity the company is launching a multimedia brand campaign across television, press, outdoor, cinema and the Internet. Over the past three years since the company commenced its operations in India, Tata AIG Life Insurance Company has designed its insurance, pension and superannuation products by anticipating the present and more importantly the future savings and insurance requirements of the insurable population of this country. Tata AIG Life has carved out a differentiated position in the Indian insurance market and is a leader in the insurance sector for introducing innovative insurance and pension products. These unique products have not been just the building blocks for the company but have redefined the way insurance, savings and pension needs are understood, keeping both the present and future needs of the insured in mind. 38
In the past Tata AIG Life has introduced several innovative products in India. Mahalife Gold - synonymous with the whole life market, and where it owns over half the market. Heath First - where Tata AIG Life was the first off the block with a unique health product, in fact the first from any life company. And Nirvana - which continues to be the only guaranteed pension product in the market today. The company has also launched unique juvenile endowment products and was the first life insurance company to introduce simplified products including Special Life.
Recently, Tata AIG Life also launched its ULIP - Invest Assure - which is a unique unit linked insurance plan, which has the option to invest in five funds plus the security of a life cover. TATA-AIG products: Tata AIG has a range of flexible insurance products to help you secure your children’s financial future. Our products include: AssurecreerBuilder This money-back policy provides financial assistance at key stages of your child’s life, from education to their first steps into a new career. Assure Educare This first of its kind juvenile endowment policy is geared toward funding your child’s education. You can choose between Educare 18 and Educare 21, depending on your child’s needs. Assure Money Saver This savings plan provides you with cash payments in the form of survival benefits at regular intervals to fund your child’s needs at critical milestones or
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support your financial obligations. You get the dual benefits of life insurance coverage plus the flexibility of periodic payments. Tata AIG Life Insurance Company Limited is a joint venture between Tata Group and American International Group, This exceptional policy ensures that you have a steady income and insurance coverage for life! Premiums are payable only for the first 12 years. You can even use this to create a steady stream of post retirement income. To learn more, MahaLifeGold This unique policy ensures that your child will have a steady income and insurance coverage for life! Premiums are payable only for the first 15 years. NirbhayLife Tata AIG Life has a whole new participating plan which will surprise you continually with its remarkable benefits. Premiums are payable only for the first 9 years, after which you will receive all your money and much more! STARKID An exceptional endowment policy that ensures you can afford to give your child the very best for his career & marriage. ADULTS: Assure Lifeline
You get the luxury of high coverage but at an affordable cost. You also get automatic renewals and the flexibility to choose the term of cover
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Assure Money Saver
This plan offers you cash payments at the end of every 3 years during the term of the policy. You also get the dual benefits of life insurance coverage plus the flexibility of periodic payments.
Assure Security & Growth
This amazing endowment policy enables you keep your money safe and have it grow. In the unfortunate event you die while under this cover, your dependants will get the sum assured. However, if you outlive the term, you still get the sum assured along with a whole range of bonuses
Assure Golden Years This endowment policy gives you safety AND returns. In case of death, your dependants get the sum assured otherwise your savings grow. If you live past the term you still get that sum assured along with a whole host of bonuses.
Health Protector The average cost for a major surgery or treatment in hospital is between three to five lakh. Health Protector is the first product of its kind in India that offers you protection in case ANYONE in your family has an accident or falls ill. Life plus
This plan lets you win no matter what happens. Get your premiums back if you outlive the term. Get sum assured in case of death by natural causes. Get DOUBLE the sum assured in case of death by accidental causes.
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MahaLife
This exceptional policy ensures that you have a steady income and insurance coverage for life! Premiums are payable only for the first 12 years. You can even use this to create a steady stream of post retirement income.
MahaLifeGold
This is the ideal planning vehicle for your retirement. It provides you a steady income and insurance coverage for life! Premiums are payable only for the first 15 years. You can even use this to cover future expenses of your children.
NirbhayLife
Tata AIG Life has a whole new participating plan which will surprise you continually with its remarkable benefits. Premiums are payable only for the first 9 years, after which you will receive all your money and much more! To
ShubhLife
This plan provides you 100% life insurance protection and high returns on your investment but the premiums you pay are among the lowest of any similar endowment policy
Health First
Quality healthcare is incredibly expensive. You need a policy that covers all contingencies including prolonged hospitalization, major surgery, critical illness, post hospitalization fees and even the unfortunate event of your death. 42
Invest Assure This highly flexible plan gives you full life cover AND high returns AND the flexibility of deciding the Length of your life cover term, the amount of Cover you receive & where the rest of your premium is invested For Retirement:
Keep your capital safe and growing with Assure Golden Years.
Provide a stable, lifetime income for you and your family with MahaLife Gold.
Give you the flexibility to choose when to retire and where to invest with Nirvana.
Guarantee additions to your sum assured with Nirvana Plus.
Most popular products in TATA-AIG: In 2004, the first year of its launch, Invest Assure accounted for 38 per cent of the total premiums issued. Maha Life made up 30 per cent of the total number of policies sold so far this year. Health First and Health Protector were unique since these were the first healthrelated products introduced by a private life insurance company in India. These two (products) take care of the entire gamut from hospitalization to surgery. Nirvana Plus is a pension planning solution and MahaLife Gold has also been received very well. Tata AIG Life Insurance - winner of customer satisfaction A recent survey conducted by the Voluntary Organization in Interest of Consumer Education (VOICE) revealed Tata AIG Life Insurance Company (Tata AIG Life) as the clear winner in terms of customer satisfaction in the life
43
insurance category. This is India's first-ever customer satisfaction study for the insurance sector. The survey also revealed that Tata AIG Life had a high recall as a reputed brand name. The ability to provide innovative and customer-focused service such as allowing the maximum grace period for premium payment has not only further distinguished Tata AIG Life from other life insurance companies but also appealed to consumers. Commenting on the survey results, Trevor Bull, managing director, Tata AIG Life Insurance Company, said, "The quest of the company has always been to be the best at what we do rather than adopting a simplistic market share at all costs approach. Achieving this VOICE recognition required huge effort from Tata AIG Life team; however retaining the number one position will be tougher. Being ranked the best in the life insurance category by an independent consumer group is an encouraging and fitting manifestation of our successful completion of five years of service in the insurance industry. We look forward to the challenges that lie ahead and are confident of maintaining and improving further our current standards of service and efficiency." The survey, which was conducted across eight cities and covered around 1,250 life insurance customers, evaluated the different life insurance companies on the parameters of tangibility, problem solving ability, reliability, responsiveness, assurance and empathy. The objective of the survey was to understand and measure overall customer satisfaction within the insurance sector. The Voluntary Organization in Interest of Consumer Education (VOICE) is a voluntary action group, whose objective is to protect and further the interests of the consumer.
44
Tata AIG eyes 90% rise in premium income (Business Standard — June 6, 2006) Tata AIG Life Insurance Company Ltd is expecting an 85-90 per cent growth in its premium incoming 2006-07.
"We will be looking at an 85-90 per cent increase in total premium income. Increase in the first year premium income (FPI) is expected to be around 70 per cent this year," said Joydeep Roy, director, alternate channels/chief distribution officer, Tata AIG
Life Insurance. The company had targeted 100 per cent
increase in premium income to more than Rs 800 crorein 2005-06. During the first eight months of 2005-06, it recorded a 102 per cent year-on-year growth in total premium income at Rs 678 crore whereas FPI grew by 79 per cent at Rs351crores. The company was all set to launch around six products during the current financial year.
"Two products are likely to be unit linked insurance product (ULIP), two would be rural products and remaining two would be accident health product or rider. We have already applied to the Insurance Regulatory and Development Authority (IrDA)
fort heir approval. The company would shortly apply to the
IrDA for approval for another couple of products, he noted. Meanwhile, the company is very comfortable with its exposure in capital market. "IRDA has strong rules about investments in capital market. Currently, we are very comfortable with our investments in the capital market. The company had firmed up significant network expansion plans. The company would be opening 2025newofficesduring2006-07.
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"Currently, we have 85 offices in cities. We will be adding 20-25 new offices at strategic locations to cater to a large customer base. Among the states to get new offices will be Madhya Pradesh, Rajasthan, TamilNadu. Tata AIG Life will also be doubling its 'mobile vans' for reaching to Remote customers.
"The company has experienced tremendous response with its mobile vans that are being used for selling products as well as collecting premiums. We are planning to double the number of vans to eight vans during the year," added Roy.
Currently, 35-40 per cent of the company's business comes from banc assurance, 45 per cent form agencies and remaining from other channels including corporate agents.
Tata-AIG simplifies claims processing
Tata AIG Life Insurance has simplified the claims processing system for policyholders. The company's staff is visiting major hospitals and advising people on how to expedite claims. Tata AIG's customers can also call the 24-hour toll-free help line and get immediate assistance and advice on the claims process. A special 24-hour help line has also been set up. Mr. Sunil Mehta, Country Head and Chief Executive, American International Group (AIG), said Tata AIG had activated the Claims Catastrophe Management Plan (CCMP) that was envisaged to meet claims under such calamities.
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Tata AIG Life Insurance appoints Vivek Sood as CFO Tata group company, Tata AIG Life Insurance Company Limited (Tata AIG Life), has announced the appointment of Vivek Sood as the Chief Financial Officer (CFO) of the company. Prior to this appointment, Sood was the Vice-President, Finance, at Hutchison Essar for the southern region, a release issued here today stated. Sood will provide guidance to the financial team at Tata AIG Life in managing and taking financial decisions, as also responsible for formulating and managing the financial strategy of the company. Service tax effects on policy TATA –AIG life insurance start charging service tax from the policy holders as renewal premium due paid or after June 5th 2006. Service tax paid along with under section 80/80ccc and 80 current tax laws. Service tax rate depend upon type of policy.
Segmentation of customers
Tata AIG Life Insurance Company Ltd. "Tata AIG Life" offers a broad array of life insurance products.
To suit individuals
Employees
Associations
Businesses of all sizes, with a wide variety of additional coverage to ensure our customers can find an insurance product to meet their needs
Objectives Goal finders A unique that tool that helps us understand your goals and needs. Helps you understand your current financial position Ensure recommendation that fits your needs and priorities. 47
Market share of TATA AIG in the year of 2006 march the market share of the TATA AIG IS 3.09 COMPETITORS OF TATA-AIG
Main Competitors
Market share (%)
LIC
71.44
ICICI PRUDENTIAL
7.34
BIRLA SUN LIFE
3.01
BAJAJ ALLIANZ
7.56
HDFC STANDARD
2.86
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CHAPTER – IV ANALYSIS OF THE STUDY TABLE- 1 POLICY AND CATEGERY OF RESPONDENTS TYPE POLICY
OF EMPLOYEES
BUSINESS PEOPLE
OTHER PEOPLE
HEALTH
21
29
5
CHIDRENS EDUCATION
14
12
7
RETIREMENT PLANNING
26
36
14
OTHER POLICIES
11
15
12
TOTAL
72
92
49
36
POLICY AND CATEGERY OF PEOPLE Health 40 30 NO OF PEOPLE 20 10
26
21 14 11
29
36
12 15
Childrens education
57
1412
Retirement planning Other policies
0 Employees Business people
Others
DIFFRENT CATAGERIES OF PEOPLE
CHART – I Inferences: 92 members of the business people preferred all the types of the policies. So in the near future most of the business people are potential customers of the TATA AIG life insurance company. Second category of customers like employees (72) preferred both retirement planning and health policy because these type policies will give tax benefits and life long returns to the policy holder. 36 members of the respondents like rural people mostly preferred retirement planning they want some monthly returns.
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TABLE-2 AGE AND PREFERENCE OF POLICY RETIREMEN OTHER T PLANNING POLICIES
2O-30
CHILDREN S HEALTH EDUCATIO N 8 14
8
11
31-40
14
22
19
13
41-50
22
11
26
10
50 ABOVE
12
9
7
6
TOTAL
56
44
60
40
AGE
CHART - 2
AGE AND PREFERENCE OF POLICY
30
26
25
22
22 19
20
20-30 NO OF RESPONDENTS 15 10
14
12
8
14 11 9
8
13 11 10 7
6
5 0 Health
childerns education
Retirement planning
Other policies
DIFFRENT POLICIES
51
31-40 41-50 ABOVE 50
Inferences: o Above table shows that 56 members of the customers take health policy, in that 56 included all ages of the customers .41-50 years of age of the customers preferred health policy heavily .so these customers are high net worth value customers of the TATA –AIG o 44 members of the customers preferred children’s education policy .most of 31-40 years age of the customers preferred children’s education policy.beacuse they are just entered in to the life and they want to more investment and financial plans. o 60 members of the respondents are preferred Retirement planning, 41-50 Middle Ages of the people preferred heavily, this type of policy helpful in future needs and wants. o 31-40 ages of the respondents are take other policies like invest assure and Nirvana plus.
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TABLE-3 MODE OF PREMIUM PAYMENT MODE OF PREMIUM PAYMENT MONTHLY QUATERLY HALFYEARLY YEARLY TOTAL
NO RESPONDENTS 43 63 42 52 200
OF
MODE OF PREMIUM PAYMENT
63
70 60
43
52 42
50 MONTHLY
40 NO OF RESPONDENTS 30
QUARTERLY HALFYEARLY
20
YEARLY
10 0 1 MODE OF PREMIUM
Inferences 43 respondents are satisfied with monthly mode of premium for the reason that they felt that easy to pay premium. 63 of the respondents are satisfied with their quarterly yearly premium payment 42 of the respondents are satisfied with their half yearly premium payment 42 of the respondents are satisfied with their yearly premium payment 53
TABLE-4 OTHER COMPANY POLICIES OF THE TATA-AIG CUSTOMERS DIFFERENT HEALTH COMPANIES
RETIREMENT CHILDRENS PLANNING EDUCATION
OTHERS
LIC
18
18
10
7
TATA AIG
21
22
9
5
14
15
12
12
12
3
66
46
27
13
BAJAJ ALLIANZ BIRLA SUNLIFE
9 61
TOTAL
OTHER COMPANY POLICIES OF TATA AIG CUSTOMERS 25 20 NO OF CUSTOMER 15 IN EACH 10 COMPANY 5
2122
1818 10 7
5 1315112 12 9 911 5 3
0 LIC
TATA AIG BAJAJ BIRLA ALLIANZ SUN LIFE DIFFRENT COMPANIES
54
HEALTH RETIREMENT PLANNING CHILDRENS EDUCATION OTHERS
Inferences 61 members of the TATA AIG HEALTH policy customers taken other company policies, most of the customers preferred LIC. 66 members of the TATA AIG RETIREMENT PLANNING customers contain other company policies. They are also mostly invested in LIC because they felt that it gives more security compare other insurance companies 46 members of the TATA AIG CHILDERNS EDUCATION customers have other company policies.
policy
27 members of the TATA AIG policies different policy customers contain other company
]
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TABLE -5
REASONS FOR SELECTING TATA-AIG LIFE INSURANCE REASONS
NO OF RESPONDENTS
Brand Name
98
Good Relationship Customers More Returns
with 58 44
TOTAL
200
CHART- 5
98 58
44 BRAND NAME
GET MORE RETURNS
GOOD RELATIONSHIP
120 100 80 60 40 20 0
BRAND NAME
NO OF RESPONDENTS
REASONS FOR SELECTING TATA-AIG
REASONS
56
GOOD RELATIONSHIP WITH CUSTOMRERS GET MORE RETURNS
Inferences 98 of the respondents are opting for TATA-AIG is to have good brand name. 58 of the respondents are said to TATA-AIG maintain good relationship with customer 44 of the respondents are said to be it gives good returns to their investment
57
TABLE-6 MODE OF RESPONSE ON PRODUCT DOUBTS RECEIVED
MODES OF RESPONSE
NO OF RESPONDENTS
PHONE
78
PERSONAL INTERACTION WEBSITES
104 18
TOTAL
200
CHART - 6
NO OF RESPONDENTS
PRODUCT DOUBTS AND WAY OF RESPONSE RECEIVED 120 100 80 60 40 20 0
78
104 PHONE
18 Phone
personal interaction
websites
PERSONAL INTERACTION WEBSITES
WAY OF RESPOSE
Inferences 104 numbers of existing customers are clarifying their doubts regarding policy and their mode of premium through personal interaction. 78 members of existing customers are clarify their doubts through phones because they living in far away from the office. 18 of the respondents are daily visit company websites and they will see what are the happened in the company policies and clarify their doubts. 58
TABLE-7 COMPANY SERVICE LEVELS DIFFERENT RANKS
NO OF RESPONDENTS
GOOD
102
AVERAGE
67
POOR
31
TOTAL
200
CHART - 7
COMPANY SERVICE LEVELS
120 100 80 NO OF 60 RESPONDENTS 40 20 0
102
67 31
Good Average Poor
GOOD AVERAGE POOR DIFFRENT RANK
Inferences In this survey 102 numbers of respondents are said to be company service levels are good like they provide on time training to newly joining of advisors. In this survey 67 respondents are said to be company service levels are average In this survey 31 respondents are said to be company service levels are poor 59
TABLE -8 ADVISORS EXPLANATION REGARDING POLICY NO OF RESPONDENTS EXPLANATION GOOD
69
SATISFIED
112
UN SATISFIED
21
TOTAL
200 CHART – 8
ADVISORS EXPLANATION REGARDING POLICY
120 100 80 NO OF 60 RESPONDENTS 40 20 0
112 69 21
Good Satisfied Un satisfied
GOOD SATISFIED UNSATISFIED DIFFRENT RANKS
Inferences 112 members of the of a TATA AIG existing customer are said to be they are satisfied with advisor explanation. Advisors have enough knowledge and skills regarding policy 69 members of TATA AIG of the existing customer are said Advisors explanations are good. 21 members of members of TATA AIG of the existing customer are said Advisors explanations are poor. Because they are not provided exact requirements of the customer
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TABLE-9 TOTAL CUSTOMER SATISFACTION LEVELS DIFFERENT RANKS
NO OF RESPONDENTS
GOOD
103
AVERAGE
69
POOR
28
TOTAL
200
CHART - 7
TOTAL CUSTOMER SATISFACTION LEVELS 200 NO OF RESPONDENTS
0 Series1
GOOD AVERA 103
69
POOR 28
DIFFRENT RANKS
Inferences In this survey 103 existing customers are satisfied regarding company service levels advisors explanation and different policies offered by the company. 69 members of the existing customers said to be company service levels advisors explanation are Average 28 members of the existing customers said to be company service levels advisors explanation are poor.
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CHAPTER – V FINDINGS AND SUGGESTIONS
FINDINGS : Most of the TATA AIG existing customers are aware of the all the products offered by the company With regard to occupation most of the respondents are business people Most of the respondents preferred both retirement planning and health protector policy because
health protector gives tax benefits .and
Retirement planning gives life long returns to the policy holders. To protect their income after retirement most of the respondents preferred to opt for the monthly income schemes. most of the respondents aware of the insurance and its benefits Most of the respondents felt that it is needed for the family. with regarding to arrangement of cash for medical expenses, most of the respondents prefer health protector Most of the respondents are satisfied with company service levels advisors explanation regarding policy
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As a whole total customer satisfaction is very in TATA AIG LIFE INSURANC COMPANY.
SUGGESITONS : Company should give more ads like hoardings , than only people should aware of the company
Before a policy is sold all the details of the policy should be clearly explained to the client so they should understand what the exact requirement of the customers is, it will helps in avoiding misunderstanding between customer and advisors.
Company should open online transaction facility so that the transaction need not take so
much of time
Company should train the advisors in the way of innovatively then all the potential customers are converted in to policyholders
It is cleared from the data collected the majority of the people believe in insurance therefore, the company may grab this opportunity in the near future to sell their products.
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BIBLILOGRAPHY
Website visited: www .tata-aig.com www.tata-aiglife.com Www. the hindubusinessline www.irdaindia.org
List of books and other supplementary material referred to: Hindu’s market survey On Life Insurance by M .Anderson, Buist M.Anderson]
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ANNEXURE QUESTIONNAIRE OF THE PROJECT NAME: SEX
:
MALE
FEMALE.
OCCUPATION AGE A) 20-30 years
b) 31-40 years
c) 41-50 years. d) 50 above.
1) Which type of policy did you take? a) health insurance b) children education c) retirement planning d) Any other product. 2)
How much amount of policy did you take with respective to TATAAIG? a) 50000. b) 50000-100000 c) 100000 ABOVE.
3)
How much amount of premium do you pay? a) Below 10000 b) 10000 _15000 c 15000 above 4) Are you satisfied with the mode of premium payment? a) b) c) d)
Monthly quarterly half yearly yearly
Why please specify ………………………. 5) Do you have any other life insurance policy apart from TATA-AIG? If yes, with which insurance company. a) icici prudential b) Bajaj Allianz c) Birla sun life insurance d) Any other life insurance company. e) no 65
6) Why did you opt for TATA- AIG Life Insurance Company? a) brand name b) Good relationship with customers c) Get more returns. d) Any other reasons Please specify…………………….. 7) If you have any doubt regarding insurance service how do you receive the response? a) Phone b) Personal interaction c) Websites d) Any other 8) How do you define the company service levels? a) good b) average c) Poor. 9) Do you satisfy with the advisors explanation about our products? a) Good b) Satisfactory c) Unsatisfactory If no, please specify reasons for dissatisfaction. ………………………….. d) no 10) Do you get any additional benefits from our company? a) Incentives. b) Gifts/ gift vouchers. c) Conventions d) Any other benefits 11) How do you define the rank of the customer satisfaction levels? e) good f) average g) Poor.
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