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Marketing System Insurance Company Ltd.”.




Submitted In Partial fulfillment for the requirement of Bachelor’s of Business Administration (BBA)

Submitted to: Ms. Chania Dhall

Submitted by: Dhruv Bindal 02924501709 BBA 2009-2012

Jagannath International Management School Kalkaji, New Delhi


I would like to thank my project guide Mr. Birender Kumar , Circle Manager AVIVA Life Insurance, New Delhi for guiding me through my summer internship and research project. His encouragement, time and effort are greatly appreciated. I would like to thank Ms. Chania Dhall for supporting me during this project and providing me an opportunity to learn outside the class room. It was a truly wonderful learning experience. I would like to dedicate this project to my colleagues and all those who help me to complete this project. Without their help and constant support this project would not have been possible. Lastly I would like to thank all the respondents who offered their opinions and suggestions through the survey that was conducted by me in Delhi.

Dhruv Bindal


This internship report consists of the overall experience of online working as a part of AVIVA Life Insurance Co. Ltd. This experience helped me understand the basic functioning of the organization where I was inducted.

My Internship program - Project Title: Performance Appraisal System of AVIVA Life Insurance Company.

The best learning experience was that I started from the very basics of getting to that position and not from the position itself. This helped me get useful insight and understanding of online marketing, the benefits to the members as well as the AVIVA Life Insurance Company.

Training sessions were held to give me insights about How to create markets and write comments on other member’s markets and to encourage and appreciate them for their nice efforts and creative markets.

I also learnt how to work online for such a nice company AVIVA Life Insurance Co. Ltd which enhanced my knowledge, writing skills and communication.


Introduction to Insurance Company Profile of HDFC SLIC Research Design Competitive analysis Marketing problems Analysis and Interpretation Conclusion Bibliography

1 17 53 58 64 68 93 99



AN OVERVIEW OF THE INSURANCE INDUSTRY IN INDIA Indian economy is in transition over the last ten years owing to the initiation of major economic reforms affecting almost all sectors. The paradigm shift from a mixed economic organization to a market oriented organization has exposed all sectors to an intense competition. Insurance being one among the players in the financial services sector. Indian insurance business is the most significant one among them. The industry covers two dimensions viz. Life insurance and General insurance. While Life Insurance Corporatin (LIC) of India is a financial intermediary which mobilizes people’s savings and invests large amounts of premiums, the General Insurance Companies (GIC) do not collect savings, yet they raise crores of rupees from premiums. General insurance deals with exposure of risks to goods and property, whereas life insurance is a way to meet the contingencies of physical death and economic death. In case of prematured death of the assured, the proceeds of policy are paid to the beneficiaries and annuities protect the assured against economic death when he lives too long to arrange for his necessities. In simple language, insurance promises a compensation of monetary loss sustained by a particular person, due to the damage or destruction of a particular piece of property owned by

him, provided it happens due to certain courses. In other words, it is perfectly a simple promise to make good the loss. HISTORICAL ASPECTS OF INSURANCE IN INDIA Insurance activity in India is going on for more than 150 years. In India, life insurance in its modern form was brought for the first time by the Britishers. The Oriental Life Insurance Company started in 1818 in Calcutta was the first to be founded in India by Europeans to help the widows of their community. The general insurance business in India, on the other hand, can trace its roots to him Triton Insurance Company Ltd, the first general insurance company established in the year 1850 in Kolkata by the British. The year 1870, saw the birth of first Indian Insurance Company namely, Bombay Mutual Life Assurance Society. The basic aim of this company was to insure Indian lives at normal rates since in the earlier period. Indian lives were treated as subnormal and loaded with an extra premium of fifteen to twenty per cent. However, right up to the end of 19th century, the foreign insurance companies in India had an upper hand in matters of Insurance business. Insuring Indian lives with 10 percent of extra premium was a common practice prevalent in those times. The Indian Life Assurance Companies were the first to regulate the life insurance business in 1912. In 1928, the Indian Insurance companies act enabled the government to collect

statistical information about both life and non life insurance business. Later, the insurance Act of 1938 was passed and department of insurance under authority of superintendent of insurance was established for the administration of the Act. Upto 1939, 199 companies were working in India. KEY MILESTONES  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.  1938: Earlier legislation consolidated and amended by the Insurance Act with the objective of protecting the interests of the insuring public.  1956: 245 Indian and foreign insurers along with provident societies were taken over by the central government and nationalized. LIC was formed by an Act of Parliament- LIC Act

1956- with a capital contribution of Rs. 5 crore from the Government of India.

INSURANCE SECTOR REFORMS The government in a bid to complement the reforms initiated in the financial sector established a committee headed by former finance secretary and Reserve Bank of India (RBI) governor, Mr R.N. Malhotra to evaluate the insurance industry and to recommend its future direction. This committee suggested the following changes:  Government stake in insurance companies be brought down to 50 percent.  The take over of the holding of GIC and its subsidiaries in order to facilitate their functioning as independent corporations.  Allowing private enterprise in the sector with companies with a paid up capital of a minimum of Rs 100 crore.  No single entity to function in both Life and General insurance segments.

 Foreign companies to be allowed only in combination with an Indian partner.  Changed to be made to the insurance Act.  An independent insurance regulatory authority to be set up.  Reduction in the mandatory investments of LIC Life Fund in government securities to be brought down from 75 percent to 50 percent.  GIC and its subsidiaries are not to hold more than 5 percent in any company.  Popularization of pension schemes in rural areas.  Allowing PLI (Postal life insurance) in rural areas.  Rapid computerization of branches.  Payment of interest on delayed claims.  Use of revised mortality tables by LIC and revision of premiums after every 10 years.  Issue of long term unit linked insurance plans.

 Transfer of LALGI and IRDP schemes to concerned government authorities.  The insurance sector began its reform process with the passage of the IRDA (the Insurance Regulatory and development authority) bill in Parliament in December 1999. However with the setting up of IRDA, the government has once again de-regulated the sector opening it for the private players. The entry of private players has enabled the industry to look at alternative distribution channels. To get the maximum pie of the premium, every insurance company is adopting new distribution and marketing strategies. In the last two years alone, the economy has witnessed some fundamental changes in the Indian insurance industry. The total foreign direct investment in India in the insurance sector today stands at Rs 95,250 crore. The total premium income of the Indian insurance industry both life and non life for the year ending March 31, 2007 stands at Rs 1,91,376,11 crore, out of this, the share of life insurance premium is 78 percent, i.e. Rs 7155416 crore and general insurance premium is 22 percent, i.e. Rs 15,638 crore. The share of private sector in life insurance cake has increased from 0.02 to 1.99 percent in the last two years. While the share of private sector in general insurance cake has increased from 0.07 to 9.50 percent. The transition of the insurance industry

from a public monopoly to a competitive environment new presents very interesting challenges both to the new players and to the customer. Not only the new players have an opportunity to test out their various hypothesis and apply learning’s from overseas markets, the customer will have a greater choice when it comes to choosing a provider or a solution for their needs. The study of insurance companies of that time clearly reveal that concept of trustship which should be cornerstone of life business seemed entirely lacking and most of the managements had no appreciation of the clear and vital distinction that exists between trust monies and those that belong to joint stock companies owned by shareholders. So the nationalization of life insurance business became necessary with a view to - provide cent percent security to policy holder,  ensure the use of life insurance funds for nation building activities,  avoid wasteful efforts in competition,  save the dividends paid to shareholder of insurance companies,  avoid certain undesirable practices adopted by some of the insurance companies management, and  spread the gospel of life insurance into the neglected rural areas.

245 Indian and foreign insurance and provident societies taken over by the central Government and nationalized. In 1956, the Government of India nationalized the life insurance business. Since then the entire life insurance business is being transacted by the Life insurance Corporation of India for more than four decades, the LIC has been enjoying monopoly status enjoying supernormal profits at the expense of consumers in life business in the country. The LIC by this time has grown manifold. At present it has a network of 7 zones, 100 divisions and over 2000 branches. The annual premium income was US $21 million in 1956. Current business investment in LIC is over US $29 billion. Life insurance funds constitute approximately 11 percent of gross household saving in financial assets in India, and a little over 1 percent of gross domestic product. Life insurance corporation of India, despite its best efforts, has not penetrated more than 15 percent of the insurance population, which itself is more than 300 million. Insurance penetration as a measure of percentage of GDP is very low for India and countries like South Korea are much higher than India. With approximately $7 billion of premium collected annually, India is the 23rd largest market in the world. The General insurance business (Nationalization) Act, 1972 nationalized the general insurance business in India with effect from January 1, 1973. 107 insures amalgamated and grouped into four companies, viz the national insurance company Ltd.,

the New India Assurance Company Ltd., the Oriental Fire and general insurance company Ltd., and the United India insurance company Le., General insurance company (GIC) was incorporated as a company. The four constituents of the GIC were to operate on a competitive basis and be governed by the guidelines structured by the Government of India. Recognizing the need for reforms in the financial and insurance sector, the government appointed the Malhotra Committee to seek and identify the measures required for the reform process in the insurance sector.



Aviva is UK’s largest and the world’s fifth largest insurance Group. It is one of the leading providers of life and pensions products to Europe and has substantial businesses elsewhere around the world. With a history dating back to 1696, Aviva has a 35 million-customer base worldwide. It has more than £332 billion of assets under management. In India, Aviva has a long history dating back to 1834. At the time of nationalisation it was the largest foreign insurer in India in terms of the compensation paid by the Government of India. Aviva was also the first foreign insurance company in India to set up its representative office in 1995. In India, Aviva has a joint venture with Dabur, one of India's oldest, and largest Group of companies. A professionally managed company, Dabur is the country's leading producer of traditional healthcare products. In accordance with the government regulations Aviva holds a 26 per cent stake in the joint venture and the Dabur group holds the balance 74 per cent share. With a strong sales force of over 12,000 Financial Planning Advisers (FPAs), Aviva has initiated an innovative and differentiated sales approach to the business. Through the “Financial Health Check” (FHC) Aviva’s sales force has been able to establish its credibility in the

market. The FHC is a free service administered by the FPAs for a needbased analysis of the customer’s long-term savings and insurance needs. Depending on the life stage and earnings of the customer, the FHC assesses and recommends the right insurance product for them. Aviva pioneered the concept of Bancassurance in India, and has leveraged its global expertise in Bancassurance successfully in India. Currently, Aviva has Bancassurance tie-ups with ABN Amro Bank, American Express Bank, Canara Bank, Centurion Bank of Punjab, The Lakshmi Vilas Bank Ltd. and Punjab & Sind Bank, 15 Co-operative Banks in Gujarat, Rajasthan, Jammu & Kashmir, Bihar, West Bengal and Maharashtra and one regional Bank in Sikkim. When Aviva entered the market, most companies were offering traditional life products. Aviva started by offering the more modern Unit Linked and Unitised With Profit products to the customers, creating a unique differentiation. Aviva’s products have been designed in a manner to provide customers flexibility, transparency and value for money. It has been among the first companies to introduce the more modern Unit Linked Products in the market. Its products include: whole life (Life Long), endowment (Life Saver, Easy Life Plus), and child policy (Young

Achiever) single premium (Life Bond and Life Bond Plus), Pension (Pension Plus), Term (Life Shield), fixed term protection plan (Freedom Life Plan) and a tax efficient investment plan with limited premium payment term (LifeBond5). Aviva products are modern and contemporary unitised products that offer unique customer benefits like flexibility to chose cover levels, indexation and partial withdrawals. Aviva’s Fund management operation is one of its key differentiators. Operating from Mumbai, Aviva has an experienced team of fund managers and the range of fund options includes Unitised With-Profits Fund and four Unit Linked funds: - Protector Fund, Secure Fund, Balanced Fund and Growth Fund. Aviva has 112 Branches in India (including rural branches) supporting its distribution network. Through its Bancassurance partner locations, Aviva products are available in 378 towns and cities across India. Aviva is also keen to reach out to the underprivileged that have not had access to insurance so far. Through its association with Basix (a micro financial institution) and other NGOs, it has been able to reach the weaker sections of the society and provide life insurance to them. For three consecutive years in 2005, 2006 and 2007, Aviva has had relatively high scores on the parameters of Credibility, Respect,

Fairness, Pride and Camaraderie in the survey administered by Grow Talent Company Ltd. along with Great Places to Work® Institute, Inc. and Business World magazine.

WHO IS AVIVA DABUR A professionally managed company, it is the country's leading producer of Founded in 1884, Dabur is one of India's oldest and largest group of companies with consolidated annual turnover in excess of Rs 1,899 crores. Traditional healthcare products.

Aviva is UK’s largest and the world’s fifth largest insurance Group. It is one of the leading providers of life and pensions products to Europe and has substantial businesses elsewhere around the world. With a history dating back to 1696, Aviva has a 35 million-customer base worldwide. It has more than £332 billion of assets under management.

Aviva - where exceeding expectations through innovative solutions is "the" way of life This is the compelling vision that Aviva India has created through the active contribution of its employees. These lines not only define the way we live and work but also serve as a reminder to deliver the best to our customers, shareholders, colleagues, partners & employees at all times.

Embedded in this vision are the core values of Integrity, Customer centricity, Passion for winning, Innovation and Empowered team that we have collectively defined and committed to working towards.

Aviva is committed to helping our customers get 'Kal par Control' and make the most out of their lives. It is the constant endeavour to ensure that our customers have easy access to Aviva products and services at all times. Aviva has pioneered bancassurance in the country through its tie-ups with 22 leading private and nationalised Banks in the country. Aviva

also focuses on bancassurance worldwide and has a proven track record of successful bancassurance relationships. It has 40 major partnerships with leading banks across the globe. Aviva is a leading bancassurer in countries such as France, Italy, Spain, Australia and New Zealand. ABN AMRO Bank ABN AMRO is a prominent international bank with European roots and a clear focus on consumer and commercial banking gaining a competitive edge on the chosen markets and client segments. ABN AMRO Bank (India) ventured into the Indian market in 1920 primarily to finance the diamond trading business and evolved by mid 1990’s into a fastest growing retail bank and a well-respected wholesale bank. The Bank is recognized as one of the most successful consumer banking outfits in the county, known for its innovation and aggression. ABN India consumer banking pioneered the distribution of third party financial products like mutual funds, bonds and life insurance. Aviva's relationship with ABN India commenced in June 2002 under which the bank introduces its customers to Aviva for insurance and provides access to its affluent customer base across the country through its operations in 21 branches at 14 locations.

American Express Bank American Express Company is a diversified worldwide travel and financial services company founded in 1850. It is the world’s largest single card issuer, based on purchase volume generated of nearly 55 million cards worldwide. Present in India since 1921, American Express provides high quality travel related and financial services in India. Aviva Life Insurance entered into a strategic alliance with American Express for distribution of Life Insurance in June 2002 to offer top-of the line saving-cum-protection plans to Amex bank and card customers. Aviva offers tailor-made investment solutions to the high net worth clients of the Wealth Management channel. The retail card segment is being tapped through outbound calling to the Amex cardholders. The American Express Inbound call center also pitches Aviva products to its callers. The Lakshmi Vilas Bank Ltd The Lakshmi Vilas Bank Ltd, based out of Karur, is among the top private banks in India. It has 221 branches with a customer base of 1.2

million, across 10 states. Currently Aviva products are sold across 204 branches of LVB.

Canara Bank Canara Bank is one of the largest retail banks in India with 2,513 branches spread across 25 States and 4 Union Territories. The customer base of Canara Bank exceeds 27 million. With a net profit of INR 1110 Crores, deposits of over INR 96,908 Crores, 47389 employees for the year ending Mar 2005, Canara Bank is truly a Bank to be reckoned with for the sheer magnitude of coverage it offers its clients. Canara Bank has tied up with Aviva as a Corporate Agent for its Life Insurance Products. Aviva products are currently offered in 1030 Canara Bank branches in 103 Cities. Punjab & Sind Bank Punjab & Sind Bank was established in the year 1908. Based on the principles of social commitment to the people, help the farmers, and the weaker sections of the society to raise their standard of living and play a significant role in the development of the country. Even after 96 years of its inception, Punjab & Sind Bank stands committed to honor the high

ideals of its founding fathers. Punjab and Sindh Bank has a network of 759 branches and 132 extension counters all over the country with close to 9,765 employees. 42 per cent of its branches are in the rural and semi urban areas. In line with spirit of liberalisation the Bank has laid special emphasis on International banking, Hire purchase, Leasing, Tele-banking and Credit card facilities. The bank has also started their Rural Development Division, High Tech Agricultural Branches, Specialised Locker Branches, Industrial Finance and SSI branches, besides Housing Finance Branch for the convenience of its customers. Centurion Bank of Punjab Centurion Bank of Punjab is a new generation private sector bank offering a wide spectrum of retail and corporate banking products and services. It holds leadership positions in retail two-wheeler loans and commercial vehicle loans. It has been among the earliest banks to offer a technology-enabled customer interface that provides easy access and superior customer service. RBI has approved the merger between Centurion Bank and Bank of Punjab effective from October 1st, 2005. The merged entity, named

Centurion Bank of Punjab, has a strong nationwide franchise of 241 branches and extension counters and 389 ATMs. With strengths in the retail, SME and agriculture businesses the bank is well poised to capture the opportunities that exist in the Indian market. The combined bank’s 3,500 employees will continue to provide support and an enhanced banking experience to our customers, as part of a bigger, stronger bank. “Aviva’s key strength is its fund management capabilities with an experience of 30 years in money management.”

EQUITY The much-awaited correction finally materialised in the quarter ended June 2006. The BSE Sensex, which peaked at 12612 levels on 10th May 2006, has corrected to around 10000 levels. After three years of

sustained Bull Run, the recent correction has been a timely reminder that the markets, in the short term, may see downsides too. Compared to the rise in the market, the downtrend has not been very large though it has been quicker than expectations. Even post this 20% or so correction from its peak, the Sensex is up 12.9% year to date. This much-needed correction has weeded out some of the euphoria and the focus on value is back. Does this correction reflect any change in the key fundamentals of India? We do not think so. The three-year rally was in the first place due to appreciation of India’s sustainable growth story. The second reason was an improvement in the global liquidity as investor’s appetite for risk iJhansieased. The India growth story remains intact and the GDP growth in the last few quarters is an evidence of this. We expect GDP to grow by over 7% on a sustainable basis and hence India would continue to be an attractive investment destination. The major reason for the correction has been liquidity moving out of the markets. This has been caused by fall in the commodity prices from their peak, rising global interest rates and high crude prices causing

worries about inflation and a global meltdown. With the tightening of global liquidity and reduced risk appetite of investors, there have been outflows from emerging markets including India. Secondly, valuations in India were among the highest in emerging markets and hence witnessed a greater compression. One of the major fears globally is that of a slowing economy in the US and China. India is highly resilient to global meltdowns as private consumption accounts for 62% of our GDP and exports account for only 12% of GDP. With a favourable demographic profile- iJhansieasing working population and improved disposable income in the hands of the consumer, this resilience will only improve. This coupled with superior growth and demographics will drive flows back to India in the long term. In the short term, the markets could continue to witness volatility as the direction would be determined by global liquidity, progress of monsoons and the quarterly results for June 2006. We believe, for the long-term investor, this correction would provide a good opportunity to participate in the India growth story. However, expectations of returns from equity should be moderate with stock returns tracking earnings growth.

FIXED INCOME Is virtuous cycle turning vicious? Inflation has touched one year high of 5.44%, and INR has touched 2 year low of 46.04. Aligning with these movements, yield on benchmark 10 year Government Bond also went up to a four year high of 8.10%. The latest balance of payments numbers for 2005-06 show an overall balance of $15 bn, helped by a less-than-expected deficit on the current account ($10.6 bn). This was essentially due to strong invisibles (private remittance and net software exports) providing cover for a trade deficit, which was itself moderated by a strong 28% y-o-y growth in exports. Net inflows on the capital account stood at $24.7 bn with $5.7 bn coming from net FDI and $12.5 bn being accounted for by portfolio inflows. Though headline inflation recently has picked up with prices of food and non food articles in the ‘primary goods’ category rising, the government has taken short-term measures in the form of liberalizing imports of wheat and sugar and banning exports of pulses in order to ease the supply situation. Core inflation, that is, excluding the more volatile primary and fuel categories, has picked up a bit in comparison to last year. However it is expected to remain in a manageable range. RBI seems committed to containing inflation and would thus act accordingly. Recently, RBI chose to increase rates to manage inflationary expectations and in response

to various central banks hiking rates globally. This has led to a few banks raising lending rates in addition to getting reflected in the money and bond markets. GDP growth for 2005-06 came in at a better than expected 8.4%, propped up by improved agriculture performance. For 2006-07 also, despite inflationary pressures, the GDP is expected to grow at over 7%. Going forward, monetary tightness will weigh on the interest rate outlook and it is expected to remain firm.

PROBLEMS OF THE COMPANY AND THEIR SOLUTION The goal of Aviva Life Insurance is not only to sell an INSURANCE POLICY, but also to help its customers at every step of the way in making thier world a better placce to live in. Besides its will to provide a high-quality service to all of its customers, Aviva Life Insurance takes a stand as a socially responsible enterprise respectful of its envoronment and respectful of the issues, Aviva Life Insurance has been strongly committed not only to environmental conservation programmes but also expresses the increasingly inseperable balance between the economic concerns and the environmental and social issues faced by a business. A business must not grow at the expense of mankind and man’s future but rather must serve mankind. “We must do something for the community from whose land we generate our wealth.” We at Aviva Life Insurance are committed to demonstrate excellence in our envirinmental performance on a continual basis, as an intrinsic element of our corporate phyilosophy.

To achieve this we commit ourselves to: 1. 2. Continue product innovation to environmental compatibility. Comply with all applicable environmental legislation and also controlling our environmental discharges through the principles of “alara” (as low as resonably isachievale. 3. A large scale of agent advisors are posted in every state of India whiich are very helpful to the customers. 4. 5. 6. All the policy claims had been resolved in 72 hours. Online policy reneable available on internet. Some policies were introduced which are very to semi-urban areas.

COMPETITION INFORMATION Life insurance vs other investments Life insurance allows long-term savings to be made in a reletively painless manner because of the low and convinient investments nade through premiums. Moreover, it encourages ‘forced thrift’ which means the insured is made to pay premiums an d save money, which he/ she may not do in the regular course of life. If you require loans, say for building a house, it can be easily obtained against a life insuranne policy. Amongst the most known benefits of life insurance is the savings on your income taxes. Life insurance cannot be compared with any other form of investment as life insurance gives you alife long benifits and returns on your money when it is most required.

Insurance premiums are linked to age of the lifef to be insured and the earlier one buys it, the lower are the premiums requirement. Besides, the money stays invested for a longet time and thereby maximising one’s returns through the power of rupee compounding.

So, a life insurance policy is an ideal tool to gain security and ensure savings. Most importantly it provides you with that unique sense security and peace of mind that no other form of investment provides.

PRIVATE PLAYERS IN THE INDIAN INSURANCE MARKET. Company Indian partner Foreign insurer Area

Birla Sunlife

Aditya Group

Birla Sunlife, Canada


Om Kotak

Kotak Mahindra Old Mutual, Finance South Africa


HDFC-Standard Life HDFC Royal Sundaram Sundaram Finance ICICI-Prudential ICICI

Standard Life UK Life Roya Sun, UK Life & Non life Prudential, UK New York Life USA Life Life

Max New York Life Max India


Tata group


Life & non Life

ING Vysya

Vysya Bank

ING Insurance, Netherlands


Aviva Metlife India

Dabur Jammu & Kashmir Bank

CGU life, UK Metlife, USA

Life Life

Bajaj Allianz

Bajaj Auto


Life & non Life

AMP Sanmar SBI Life Insurance

Sanmar Group SBI

AMP, Australia Cardiff, Frnce

Life Life

TABLE 1.1 In the first quarter of the year 2007, insurance companies spent 70 percent of what was spent in the year 2006, on advertising ad publicity. Across the world, insurance as a category was one of the largest spenders on advertising. In India too substantial expenditure was being incurred due to advertising depicted in the Table given below:

Advertisement Expenditure by Insurance Companies (Rs. Million) Company LIC Allianz Bajaj Om Kotak Mahindra ICICI Prudential Expenditure 1000 200 150 146


 LIC’s business increased mainly because of the increased public awareness about insurance. During the first year of the entry of new players, while LIC reported a growth of over 250 percent, private insurers managed to garner only about 0.5 percent market share in spite of spending hefty amounts on advertising and promotion. According to a sample survey conducted by ORG-marg on the popular life insurance brands in Dec 2006, awareness of LIC policies was a phenomenal 100 per cent while the private insurers lagged behind. But now private players firmly etched in the minds of tap insurance market.

Slicing the insurance Pie Life insurance No. of policies sold Value of business as on June 31st , 2006 ICICI Prudential Max New York Life Aviva HDFC standard Birla Sunlife SBI Cardit Non-Life Insurance : Tata AIG Royal Sundaram Reliance Genins IFFCO-Tokio Bajaj Allianz 6178 1227 372 174 10 18.69 7.55 8.51 16.30 1.26 12,757 6996 1688 1629 1048 169 14.60 2.75 1021 2.09 7.60 1.63 (Rs Crore)



Right products, quality and reliability.


Not very popular in the international market

Superior product performance vs. competitors.

 

Customer service staff need training.

Brand Image Products have required accreditations.
 

Processes and systems, etc Management cover insufficient.

High degree of customer satisfaction.

   


Profit margins will be good. Could extend to overseas. Could seek better supplier deals. An applied research centre to create opportunities for developing techniques to provide added-value services

Vulnerable to reactive attack by major competitors.

Lack of infrastructure in rural areas could constrain investment.

High volume/low cost market is intensely competitive.



INTRODUCTION A Research Design is the framework or plan for a study which is used as a guide in collecting and analyzing the data collected. It is the blue print that is followed in completing the study. The basic objective of research cannot be attained without a proper research design. It specifies the methods and procedures for acquiring the information needed to conduct the research effectively. It is the overall operational pattern of the project that stipulates what information needs to be collected, from which sources and by what methods.


“To Compare the products of AVIVA Life Insurance Company Limited and Tata AIG Life Insurance Company Limited for AVIVA Life Insurance Company Ltd.”
STATEMENT OF THE PROBLEM This study was undertaken to identify which type of insurance plans AVIVA should market to beat Tata AIG LIC in India. A survey was undertaken to understand the preferences of Indian consumers with respect to insurance. While marketing policies the sole duty of an advisor/ agent is to provide insurance plans as per customer requirements. In effect plans (insurance products) should be flexible to suit individual requirements. This research tries to analyze some key factors which influence the purchase of insurance like the term of the policy, the type of company, the amount of annual premium payable (capacity and willingness to spend), risk taking ability and the influence of advertising. Solutions and recommendations are made based on qualitative and quantitative analysis of the data.


 To analysis the product details of AVIVA life Insurance Company limited and Tata AIG life Insurance Company Limited.  To find ‗Points of Parity‘ and ‗Points of Difference‘ of AVIVA Life Insurance Company Limited and Tata AIG Life Insurance Company Limited.  To find out factors that influence customers to purchase insurance policies and give suggestions for further improvement.


TYPE OF DATA COLLECTED There are two types of data used. They are primary and secondary data. Primary data is defined as data that is collected from original sources for a specific purpose. Secondary data is data collected from indirect sources. (Source: Research Methodology, By C. R. Kothari)

PRIMARY SOURCES These include the survey or questionnaire method, telephonic interview as well as the personal interview methods of data collection.

SECONDARY SOURCES These include books, the internet, company brochures, product brochures, the company website, competitor‘s websites etc, newspaper articles etc.

SAMPLING Sampling refers to the method of selecting a sample from a given universe with a view to draw conclusions about that universe. A sample is a representative of the universe selected for study.

SAMPLE SIZE The sample size for the survey conducted was 270 respondents. This sample size was taken on 95% confidence level and 6 significant level. Data universe for this sample is 11,954,217 which is approx population of Delhi.

SAMPLING TECHNIQUE Random sampling technique was used in the survey conducted.


Tables were used for the analysis of the collected data. The data is also neatly presented with the help of statistical tools such as graphs and pie charts. Percentages and averages have also been used to represent data clearly and effectively.

STUDY AREA The samples referred to were residing in Delhi. The areas covered were Shastri Nagar, kashmeri gate, ashok vihar, chadni chowk, kashewpuram, saket, Subhash Nagar, City Area and Kamla Nehru Nagar.


Trevor Bull, CEO, Tata AIG

Tata AIG Life Insurance Company Limited (Tata AIG Life) is a joint venture company, formed by the Tata Group and American International Group, Inc. (AIG). Tata AIG Life combines the Tata Group‘s pre-eminent leadership position in India and AIG‘s global presence as the world‘s leading international insurance and financial services organization. The Tata Group holds 74 per cent stake in the insurance venture with AIG holding the balance 26 percent. Tata AIG Life provides insurance solutions to individuals and corporate. Tata AIG Life Insurance Company was licensed to operate in India on February 12, 2001 and started operations on April 1, 2001.

The Tata Group is one of India's largest and most respected business conglomerates, with revenues in 2004-05 of $17.8 billion (Rs. 799,118 million), the equivalent of about 2.8 per cent of the country's GDP. Tata companies together employ some 215,000 people. The Group's 32 publicly listed enterprises - among them standout names such as Tata Steel, Tata Consultancy Services, Tata Motors and Tata Tea - have a combined market capitalization that is the highest among Indian business houses in the private sector, and a shareholder base of over 2 million. The Tata Group has operations in more than 40 countries across six continents, and its companies export products and services to 140 nations.

American International Group, Inc. (AIG), world leaders in insurance and financial services, is the leading international insurance organization with operations in more than 130 countries and jurisdictions. AIG companies serve commercial, institutional and individual customers through the most extensive worldwide property-casualty and life insurance networks of any insurer. In addition, AIG companies are leading providers of retirement services, financial services and asset management around the world. AIG's common stock is listed on the New York Stock Exchange as well as the stock exchanges in London, Paris, Switzerland and Tokyo.

Tata AIG has strong brand name and recall factor which most of its competitors lack in. Other than the public behemoth Life Insurance Corporation (LIC) of India which has a major hold in the market share (of approximately 79%), the private players too are having more and more opportunities to tighten their hold of the market. Of the private players, ICICI Prudential comes first with an almost 4.50% of the market share followed by Tata AIG with about 2.10% of the pie. The private players have everything to work for, especially with LIC not meeting the needs of its clientele with respect to the services they need. This provides a prospect for the private sector players to increase their share of the market. Companies with a familiarity such as Tata AIG can especially achieve their targets due to the brand image that the Tata group has. (Source: 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 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.

Corporate life insurance products:     Employee Benefits Credit Life Group Pensions Workplace Solutions

Individual life insurance products:      Health First Health Protector Mahalife Invest Assure II, Invest Assure Gold Shubh life, Nirbhay life

With respect to individual life insurance products, Tata AIG has an array of policies to suit the needs and requirements of all age groups viz, children, students, adults, retirees etc.

The ‗SUPPORT‘ arm of Tata AIG Life is constituted of Operations, Human Resources, Marketing, Corporate Training, Finance and Compliance.

Tata AIG Life possesses the philosophy and drive to customize retirement obligations (for the company) which occur in the form of cash outflows, for the maximum benefit of both the employer and the departing employee.



Points of Parity
Funds available with ULIP Plans

General Description

Nature of Investments Primarily invested in company stocks with the general aim of capital appreciation Invested in corporate bonds, government securities and other fixed income instruments Sometimes known as Money Market Funds — invested in cash, bank deposits and money market instruments Combining equity investment with fixed interest instruments

Risk Category

Equity Funds


Income, Fixed Interest and Bond Funds


Cash Funds


Balanced Funds


Generally all life insurance companies have three types of fund which are Equity fund, Debt fund and Balance fund. These fund have different risk profile. Equity fund has high risk but it gives high return, Debt fund has low risk so it gives low return and Balanced fund is combination of both Equity and Debt fund so risk is medium and return is also low. Both AVIVA and Tata AIG LIC have 7 types of funds based on combination of Debt–Equity fund. These are liquid fund, stable managed fund, secure managed fund, defensive managed fund, balanced managed fund, equity managed fund, growth fund. Indexation You have the option to increase your regular premiums by an indexation rate at any policy anniversary to protect the real value of your investment against inflation. The rate of indexation will be in line with the increase in the Whole Sale Price Index (or in the event that this Index

ceases to be published such other index as the Company may select for this purpose). The base sum assured and sum assured of any attached rider would also be increased by the corresponding indexation increase.

Charges, Fees and Deductions in ULIP
 Premium Allocation Charge

This is a premium-based charge. After deducting this charge from premiums, the remainder is invested to buy units. The Allocation charges are guaranteed for the entire duration of policy term.  Mortality Charge

The Mortality Charge will apply on the Sum at Risk (SAR = Sum Assured less the Fund Value pertaining to regular premiums). It will be deducted by monthly cancellation of units from the accumulation unit account. The Mortality Charge shall remain guaranteed throughout the policy term.  Fund Management Charge

1% p.a. on With Profits Fund, 1% p.a. on Debt Fund, 1.25% p.a. on Balanced Fund and 1.50% p.a. on Growth Fund. FMC will be applied on the fund while calculating NAV on a daily basis. The maximum FMC on any fund is 2% p.a. subject to prior approval by the IRDA.  Policy Administration Charge

Rs. 60 per month, which will increase by 5% p.a. on the 1st of January each year. PAC will be deducted monthly by cancellation of units from the accumulation unit account. If premiums are discontinued, this charge would reduce to 60% of the charge applicable for the premium paying policies

Surrender Charge  This is the charge that applies when the policy is surrendered. It is equal to 50% of the difference between regular premiums expected and those paid in the first year of the contract.  Service Tax Deductions

12.36% service tax is applicable on the first premium of life insurance policy. Tax Benefits Tax benefits will be as per Section 80C & Section 10(10D) of the Income Tax Act, 1961. Insurance is tax free up to Rs. 100000 per annum and the returns on investment on maturity of the policy are also tax free.

Riders and Bonuses Tata AIG Life Insurance 15 days Based on company's performance Based on company's performance Minimum Rs. 5000

AVIVA Life Insurance Free Look Period Reversionary Bonus 15 days Based on company's performance Based on company's performance Minimum Rs. 5000

Terminal Bonus TOP UP

Riders Gives on diagnosis of anyone of 6 critical illness Gives on diagnosis of anyone of 12 critical illness Provides

Critical Illness (CI) Benefit

Additional Term Benefit (ATB) Accidental Death Benefit (ADB) Double Benefit Triple Benefit Payer Benefit Rider (PBR) Waiver of Premium (WOP) Benefit


Provides Provides Provides Does not provide Provides

Provides Does not provide Does not provide Provides Provides

Points of Difference

AVIVA Life Insurance Grace Period Policy Administration Charge Guaranteed Bonus Loyalty Bonus 15 days Rs. 60 per month

Tata AIG Life Insurance 31 days Rs. 55 per month 10% on sum-assured after 10 year 0.25% after every 4th year 4 free switches per year after this Rs. 250 per switch 30% of all premium paid excluding 1st premium 1.75% per annum on the fund value First 2 Premium Redirection in a year is free after this Rs. 1000 per Premium Redirection 72%

Does not give 0.1% every year Total 24 free switches in a policy after this Rs. 100 per Switch 50% of all premium paid excluding 1st premium 0.80% per annum on the fund value Total 12 free Premium Redirection in a policy after this Rs. 250 per Premium Redirection 42.70%

Fund Switching Charge

Guaranteed Surrender value

Fund Management Charge

Premium Redirection Charge

Last Year Return

We see that both the life insurance companies‘ products are almost same. They have same charges, fees and deductions. There is slightly difference in charges and maximum limits of all charges are fixed by IRDA. Before buying any life insurance policy

one should check charges and fees on policy and company‘s overall performance and return given to its consumer.




LIC has an excellent money back policy which provides for periodic payments of partial survival benefits as long as the policy holder is alive. 20% of the sum assured is payable after 5, 10, 15 and 20 years and the balance 40% is payable at the 20th year along with accrued bonus. ( For a 25 years term , 15% of the sum assured becomes payable after 5,10,15 and 20 years and the balance 40% plus the accrued bonus becomes payable at the 25th year. An important feature of these types of policies is that in the event of the death of the policy holder at any time within the policy term the death claim comprises of full sum assured without deducting any of the survival benefit amounts which have already been paid. The bonus is also calculated on the full sum assured. AVIVA does not have a money back policy. It could offer a money back plan and capture some portion of this market. While marketing insurance products I found that many customers wanted to purchase these plans. LIC offers 66 different plans; plans are formulated for specific occasions – whole life plans, term assurance plans, money back plan for women, child plans, plans for the handicapped individuals, endowment assurance plans, plans for high worth individuals, pension plans, unit linked plans, special plans, social security schemes – diversified portfolio of products. AVIVA could diversify its product portfolio. It could add more plans for high worth individuals and women.

ICICI PRUDENTIAL ICICI Prudential is a stiff competitor for AVIVA. The company is a merger between ICICI Bank which is the biggest private bank in India and Prudential Plc which is a global life insurance company. The company has an investment plan which is market related – Invest Shield Life. In this plan even if the market falls, the premium will be returned to investors. It is a guaranteed plan which ensures the company carefully invests your money. The stock market performance of ICICI Prudential is much better than AVIVA. The returns on the growth fund were 46.28% compared to the 42.70% offered by AVIVA. Customers are attracted by higher returns and this is a plus point for Prudential. The company is very well advertised. The advertisements are showcased in movies, television, newspapers, magazines, bill boards, radio etc. The company has an excellent brand ambassador – Mr. Amitabh Bacchan. His promotion of the company builds trust and faith in the minds of our people. However the charges are very high in the plans offered by ICICI Prudential. It is 35% during the first year, 15% in the next year and 3% from the third year onwards. Also a higher minimum premium of Rs. 8000 is charged. Hence the policies are not accessible to the lower strata of the society. (Source:


Birla Sun Life Insurance Company Limited is a joint venture between The Aditya Birla Group, one of the largest business houses in India and Sun Life Financial Inc., a leading international financial services organization. The local knowledge of the Aditya Birla Group combined with the expertise of Sun Life Financial Inc., offers a formidable protection for your future. (Source: The Aditya Birla Group has a turnover close to Rs. 33000 crores with a market capitalization of Rs. 53400 crores (as on 31st March 2007). It has over 72000 employees across all its units worldwide. It is led by its Chairman - Mr. Kumar Mangalam Birla. Some of the key organizations within the group are Hindalco and Grasim. Sun Life Financial Inc. and its partners today have operations in key markets worldwide, including Canada, the United States, the United Kingdom, Hong Kong, the Philippines, Japan, Indonesia, India, China and Bermuda. It had assets under management of over US$343 billion, as on 31st March 2007. The company is a leading player in the life insurance market in Canada. Being a customer centric company, BSLI has invested heavily in technology to build world class processing capabilities. BSLI has covered more than a million lives since inception and its customer base is spread across more than 1000 towns and cities in India. All this has assisted the company in cementing its place amongst the leaders in the industry in terms of new business premium income. The company has a capital base of 520 crores as on 31st July, 2007. Its Flexi Life Line Plan offers life long insurance cover till the policy holder is 100 years of age. There are guaranteed returns of 3% p.a. net of policy charges after every 5 years from the eleventh policy year onwards. However the charges are very high. The initial charges for the first year are 65%. Hence the fund value is greatly reduced.

BAJAJ ALLIANZ Bajaj Allianz is a joint venture between Allianz AG with over 110 years of experience in over 70 countries and Bajaj Auto, a trusted automobile manufacturer for over 55 years in the Indian market. Together they are committed to offering you financial solutions that provide all the security you need for your family and yourself. Bajaj Allianz is the number one private life insurer for the year 2005 – 2006. It is leading by 78 crores. It has experienced a whopping growth of 216% in the last financial year. The company has sold 13, 00,000 policies and is backed by 550 offices across India. It offers travel insurance, motor insurance, home insurance, health and corporate insurance. The mortality charges are lower than AVIVA. The entry age could be zero years which allow even new born babies to be insured. (Source:

TATA AIG Tata Aig is a joint venture between the Tata group and American International Group Inc. In one of the plans the company offers hospital cash benefit wherein it will pay Rs. 2500 per day in case of hospitalization and Rs.12.5 lakhs in case the person suffers from any critical illness. Annual premium is much less (about Rs. 6712) to avail such a good benefit. Charges are relatively low compared to AVIVA for some policies. The company offers high coverage plans at low cost. There is a plan even for a policy term of 1 year. Your family can continue to enjoy their current lifestyle even in the case of something happening to you. These plans are very flexible and AVIVA could adopt this idea of insuring individuals for short periods of time. For example; there is a family of four. The only earning member is the father. He has just taken a loan from a bank of 20 lakhs to purchase a new home. He is able to repay the loan with his current salary in 15 years. The problem arises if something were to happen to him within these fifteen years. Not only will the family face the emotional and financial loss of their father but they will also have to repay the home loan or risk being homeless. (Source:


The old and out dated technique of tele marketing is used to prospect customers. More modern techniques must be adopted. The company must sponsor shows and give presentations in corporate houses. The financial health check must be performed for every prospect to assess his/her true financial position and needs. Some of the advisors skip this vital step and the prospect ends up with a plan they do not appreciate and soon surrender or discontinue. Some of the main problems in marketing the policies are:  Large amount of competition (18 players in the market)  Other brands are well advertised and have higher recall value  LIC is considered a safer option  Face competition from banks and mutual funds  High premium policies are difficult to market  Incorrect perception about insurance  Interested prospects might have a lack of time and postpone investments  Customers get defensive if you cold call  Short term plans are available only at large premium  Customers do not have risk appetite to invest in shares  Some prospects have already invested and are not interested in further investments  Consumers don‘t want to undertake medical examinations  Large amount of documentation  Customers do not like their money locked up for many years  Lack of awareness about the unit linked funds in the market  No money back plan present in the product portfolio

SUGGESTIONS FOR IMPROVEMENT  Advertise about the company and its products – it motivates individuals to purchase insurance  Create a positive perception about insurance  Speak about the good features a plan offers like high returns, life cover, tax benefits, indexation, accident cover while prospecting customers  Try to sell the product/plan which the consumer requires and not the plan where the advisors benefit is higher  Improve the efficiency in operations  Bring out policies with small premiums payable for short periods of time – Rs. 5000 – Rs. 10000 per annum for 10 years  Attract the youth of India with higher returns on investment as returns are the motivating factor which influence purchase of insurance  Promote insurance in colleges and corporate houses  Promote AVIVA as an Indian Company to build trust  AVIVA could have a brand ambassador or a mascot to promote its services  Should have partial withdrawals from the first year onwards  Tap the rural market where there is large potential  Diversify product portfolio  Make products more straight forward – reduce complexities



Age group 18 - 25 years 26 - 35 years 36 - 49 years 50 - 60 years More than 60 years No. of Respondents 127 67 46 24 6


2% 9%

18 - 25 years 17% 47% 26 - 35 years 36 - 49 years 50 - 60 years More than 60 years 25%

Analysis: From the chart above we find that 47% of the respondents fall in the age group of 18 – 25 years, 25% fall in the age group of 26 – 35 years and 17% fall in the age group of 36 – 49 years.

Therefore most of the respondents are relatively young (below 26 years of age). These individuals could be induced to purchase insurance plans on the basis of its tax saving nature and as an investment opportunity with high returns.

Individuals at this age are trying to buy a house or a car. Insurance could help them with this and this fact has to be conveyed to the consumer. As of now many consumers have a false perception that insurance is only meant for people above the age of 50. Contrary to popular belief the younger you are the more insurance you need as your loss will mean a great financial loss to your family, spouse and children (in case the individual is married) who are financially dependent on you.



Particulars Male Female

No. of Respondents
193 77


250 200 No. of Respondents 150 100 50 0 Male Female 193


Student Housewife Working Professional Business Self Employed Government service employee

No. of respondents
62 5 116 49 24 14


5% 9% 23% Student Housewife 18% 2% Working Professional Business Self Employed Government service employee


Analysis: From the chart above it can clearly be seen that 43% of the respondents are working professionals, 23% are students and 18% are into business. Therefore the target market would be working individuals in the age group of 18 – 25 years having surplus income, interested in good returns on their investment and saving income tax.

103 167

103, 38% 167, 62%

Yes No

ANALYSIS: This graph shows that out of total 270 respondents only 103 or 38% respondents have life insurance policy in their name. Rest all don‘t have a single policy in their name. So there is a very big scope for life insurance companies to cover these people. So in future business of life insurace will gro further.


4 3 6 7 55 6 12 6 2 2

60% 50% 40% 30% 20% 11% 10% 0% 4% 3% 6% 7% 6% 6% 2% 2% 53%


Company Name

Analysis: In India, the largest life insurance company is Life Insurance Corporation of India. It has been in existence in India since 1956 and is completely owned by the Government of India. Today the organization has grown to 2048 offices serving 18 crore policies and has a corpus of over 340000 crore INR.


TABLE 6: Premium paid (p.a.) Rs. 5000 - Rs. 10000 Rs. 10001 - Rs. 15000 Rs. 15001 - Rs. 24900 Rs. 25000 - Rs. 50000 Rs. 50001 - Rs. 60000 Rs.60001 - Rs. 80000 Rs. 80001 - Rs. 100000 No. of respondents 40 26 18 10 4 2 3


4% 2% 3% 10% 17% 39% Rs. 5000 - Rs. 10000 Rs. 10001 - Rs. 15000 Rs. 15001 - Rs. 25000 Rs. 25001 - Rs. 50000 Rs. 50001 - Rs. 60000 25% Rs.60001 - Rs. 80000 Rs. 80001 - Rs. 100000

Analysis: From the chart above we find that, 39% of the respondents surveyed pay an annual premium less than Rs. 10001 towards life insurance. 25% of the respondents pay an annual premium less than Rs. 15001 and 17% pay an annual premium less than Rs. 25000. Hence we can safely say that AVIVA would be able to capture the market better if it introduced products/plans where the minimum premium starts at Rs. 5000 per annum. Only 19% of the respondents pay more than Rs. 25000 as premium and most products sold by AVIVA have Rs.12000 as the minimum annual premium amount. They should introduce more products like Easy Life Plus and Safe Guard where the minimum premium is Rs.6000 p.a. and Rs. 12000 p.a. respectively. This would definitely increase their market share as more individuals would be able to afford the policies/plans offered.



Type of Plan Term Insurance Plans Endowment Plans Pension Plans Child Plans Tax Saving Plans

No. of Respondents 105 122 16 8 19


3% 6%


Term Insurance Plans 39% Endowment Plans Pension Plans Child Plans Tax Saving Plans 45%

Analysis: From the chart given above we can clearly see that 45% of the respondents hold endowment plans and 39% of the respondents hold term insurance plans. Endowment plans are very popular and serve two purposes – life cover and savings. If the policy holder dies during the policy term the nominee gets the death benefit that is, sum assured and accumulated bonus. On survival the policy holder receives the survival benefit with a bonus.

A term plan is a pure risk cover plan wherein the insured pays a lower premium for a higher sum assured. Term insurance is the cheapest form of insurance and helps the policy holder insure himself for a relatively low premium. For the returns sensitive investor term plans do not find favor as they do not offer a return in case the individual does not die during the policy term.


Awareness of Unit Linked Plans Yes No No. of Respondents 154 116


43% 57% Yes No

Analysis: From the chart given above we find that 57% of the respondents are aware of unit linked life insurance plans and 43% are not aware of such plans. These plans should be promoted through advertising. The company can advertise through television, radio, newspapers, bill boards and pamphlets. This would increase awareness and arouse curiosity in the minds of the consumer which would enable the company to market its products more effectively.

Unit – linked plans are those where the benefits are expressed in terms of number of units and unit price. They can be viewed as a combination of insurance and mutual funds. The number of units a customer would get would depend on the unit price when they pay the premium.

When the policy matures the individual gets his fund value. The value of his fund is calculated by multiplying the net asset value and number of units held by them on that day.

Willingness to spend on premium Less than Rs. 6,000 Rs. 6,001 - Rs. 10,000 Rs. 10,001 - Rs. 25,000 Rs. 25,001 - Rs. 50,000 Rs. 50,001 - Rs. 1,00,000 No. of respondents 41 73 110 41 5 Percentage 15% 27% 41% 15% 2%


50% Percentage 40% 30% 20% 10% 0% Less than Rs. 6,000 Rs. 6,001 Rs. 10,000 15% 27%


15% 2% Rs. 10,001 - Rs. 25,001 - Rs. 50,001 Rs. 25,000 Rs. 50,000 Rs. 1,00,000

Insurance Premium

Analysis: From the graph above, we can clearly see that 41% of the respondents would be willing to spend between Rs. 10001 – Rs. 25000 for life insurance. 27 % would be willing to spend between Rs. 6001 – Rs. 10000 per annum. Only 15% would be willing to spend more than Rs. 25000 per annum as life insurance premium.

We could say that the maximum premium payable by most consumers is less than Rs. 25000 p.a. This is further reduced as most customers have already invested with LIC, ICICI Prudential, Birla Sun Life, Bajaj Allianz etc.

AVIVA is faced with a large amount of competition. There are 18 insurance companies in India inclusive of LIC. Hence to capture a larger part of the market the company could introduce more reasonable plans with lesser premium payable per annum.

Ideal policy term 3 - 5 years 6 - 9 years 10 - 15 years 16 - 20 years 21 - 25 years 26 - 30 years More than 30 years Whole life Policy No. of respondents 51 41 95 38 24 5 3 13

40% 35% 35% 30% Percentage 25% 20% 15% 10% 5% 0% 3 - 5 years 6 - 9 years 10 - 15 years 16 - 20 years 21 - 25 years 26 - 30 years More than Whole life 30 years Policy 19% 15% 14% 9% 5% 2% 1%


Analysis: From the chart given above it can be seen that 35% of the respondents prefer a policy term of 10 – 15 years, 19% prefer a term of 3 – 5 years and 15% prefer a term of 6 – 9 years. This means that AVIVA could introduce more plans wherein the premium paying term is less than 15 years.

The outlook of insurance as a product should be changed from something which you pay for your whole life (whole life policy) and do not receive any benefit (the nominee only receives the benefit in case of your death) to an extremely useful investment opportunity with the prospects of good returns on savings, tax saving opportunities as well as providing for every milestone in your life like marriage, education, children and retirement.



Parameter Advertisements High returns Advice from friends Family responsibilities Others

No. of Respondents 35 84 46 89 16



13% Advertisements

33% 31%

High returns Advice from friends Family responsibilities Others


Analysis: From the chart above it can be seen that 33% of the respondents purchase life insurance to secure their families, 33% take life insurance to get high returns, 17% purchase insurance on the advice of their friends and 13% purchase insurance because of the influence of advertisements.

The main purpose of insurance is to cover the financial or economic loss that occurs to the family in case of the uncertain death of the policy holder. But now a days this trend is changing. Along with protection (life cover), a savings element is being added to insurance.

With the introduction of the new unit linked plans in the market, policy holders get the option to choose where their money will be invested. They can invest their money in the equity market, debt market, money market or a combination of these. The debt and money markets usually have low risk attached whereas the equity market is a high risk investment option.

Type of Company Government Owned Company Public Limited Company Private Company Foreign Company No. of Respondents 127 62 49 32 Percentage 47% 23% 18% 12%


No. of Repondents (%)


60% 50% 40% 30% 20% 10% 0%


7% Government Owned Company Public Limited Private Company Company Type of Company

4% Foreign Company

Analysis: From the graph above we find that 60% of the respondents preferred to purchase insurance from a government owned company, 29% of the respondents preferred to purchase insurance from a public limited company and only 4% of the respondents preferred a foreign based company. Heavy advertising through television, newspapers, magazines and radio is required.


Expected Returns Less than 5% 5% - 10% 11% - 15% 16% - 20% 21% - 25% 26% - 30% 31% - 40% 41% - 50% More than 50%

No. of respondents 5 39 46 49 46 27 22 14 22


20% 18% 16% 14% 12% 10% 8% 6% 4% 2% 0%

No. of Respondents (%)

17% 14%



10% 8% 5% 2% 8%

Less than 5% - 10% 11% - 15% 16% - 20% 21% - 25% 26% - 30% 31% - 40% 41% - 50% More than 5% 50%

Expected Returns

Analysis: From the chart above it can clearly been seen that 18% of the respondents would like 16 – 20% returns, 17% would like returns between 21 – 25% and 17% would like returns of 11 – 15% on their investments. Therefore the average return on investment should be at least 16 – 20 %.

Most consumers are willing to adapt to some amount of risk but still want some guaranteed returns. Therefore the bulk of investment should be made in the balanced fund with 50% debt and 50% equity. The returns on the Secure Fund are guaranteed as these involve investment is government securities and the debt market. But the returns on these instruments are low (8 – 10%). If the company invests in shares, returns are higher (39%) but correspondingly risk borne by the policy holder is also higher. Therefore a good combination of the two instruments is often a wise choice.


The future topics for research in the organization could be setting up of an appropriate ad campaign. It is very vital to the companies‘ success that the people of India know about AVIVA, its products and their special features and how insurance in general can help them in their future. The advertisements have to be emotionally appealing. They might also include a celebrity. The general perception of insurance as ―inauspicious‖ should be done away with and individuals and corporations accept insurance on power with other investment opportunities.

The other area of research could be in the management of funds AVIVApossesses and how it can maximize returns for its investors. A research project could be undertaken on how to ensure that the money gets invested in the right companies and earns a medium – high return on investment. Another area of research could be an analysis of the sales and marketing techniques used by AVIVA. A large number of changes could be introduced and this would help in saving operating costs and improving the efficiency of the firm.


AVIVA standard life insurance is first life insurance company in India. It has businesses spread out across the globe. It was registered on 23rd December 2000. It currently ranks number 4 amongst the insurers in India (Source: annual premium provided by the company) The company faces a large amount of competition. To sustain itself it must promote its products through advertising and improve its selling techniques. Consumers must be aware of the new plans available at AVIVA. The medium of advertising used could be television since most of its competitors use this tool to promote their products. The company must be promoted as an Indian company since consumers seem to have more trust in investing in Indian firms. The unit linked concept must be specifically promoted. The general perception of life insurance has to change in India before progress is made in this field. People should not be afraid to invest money in insurance and must use it as an effective tool for tax planning and long term savings. AVIVA could tap the rural markets with cheaper products and smaller policy terms. There are individuals who are willing to pay small amounts as premium but the plans do not accept premiums below a certain amount. It was usually found that a large number of males were insured compared to females. Individuals below the age of 30 (mostly male) were interested in investment plans. This was a general conclusion drawn during prospecting clients.

BIBILOGRAPHY: Magazine – Insurance World The Outlook Money Secrets of Successful Insurance Sales by Mr. Jack Kinder

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