Interim Report IDBI FEDERAL
Content
Interim Report: A Study of Consumer Behavior in relation to insurance products in IDBI Federal Life
Insurance Co. Ltd.
Executive Summary for Interim Report: My Internship in IDBI Federal Insurance Co Ltd started on 4th April 2011. As per the program we had a training for Incomesurance and the different sales techniques to pitch for our prospective clients. The target assigned to me was to achieve a sales target of minimum of 1 lac in terms of premium amount collected per month. Though I have not been able to convert any pitches into sales till now , while making these sales I got a chance to meet many different people from diverse backgrounds and occupations to discuss on insurance related topics. Along with the sales part we have been assigned a project for which I have chosen the topic Behavior of consumers while purchasing Life Insurance. Buying behavior is a vast and important marketing subject. The primary objective of my project is to identify the key factors which influence a prospective consumer of life insurance the most when considering the purchase of an insurance product. A questionnaire is been prepared with the help of my company guide and I intend to survey 200 respondents for my research. Background: Insurance is a subject listed in the Union list in the Seventh Schedule to the Constitution of India where only centre can legislate. The insurance sector has gone through a number of phases by allowing private companies to solicit insurance and also allowing foreign direct investment of up to 26% earlier and 49% from 2012, the insurance sector has been a booming market. However, the largest life-insurance company in India is still owned by the government. Insurance History : It dates back until 1818, when Oriental Life Insurance Company was started by Anita Bhavsar in Kolkata to cater to the needs of European community. In 1870, Bombay Mutual Life Assurance Society became the first Indian insurer. In the year 1912, the Life Insurance Companies Act and the Provident Fund Act were passed to regulate the insurance business. The Life Insurance Companies Act, 1912 made it necessary that the premium-rate tables and periodical valuations of companies should be certified by an actuary. The oldest existing insurance company in India is the National Insurance Company Ltd., which was founded in 1906. It is in business. The Government of India issued an Ordinance on 19 January 1956 nationalising the Life Insurance sector and Life Insurance Corporation came into existence in the same year. The Life Insurance Corporation (LIC) absorbed 154 Indian, 16 non-Indian insurers as also 75 provident societies—245 Indian and foreign insurers in all. In 1972 with the
General Insurance Business (Nationalisation) Act was passed by the Indian Parliament, and consequently, General Insurance business was nationalized with effect from 1 January 1973. 107 insurers were amalgamated and grouped into four companies, namely National Insurance Company Ltd., the New India Assurance Company Ltd., the Oriental Insurance Company Ltd and the United India Insurance Company Ltd. The General Insurance Corporation of India was incorporated as a company in 1971 and it commence business on January 1, 1973. The LIC had monopoly till the late 90s when the Insurance sector was reopened to the private sector. Before that, the industry consisted of only two state insurers: Life Insurers (Life Insurance Corporation of India, LIC) and General Insurers (General Insurance Corporation of India, GIC). GIC had four subsidiary companies. With effect from December 2000, these subsidiaries have been de-linked from the parent company and were set up as independent insurance companies: Oriental Insurance Company Limited, New India Assurance Company Limited, National Insurance Company Limited and United India Insurance Company Limited.
Insurance Acts The Insurance Act of 1938 was the first legislation governing all forms of insurance to provide strict state control over insurance business. Life insurance in India was completely nationalized on January 19, 1956, through the Life Insurance Corporation Act. All 245 insurance companies operating then in the country were merged into one entity, the Life Insurance Corporation of India. The General Insurance Business Act of 1972 was enacted to nationalise the about 100 general insurance companies then and subsequently merging them into four companies. All the companies were amalgamated into National Insurance, New India Assurance, Oriental Insurance and United India Insurance, which were headquartered in each of the four metropolitan cities. Until 1999, there were no private insurance companies in India. The government then introduced the Insurance Regulatory and Development Authority Act in 1999, thereby de-regulating the insurance sector and allowing private companies. Furthermore, foreign investment was also allowed and capped at 26% holding in the Indian insurance companies. In 2006, the Actuaries Act was passed by parliament to give the profession statutory status on par with Chartered Accountants, Notaries, Cost & Works Accountants, Advocates, Architects and Company Secretaries. A minimum capital of US$80 million(Rs.400 Crore) is required by legislation to set up an insurance business.
About IDBI Federal Life Insurance IDBI Federal Life Insurance Co Ltd is a joint-venture of IDBI Bank, India‘s premier development and commercial bank, Federal Bank, one of India‘s leading private sector banks and Ageas, a multinational insurance giant based out of Europe. In this venture, IDBI Bank owns 48% equity while Federal Bank and Ageas own 26% equity each. Having started in March 2008, in just five months of inception, IDBI Federal became one of the fastest growing new insurance companies to garner Rs 100 Cr in premiums. The company offers its services through a vast nationwide network of 2137 partner bank branches of IDBI Bank and Federal Bank in addition to a sizeable network of advisors and partners. As on 28th February 2013, the company has issued over 8.65 lakh policies with sum assured of over Rs. 26,591 Cr. IDBI Federal today is recognized as a customer-centric brand, with an array of awards to their credit. They have been awarded the PMAA Awards (2009) for best Dealer/Sales force Activity, EFFIE Award (2011) for effective advertising, and conferred with the status of ‗Master Brand 2012-13‘ by the CMO Council USA and CMO Asia.
Sponsors of IDBI Federal Life Insurance Co Ltd IDBI Bank Ltd. continues to be, since its inception, India‘s premier industrial development bank. It came into being as on July 01, 1964 (under the Companies Act, 1956) to support India‘s industrial backbone. Today, with a wide range of innovative products and services, serving retail and corporate customers in all corners of the country from 1077 branches and 1702 ATMs , the Bank offers its customers an extensive range of diversified services including project financing, term lending, working capital facilities, lease finance, venture capital, loan syndication, corporate advisory services and legal and technical advisory services to its corporate clients as well as mortgages and personal loans to its retail clients. As part of its development activities, IDBI Bank has been instrumental in sponsoring the development of key institutions involved in India‘s financial sector –National Stock Exchange of India Limited (NSE) and National Securities Depository Ltd, SHCIL (Stock Holding Corporation of India Ltd), CARE (Credit Analysis and Research Ltd). Federal Bank is one of India‘s leading private sector banks, with a dominant presence in the state of Kerala. It has a strong network of over 1060 branches and 1158 ATMs spread across India. The bank provides over four million retail customers with a wide variety of financial products. Federal Bank is one of the first large Indian banks to have an entirely automated and interconnected branch network. In addition to interconnected branches and ATMs, the Bank has a wide range of services like Internet Banking, Mobile Banking, Tele Banking, Any Where
Banking, debit cards, online bill payment and call centre facilities to offer round the clock banking convenience to its customers. Ageas is an international insurance group with a heritage spanning more than 180 years. Ranked among the top 20 insurance companies in Europe, Ageas has chosen to concentrate its business activities in Europe and Asia, which together make up the largest share of the global insurance market. These are grouped around four segments: Belgium, United Kingdom, Continental Europe and Asia and served through a combination of wholly owned subsidiaries and partnerships . Ageas operates successful partnerships in Belgium, UK, Luxembourg, Italy, Portugal, Turkey, China, Malaysia, India and Thailand and has subsidiaries in France, Hong Kong and UK. Ageas is the market leader in Belgium for individual life and employee benefits, as well as a leading non-life player through AG Insurance. In the UK, Ageas has a strong presence as the fourth largest player in private car insurance and the over 50‘s market. Ageas employs more than 13,000 people and has annual inflows of more than EUR21billion.
Literature Review: A sound insurance segment ensures better economic development as indicated by a study which states that 1 per cent increase in insurance penetration leads to 13 per cent reduction in uninsured losses and 22 per cent reduction in taxpayers' contribution to recovery following a natural catastrophe. Keeping pace with international happenings, Indian insurance industry has remained in a good health and maintained absolute transparency and highest standards of corporate governance. Assets under management (AUM) of the Indian insurers are slated to touch Rs 20 trillion (US$ 376.51 billion) while the general insurance sector is anticipated to grow 18 per cent in 2012-13 as stated by the Chairman of IRDA. He further reported that the insurance sector has grown substantially over the last few years, with its AUM from Rs 8 trillion (US$ 150.57 billion) in 2008 to Rs 18 trillion (US$ 338.82 billion) in 2011-12. Key Statistics Life insurance companies have registered a growth of 4 per cent in the first three quarters of financial year 2012-13. The total premium collection from the individual segment by 24 life insurers stood at Rs 40,688 crore (US$ 7.66 billion) in April-December 2012 as against Rs 39,131 crore (US$ 7.36 billion) in the corresponding period last year. Public sector insurer Life Insurance Corporation of India (LIC) recorded 11.3 per cent growth in the retail segment, with collection of Rs 28,017 crore (US$ 5.27 billion) during April-December 2012 while private sector insurers' collection from individual segment stood at Rs 12,671 crore (US$ 2.38 billion).
IRDA reported that insurance density came out be US$ 49 while insurance penetration stood at 4.1 per cent in 2011. The measure of insurance penetration and density reflects the level of development of insurance sector in a country. While insurance penetration is measured as the percentage of insurance premium to the gross domestic product (GDP), insurance density is calculated as the ratio of premium to population (per capita premium).
New Developments/ Product Launches Allstate Corp, the second largest insurer in the US has inaugurated its first technology and operations centre in Bangalore, India. The centre, an integral part of Allstate's global value chain, is majorly a technology services centre serving in the areas of business intelligence, analytics, testing and mobility. Metlife India is now PNB Metlife India after Punjab National Bank (PNB) picked up 30 per cent stake in the life insurance company. Apart from PNB, MetLife India has two other banks, Karnataka Bank and Jammu and Kashmir Bank as its distribution partners. At present, around 60 per cent of the business is coming from bank channels and the company expects it to increase further over next few years. Two of the insurance companies are planning to launch a specialised health cover for diabetic patients in India. While Apollo Munich has already filed a diabetic cover policy document with IRDA, Religare Health Insurance will soon submit documents for a similar cover with the regulator. Diabetes is an epidemic in India (with around 61 million people having it) and insurance companies look at this as a good business proposition. Unlike the existing health covers, which do not cover hospitals admissions relating to complications of diabetes for up to four years, the proposed policies will cover diabetics from day one. With a view to cover more and more Indians under the umbrella of insurance, public sector general insurers are mulling expanding their operations to other countries in 201314. With a large number of Indians and Indian businesses in South-east Asia, West Asia and Africa, these regions are emerging as preferred destinations. The four general insurers - New India Assurance, United India Insurance, Oriental Insurance and National Insurance - are considering setting up more international centres. While Oriental Insurance might hold stake in proposed reinsurance firm in Nepal, New India is looking to expand in Canada, Qatar and Myanmar. United India Assurance is also looking at South East Asia and Middle East for expansion. Moreover, LIC, GIC Re, four PSU general insurers are already holding stakes in Kenyan Insurance joint venture (JV).
Government Initiatives IRDA has recently formed four working groups to standardise products offered by life insurance companies, wherein the groups would consider unit-liked investment plans, linked variable insurance plans, non-linked variable insurance plans and other non-linked plans. It would focus on bringing uniformity in the designs of the products, determining relevant parameters for each product and ensuring that these parameters are aligned with IRDA stipulations. They would also mention the numerical range within which the parameters could be allowed. Buying Behavior Consumer behavior is the study of how individuals, groups, and organizations select, buy, use and dispose of goods, services, ideas, or experiences to satisfy their needs and wants. It blends elements from psychology, sociology, social anthropology and economics. It attempts to understand the decision-making processes of buyers, both individually and in groups. It studies characteristics of individual consumers such as demographics and behavioral variables in an attempt to understand people's wants. It also tries to assess influences on the consumer from groups such as family, friends, reference groups, and society in general. Five Stages to the Consumer Buying Decision Process (For complex decisions). Actual purchasing is only one stage of the process. Not all decision processes lead to a purchase. All consumer decisions do not always include all 6 stages, determined by the degree of complexity.
The 5 stages are: 1. Problem Recognition 2. Information Search 3. Evaluation of alternatives 4. Purchase Decision 5. Post purchase Behavior. Taking into consideration these 5 stages, the questionnaire has been designed to understand the need for insurances , what perceptions and factors influences buying decisions , what alternatives are available and how to create awareness for the product. Along with the questionnaire I have also circulated a pamphlet containing the brief explanation of Incomesurance , as a way of indirect advertizing while filling up questionnaires
Research Objectives • Primary Research Objective (PRO): • •
To identify the key factors which influence consumers the most when they purchase a life insurance product.
• Secondary Research Objectives (SROs): • • • • • To understand the most common purpose behind taking a life insurance policy. To find out the best option of people when it comes to making an investment. To know about the consumer perceptions to insurances To understand the market of Gujarat majorly from Ahmedabad , evaluating prospects based on needs, obtaining leads To try to create awareness about the insurance products of IDBI Federal life Insurance
Research Approach Research Design : Causal Approach Research Instrument : Questionnaire Data Collection Method: Primary Data Source: Questionnaire for survey Questionnaire These questions ( open + close ended) are being used to know what are the different attributes which consumer looks for while buying Insurance products
Secondary Data source Articles Internet Product Brochures Measurement Technique: To record the data the following measurement techniques would be used: Single Question Multi Choice Likert Scale
Sampling Plan: The sample for survey would be taken on the following basis. Sample Frame People residing or working in India majority being from Gujarat Sample Unit People in the age group of 21 and above Sample Size Targeting a sample size of 200 Time Frame 20 days for survey Sampling Method Simple random sampling (SRS)
Data Analysis Technique The data collected from the research would provide us with the different factors that a consumer looks for while buying Insurances .Analysis would be carried out the help of software like MS-Excel, SPSS etc.
References : 1. www.wikipedia.org 2. www.idbifederal.com 3. www.ibef.org
Questionnaire
Dear Sir/Madam, I am ANUJ MATHEW pursuing my MBA from IMT-Nagpur . This research, titled ―BUYING BEHAVIOUR OF CONSUMERS WHILE PURCHASING INSURANCE PRODUCTS‖ is part of my Summer Internship Program for IDBI Federal Life Insuarance.Your feedback will be strictly confidential. It will be used only for academic purpose and will be very important and valuable for my project. 1. Name: ___________________________________________________ 2. In what age group do you fall under? Tick Mark the right option. 21- 25 Yrs 26-35 Yrs 36-50 Yrs 51-65 Yrs 3. Gender: Male Female
Above 65 Yrs
4. City: ________________ State :________________ Telephone No. : ______________ Email Id: ______________________________________ 5. Occupation Service
Business
Professional
Self employed
Student
Others
6. What is your annual income? Up to Rs 1 lac
Rs 1lac – 5 lacs
Rs 5lacs – 10lacs
Above 10 Lacs
7. Which one according to you is the best investment option? Shares and debentures Bank deposits Mutual funds Post office savings Real estate Gold Others. Please Specify ___________________ 8. Do you own an Insurance Policy? Yes 9. Why would you take up an insurance policy? Risk Coverage Investment purpose Future security Childs marriage
Insurance products Others
No
Pension schemes Childs education
Tax Benefit Savings tool
10. Which insurance companys‘ policy do you own? LIC ICICI Prudential Bajaj Allianz IDBI Federal Others. Please Specify: _________________________________
SBI Life
11. What is your preferred mode of payment? Yearly Half yearly Quarterly Monthly 12. Rate each Factor given below according to how much it influences you when considering the purchase of a life insurance product. Tick Mark the right option: STRONGLY STRONGLY QUES. STATEMENT AGREE NEUTRAL DISAGREE AGREE DISAGREE Investment in insurance products is better than the 1 Bank Deposits 5 4 3 2 1 2 Mutual funds 5 4 3 2 1 3 Post office savings 5 4 3 2 1 4 shares and debentures 5 4 3 2 1
1 2 3 4 5 6 7 8 9
10 11 12 13
Features you consider before taking the insurance policy Insurance Coverage 5 4 3 Rate of Returns 5 4 3 Flexible premium 5 4 3 payment options Flexible withdrawals 5 4 3 Risk Involved 5 4 3 Safety 5 4 3 Brand Image 5 4 3 Tax benefit 5 4 3 Customization of products, services and 5 4 3 communication Approach and conviction of the 5 4 3 insurance agent Friends/relative 5 4 3 referrals Government stake in 5 4 3 the company Advertising / 5 4 3 Visibility
2 2 2 2 2 2 2 2 2
1 1 1 1 1 1 1 1 1
2 2 2 2
1 1 1 1
13. Which Insurance company comes to your mind other than (LIC) when asked about Insurance? Why?
___________________________________________________________________ 14. What is the level of Customer service you get from your current insurance company? Highly Satisfied Satisfied Neutral Dissatisfactory Highly Dissatisfied 15. Are you aware about IDBI Federal or any of the insurance products offered by it? Yes No 16. How are you aware of IDBI Federal Life Insurance? Television Print Media Hoardings/Bill Boards Friend/Family referrals If others please specify __________________
Others.
17. Do you know about the Insurance product, ―Incomesurance‖ offered by IDBI Federal Life Insurance? Can I explain it to you if you have not? I do I don‘t and I am not Interested to know I don‘t and I am Interested to Know 18. Have you invested in any of the plans offered by IDBI Federal Life Insurance? Yes No. If yes, please mention the plan: ___________________________ 19. Any feedback /Enquiry related to IDBI FEDERAL LIFE INSURANCE?
20. Any referrals you would like to provide who may be interested in knowing about Insurance? _____________________________________________ I appreciate & would like to thank you for taking out your time in providing with the details.
Insurance Co. Ltd.
Executive Summary for Interim Report: My Internship in IDBI Federal Insurance Co Ltd started on 4th April 2011. As per the program we had a training for Incomesurance and the different sales techniques to pitch for our prospective clients. The target assigned to me was to achieve a sales target of minimum of 1 lac in terms of premium amount collected per month. Though I have not been able to convert any pitches into sales till now , while making these sales I got a chance to meet many different people from diverse backgrounds and occupations to discuss on insurance related topics. Along with the sales part we have been assigned a project for which I have chosen the topic Behavior of consumers while purchasing Life Insurance. Buying behavior is a vast and important marketing subject. The primary objective of my project is to identify the key factors which influence a prospective consumer of life insurance the most when considering the purchase of an insurance product. A questionnaire is been prepared with the help of my company guide and I intend to survey 200 respondents for my research. Background: Insurance is a subject listed in the Union list in the Seventh Schedule to the Constitution of India where only centre can legislate. The insurance sector has gone through a number of phases by allowing private companies to solicit insurance and also allowing foreign direct investment of up to 26% earlier and 49% from 2012, the insurance sector has been a booming market. However, the largest life-insurance company in India is still owned by the government. Insurance History : It dates back until 1818, when Oriental Life Insurance Company was started by Anita Bhavsar in Kolkata to cater to the needs of European community. In 1870, Bombay Mutual Life Assurance Society became the first Indian insurer. In the year 1912, the Life Insurance Companies Act and the Provident Fund Act were passed to regulate the insurance business. The Life Insurance Companies Act, 1912 made it necessary that the premium-rate tables and periodical valuations of companies should be certified by an actuary. The oldest existing insurance company in India is the National Insurance Company Ltd., which was founded in 1906. It is in business. The Government of India issued an Ordinance on 19 January 1956 nationalising the Life Insurance sector and Life Insurance Corporation came into existence in the same year. The Life Insurance Corporation (LIC) absorbed 154 Indian, 16 non-Indian insurers as also 75 provident societies—245 Indian and foreign insurers in all. In 1972 with the
General Insurance Business (Nationalisation) Act was passed by the Indian Parliament, and consequently, General Insurance business was nationalized with effect from 1 January 1973. 107 insurers were amalgamated and grouped into four companies, namely National Insurance Company Ltd., the New India Assurance Company Ltd., the Oriental Insurance Company Ltd and the United India Insurance Company Ltd. The General Insurance Corporation of India was incorporated as a company in 1971 and it commence business on January 1, 1973. The LIC had monopoly till the late 90s when the Insurance sector was reopened to the private sector. Before that, the industry consisted of only two state insurers: Life Insurers (Life Insurance Corporation of India, LIC) and General Insurers (General Insurance Corporation of India, GIC). GIC had four subsidiary companies. With effect from December 2000, these subsidiaries have been de-linked from the parent company and were set up as independent insurance companies: Oriental Insurance Company Limited, New India Assurance Company Limited, National Insurance Company Limited and United India Insurance Company Limited.
Insurance Acts The Insurance Act of 1938 was the first legislation governing all forms of insurance to provide strict state control over insurance business. Life insurance in India was completely nationalized on January 19, 1956, through the Life Insurance Corporation Act. All 245 insurance companies operating then in the country were merged into one entity, the Life Insurance Corporation of India. The General Insurance Business Act of 1972 was enacted to nationalise the about 100 general insurance companies then and subsequently merging them into four companies. All the companies were amalgamated into National Insurance, New India Assurance, Oriental Insurance and United India Insurance, which were headquartered in each of the four metropolitan cities. Until 1999, there were no private insurance companies in India. The government then introduced the Insurance Regulatory and Development Authority Act in 1999, thereby de-regulating the insurance sector and allowing private companies. Furthermore, foreign investment was also allowed and capped at 26% holding in the Indian insurance companies. In 2006, the Actuaries Act was passed by parliament to give the profession statutory status on par with Chartered Accountants, Notaries, Cost & Works Accountants, Advocates, Architects and Company Secretaries. A minimum capital of US$80 million(Rs.400 Crore) is required by legislation to set up an insurance business.
About IDBI Federal Life Insurance IDBI Federal Life Insurance Co Ltd is a joint-venture of IDBI Bank, India‘s premier development and commercial bank, Federal Bank, one of India‘s leading private sector banks and Ageas, a multinational insurance giant based out of Europe. In this venture, IDBI Bank owns 48% equity while Federal Bank and Ageas own 26% equity each. Having started in March 2008, in just five months of inception, IDBI Federal became one of the fastest growing new insurance companies to garner Rs 100 Cr in premiums. The company offers its services through a vast nationwide network of 2137 partner bank branches of IDBI Bank and Federal Bank in addition to a sizeable network of advisors and partners. As on 28th February 2013, the company has issued over 8.65 lakh policies with sum assured of over Rs. 26,591 Cr. IDBI Federal today is recognized as a customer-centric brand, with an array of awards to their credit. They have been awarded the PMAA Awards (2009) for best Dealer/Sales force Activity, EFFIE Award (2011) for effective advertising, and conferred with the status of ‗Master Brand 2012-13‘ by the CMO Council USA and CMO Asia.
Sponsors of IDBI Federal Life Insurance Co Ltd IDBI Bank Ltd. continues to be, since its inception, India‘s premier industrial development bank. It came into being as on July 01, 1964 (under the Companies Act, 1956) to support India‘s industrial backbone. Today, with a wide range of innovative products and services, serving retail and corporate customers in all corners of the country from 1077 branches and 1702 ATMs , the Bank offers its customers an extensive range of diversified services including project financing, term lending, working capital facilities, lease finance, venture capital, loan syndication, corporate advisory services and legal and technical advisory services to its corporate clients as well as mortgages and personal loans to its retail clients. As part of its development activities, IDBI Bank has been instrumental in sponsoring the development of key institutions involved in India‘s financial sector –National Stock Exchange of India Limited (NSE) and National Securities Depository Ltd, SHCIL (Stock Holding Corporation of India Ltd), CARE (Credit Analysis and Research Ltd). Federal Bank is one of India‘s leading private sector banks, with a dominant presence in the state of Kerala. It has a strong network of over 1060 branches and 1158 ATMs spread across India. The bank provides over four million retail customers with a wide variety of financial products. Federal Bank is one of the first large Indian banks to have an entirely automated and interconnected branch network. In addition to interconnected branches and ATMs, the Bank has a wide range of services like Internet Banking, Mobile Banking, Tele Banking, Any Where
Banking, debit cards, online bill payment and call centre facilities to offer round the clock banking convenience to its customers. Ageas is an international insurance group with a heritage spanning more than 180 years. Ranked among the top 20 insurance companies in Europe, Ageas has chosen to concentrate its business activities in Europe and Asia, which together make up the largest share of the global insurance market. These are grouped around four segments: Belgium, United Kingdom, Continental Europe and Asia and served through a combination of wholly owned subsidiaries and partnerships . Ageas operates successful partnerships in Belgium, UK, Luxembourg, Italy, Portugal, Turkey, China, Malaysia, India and Thailand and has subsidiaries in France, Hong Kong and UK. Ageas is the market leader in Belgium for individual life and employee benefits, as well as a leading non-life player through AG Insurance. In the UK, Ageas has a strong presence as the fourth largest player in private car insurance and the over 50‘s market. Ageas employs more than 13,000 people and has annual inflows of more than EUR21billion.
Literature Review: A sound insurance segment ensures better economic development as indicated by a study which states that 1 per cent increase in insurance penetration leads to 13 per cent reduction in uninsured losses and 22 per cent reduction in taxpayers' contribution to recovery following a natural catastrophe. Keeping pace with international happenings, Indian insurance industry has remained in a good health and maintained absolute transparency and highest standards of corporate governance. Assets under management (AUM) of the Indian insurers are slated to touch Rs 20 trillion (US$ 376.51 billion) while the general insurance sector is anticipated to grow 18 per cent in 2012-13 as stated by the Chairman of IRDA. He further reported that the insurance sector has grown substantially over the last few years, with its AUM from Rs 8 trillion (US$ 150.57 billion) in 2008 to Rs 18 trillion (US$ 338.82 billion) in 2011-12. Key Statistics Life insurance companies have registered a growth of 4 per cent in the first three quarters of financial year 2012-13. The total premium collection from the individual segment by 24 life insurers stood at Rs 40,688 crore (US$ 7.66 billion) in April-December 2012 as against Rs 39,131 crore (US$ 7.36 billion) in the corresponding period last year. Public sector insurer Life Insurance Corporation of India (LIC) recorded 11.3 per cent growth in the retail segment, with collection of Rs 28,017 crore (US$ 5.27 billion) during April-December 2012 while private sector insurers' collection from individual segment stood at Rs 12,671 crore (US$ 2.38 billion).
IRDA reported that insurance density came out be US$ 49 while insurance penetration stood at 4.1 per cent in 2011. The measure of insurance penetration and density reflects the level of development of insurance sector in a country. While insurance penetration is measured as the percentage of insurance premium to the gross domestic product (GDP), insurance density is calculated as the ratio of premium to population (per capita premium).
New Developments/ Product Launches Allstate Corp, the second largest insurer in the US has inaugurated its first technology and operations centre in Bangalore, India. The centre, an integral part of Allstate's global value chain, is majorly a technology services centre serving in the areas of business intelligence, analytics, testing and mobility. Metlife India is now PNB Metlife India after Punjab National Bank (PNB) picked up 30 per cent stake in the life insurance company. Apart from PNB, MetLife India has two other banks, Karnataka Bank and Jammu and Kashmir Bank as its distribution partners. At present, around 60 per cent of the business is coming from bank channels and the company expects it to increase further over next few years. Two of the insurance companies are planning to launch a specialised health cover for diabetic patients in India. While Apollo Munich has already filed a diabetic cover policy document with IRDA, Religare Health Insurance will soon submit documents for a similar cover with the regulator. Diabetes is an epidemic in India (with around 61 million people having it) and insurance companies look at this as a good business proposition. Unlike the existing health covers, which do not cover hospitals admissions relating to complications of diabetes for up to four years, the proposed policies will cover diabetics from day one. With a view to cover more and more Indians under the umbrella of insurance, public sector general insurers are mulling expanding their operations to other countries in 201314. With a large number of Indians and Indian businesses in South-east Asia, West Asia and Africa, these regions are emerging as preferred destinations. The four general insurers - New India Assurance, United India Insurance, Oriental Insurance and National Insurance - are considering setting up more international centres. While Oriental Insurance might hold stake in proposed reinsurance firm in Nepal, New India is looking to expand in Canada, Qatar and Myanmar. United India Assurance is also looking at South East Asia and Middle East for expansion. Moreover, LIC, GIC Re, four PSU general insurers are already holding stakes in Kenyan Insurance joint venture (JV).
Government Initiatives IRDA has recently formed four working groups to standardise products offered by life insurance companies, wherein the groups would consider unit-liked investment plans, linked variable insurance plans, non-linked variable insurance plans and other non-linked plans. It would focus on bringing uniformity in the designs of the products, determining relevant parameters for each product and ensuring that these parameters are aligned with IRDA stipulations. They would also mention the numerical range within which the parameters could be allowed. Buying Behavior Consumer behavior is the study of how individuals, groups, and organizations select, buy, use and dispose of goods, services, ideas, or experiences to satisfy their needs and wants. It blends elements from psychology, sociology, social anthropology and economics. It attempts to understand the decision-making processes of buyers, both individually and in groups. It studies characteristics of individual consumers such as demographics and behavioral variables in an attempt to understand people's wants. It also tries to assess influences on the consumer from groups such as family, friends, reference groups, and society in general. Five Stages to the Consumer Buying Decision Process (For complex decisions). Actual purchasing is only one stage of the process. Not all decision processes lead to a purchase. All consumer decisions do not always include all 6 stages, determined by the degree of complexity.
The 5 stages are: 1. Problem Recognition 2. Information Search 3. Evaluation of alternatives 4. Purchase Decision 5. Post purchase Behavior. Taking into consideration these 5 stages, the questionnaire has been designed to understand the need for insurances , what perceptions and factors influences buying decisions , what alternatives are available and how to create awareness for the product. Along with the questionnaire I have also circulated a pamphlet containing the brief explanation of Incomesurance , as a way of indirect advertizing while filling up questionnaires
Research Objectives • Primary Research Objective (PRO): • •
To identify the key factors which influence consumers the most when they purchase a life insurance product.
• Secondary Research Objectives (SROs): • • • • • To understand the most common purpose behind taking a life insurance policy. To find out the best option of people when it comes to making an investment. To know about the consumer perceptions to insurances To understand the market of Gujarat majorly from Ahmedabad , evaluating prospects based on needs, obtaining leads To try to create awareness about the insurance products of IDBI Federal life Insurance
Research Approach Research Design : Causal Approach Research Instrument : Questionnaire Data Collection Method: Primary Data Source: Questionnaire for survey Questionnaire These questions ( open + close ended) are being used to know what are the different attributes which consumer looks for while buying Insurance products
Secondary Data source Articles Internet Product Brochures Measurement Technique: To record the data the following measurement techniques would be used: Single Question Multi Choice Likert Scale
Sampling Plan: The sample for survey would be taken on the following basis. Sample Frame People residing or working in India majority being from Gujarat Sample Unit People in the age group of 21 and above Sample Size Targeting a sample size of 200 Time Frame 20 days for survey Sampling Method Simple random sampling (SRS)
Data Analysis Technique The data collected from the research would provide us with the different factors that a consumer looks for while buying Insurances .Analysis would be carried out the help of software like MS-Excel, SPSS etc.
References : 1. www.wikipedia.org 2. www.idbifederal.com 3. www.ibef.org
Questionnaire
Dear Sir/Madam, I am ANUJ MATHEW pursuing my MBA from IMT-Nagpur . This research, titled ―BUYING BEHAVIOUR OF CONSUMERS WHILE PURCHASING INSURANCE PRODUCTS‖ is part of my Summer Internship Program for IDBI Federal Life Insuarance.Your feedback will be strictly confidential. It will be used only for academic purpose and will be very important and valuable for my project. 1. Name: ___________________________________________________ 2. In what age group do you fall under? Tick Mark the right option. 21- 25 Yrs 26-35 Yrs 36-50 Yrs 51-65 Yrs 3. Gender: Male Female
Above 65 Yrs
4. City: ________________ State :________________ Telephone No. : ______________ Email Id: ______________________________________ 5. Occupation Service
Business
Professional
Self employed
Student
Others
6. What is your annual income? Up to Rs 1 lac
Rs 1lac – 5 lacs
Rs 5lacs – 10lacs
Above 10 Lacs
7. Which one according to you is the best investment option? Shares and debentures Bank deposits Mutual funds Post office savings Real estate Gold Others. Please Specify ___________________ 8. Do you own an Insurance Policy? Yes 9. Why would you take up an insurance policy? Risk Coverage Investment purpose Future security Childs marriage
Insurance products Others
No
Pension schemes Childs education
Tax Benefit Savings tool
10. Which insurance companys‘ policy do you own? LIC ICICI Prudential Bajaj Allianz IDBI Federal Others. Please Specify: _________________________________
SBI Life
11. What is your preferred mode of payment? Yearly Half yearly Quarterly Monthly 12. Rate each Factor given below according to how much it influences you when considering the purchase of a life insurance product. Tick Mark the right option: STRONGLY STRONGLY QUES. STATEMENT AGREE NEUTRAL DISAGREE AGREE DISAGREE Investment in insurance products is better than the 1 Bank Deposits 5 4 3 2 1 2 Mutual funds 5 4 3 2 1 3 Post office savings 5 4 3 2 1 4 shares and debentures 5 4 3 2 1
1 2 3 4 5 6 7 8 9
10 11 12 13
Features you consider before taking the insurance policy Insurance Coverage 5 4 3 Rate of Returns 5 4 3 Flexible premium 5 4 3 payment options Flexible withdrawals 5 4 3 Risk Involved 5 4 3 Safety 5 4 3 Brand Image 5 4 3 Tax benefit 5 4 3 Customization of products, services and 5 4 3 communication Approach and conviction of the 5 4 3 insurance agent Friends/relative 5 4 3 referrals Government stake in 5 4 3 the company Advertising / 5 4 3 Visibility
2 2 2 2 2 2 2 2 2
1 1 1 1 1 1 1 1 1
2 2 2 2
1 1 1 1
13. Which Insurance company comes to your mind other than (LIC) when asked about Insurance? Why?
___________________________________________________________________ 14. What is the level of Customer service you get from your current insurance company? Highly Satisfied Satisfied Neutral Dissatisfactory Highly Dissatisfied 15. Are you aware about IDBI Federal or any of the insurance products offered by it? Yes No 16. How are you aware of IDBI Federal Life Insurance? Television Print Media Hoardings/Bill Boards Friend/Family referrals If others please specify __________________
Others.
17. Do you know about the Insurance product, ―Incomesurance‖ offered by IDBI Federal Life Insurance? Can I explain it to you if you have not? I do I don‘t and I am not Interested to know I don‘t and I am Interested to Know 18. Have you invested in any of the plans offered by IDBI Federal Life Insurance? Yes No. If yes, please mention the plan: ___________________________ 19. Any feedback /Enquiry related to IDBI FEDERAL LIFE INSURANCE?
20. Any referrals you would like to provide who may be interested in knowing about Insurance? _____________________________________________ I appreciate & would like to thank you for taking out your time in providing with the details.
