A Summer Internship REPORT

ON

Branding and positioning of Kotak in Indian InsuranceIndustry (including marketing strategies, sales process and

Consumer Behavior)

Submitted by:ABINASH DASH

PGPBIFSM/09-11/01

Under the Supervision of

Prof S.D Sharma Mr. Satyajit Rath

Faculty (A.S.B.M) Manager Sales (Kotak Life-Secunderabad)

1

A REPORT

ON

Branding and positioning of Kotak in Indian InsuranceIndustry (including marketing strategies, sales process and

consumer behavior)

Submitted by:ABINASH DASH

PGPBIFSM/09-11/01

A report submitted in partial fulfillment ofthe requirements ofMBA Program of

ASIAN SCHOOL OF BUSINESS MANAGENTMENT

Distribution list:Prof. S. D SHARMA (Faculty guide)

Mr. SATYAJIT RATH (Company guide)

2

CERTIFICATE FROM THE CORPORATE GUIDE

This is to certify that Abinash Dash (PGPBIFSM/0911/01), student of Asian School of Business Management, pursuing Post Graduation Program In Banking Insurance and Financial Services Management has worked under my guidance and supervision on his project entitled Branding and positioning of Kotak in Indian Insurance Industry. To the best of my knowledge this is an original piece of

work.

Mr. Satyajit Rath

Manager Sales

3

Kotak Life, Secunderabad

CERTIFICATE FROM THE FACULTY GUIDE

This is to certify that the project entitled Branding and positioning of Kotak in Indian Insurance Industry is a piece of work done by Abinash Dash (PGPBIFSM/09-11/01), student of Asian School of Business Management, under my guidance and supervision for the partial fulfilment of the course Post Graduation Program In Banking Insurance and Financial Services Management, Asian School of Business Management, Bhubaneswar.

To the best of my knowledge and belief the thesis and embodies the work of the candidate himself and has been duly completed. Simultaneously, the thesis fulfils the requirements of the rules and regulation related to the summer internship of the institute and I am assured that the project is up to the standard both in respect to the contents and language for being referred to the examiner.

Prof. S.D.Sharma

Faculty of Asian School of Business Management

4

Bhubaneswar

DECLARATION

I do hereby declare that the work embodied in this project entitled Branding and positioning of Kotak in Indian Insurance Industry Carried out by me under supervision of Mr. Satyajit Rath(Manager Sales - Kotak Life Secunderabad ) and Prof. S.D Sharma(Professor of A.S.B.M).This project has not been submitted earlier to any other institute.

Abinash Dash(PGPBIFSM/09-11/01)

Asian School of Business Management

5

ACKNOWLEDGEMENTS

While completing the project at KOTAK LIFE INSURANCE, I feel a deep sense of gratitude

for all those who helped me during the tenure of my project and thus, consider it as one of my

duties to acknowledge their help and thank for the same. Firstly, I would like to thank Prof. S. D

SHARMA, my Faculty guide for facilitating me to undertake this project; he provided necessary

academic guidance, monitored work periodically, clarified all doubts throughout the project and

suggested ways for improvement.

I am also very thankful to my company guide Mr. Satyajit Rath (Manager Sales) for his

continuous encouragement, guidance and support. At the same time I am very thankful to Mr.

Amit Sharma (ABM) for taking time out of his busy schedule and assigning us our respective

task and for continuous guidance during the project.

Special thanks to Ms. Amrita Singh for her guidance during the training period and after. I am

thankful to all the employees of the company for their support and encouragement while

completing the project.

I would also like to thank all the members of my group without whom the project wouldn’t have

been so value additive.

6

TABLE OF CONTENTS

Abstract…………………………………………………………………………………..8

1. Introduction.…………………………………………………………………………..9

2. Literature Review…………………………………………………………………….9

3. Basics of Insurance….……………………………………………………………… 16

4. Industry Analysis….…………………………………………………………………17

5. Impact of Liberalization on Indian Life Insurance Sector……………….…......... 21

6. Company Profile…. ………………………………………………………………….22

7. Why People buy Life Insurance...………………………………………….…….. ...24

8. Why Branding is Necessary...………………………………………………………..26

9. Comparetive Analysis…………….……………………………………………….. .. 27

10.Product Comparison ………………………………………………………………...32

11. Marketing Strategies...………………………………………………………………34

12. Sales Process………………………………………………………………………....45

13. Analysis of Consumer behavior……………………………………………………..47

14. Conclusion…………………………………………………………………………….61

Bibliography

7

ABSTRACT

The project aims at providing the insight into the Indian Insurance Industry and Life Insurance in

particular. It studies the growth in the Life Insurance sector and shows how much it is expected

to grow in the coming years. The competition in the Insurance Industry is determined using

Porter’s Five Forces Model. The business and environmental factors which influence the

Insurance Industry is studied using PEST (Political, Economic, Social and Technological)

analysis.

The project will help us understand the basic functionalities and details involved in a sales

process starting from leads generation, opening a sales call till closing of a sales deal. Moreover

it will help us understand and study the consumer behavior towards life insurance. Also it will

enhance our knowledge on how various marketing concepts are implemented in a company

whose basic objective is sales and marketing

The project will also involve the trainees to fix up the appointments through calling the

prospective customers and accompany the Field Sales Officers (FSO) on their visits to the

clients, to observe how policies are pitched to the clients. In this process, the trainee will also get

to read and understand some aspects of personal selling and consumer behavior. Also it will

enhance our knowledge on how various marketing concepts are implemented in a company

whose basic objective is sales and marketing.

8

1. INTRODUCTION

1With the largest number of Life Insurance policies in the world, insurance happens to be a mega

opportunity in India. Gross premium collection is nearly 2% of GDP (Gross Domestic Product)

and funds available with LIC for investment are 8% of GDP. Yet nearly 80% of Indian

population is without Life Insurance cover while health insurance and non-Life Insurance

continues to be below international standards. Considering the growth potential, foreign

insurance companies have been demanding an increase in the foreign direct investment (FDI)

limit to bring more capital to their Indian ventures to help expand business. Stiff competition

between private and state-run insurers has boosted growth in premium income and spread

insurance coverage faster in the country, which by itself should be enough incentive to further

open up this sector. Faster growth in the insurance sector is crucial to raise long term funds

needed to raise infrastructure like roads and ports which can help raise economic growth to

double digits from the estimated 9.2% for the current fiscal year. Thus growth in Insurance

sector is important for the growth of Indian economy.

2. LITERATURE REVIEW

2With the initiation of the deregulation in the Indian insurance market, the monopoly of big

public sector companies in life insurance as well as general (non-life insurance) market has been

broken. New private players have entered the market and with their innovative approaches and

better use of distribution channels and technology, they are eating in to the shares of established

public sector companies in Indian Insurance Market.

3McKinsey’s director in India and banking industry expert Leo Puri says the opening of

insurance has been a smooth deregulation process. “The state mammoth, the LIC has not been

destabilized and the objective of deregulation has been met. Employment has grown so as the

insurance business.”

1 Business World, 5th march 20082 www.marketreserch.com, Indian Insurance Industry Forecast 2009-2011, May 1 20083 Gasping for Capital, Yassir A. Pitalwalla, Business World Online, Cover Story

9

4“Consumer attitudes and perception about insurance have changed; Insurance is now considered

a viable financial instrument to meet different needs.” Bajaj Allianz’s Ghosh.

5In 2009-10, the life insurance sector grew by 10%, . Life Insurance penetration (i.e. premium as

a percentage of GDP) in India was 2.26% as against the global penetration level of 5.23%.

The marketplace is getting competitive, but the market share of private insurance companies

remains very low -- in the 10-15 percent range. The heavy hand of government still dominates

the market, with price controls, limits on ownership, and other restraints.

6Indian insurance industry is anticipated to witness a 500% growth and reach to US$ 60 Billion

in the coming four years, thanks to swelling demand in semi-urban and rural areas, reported

industry chamber Assocham.

Assocham stated that semi-urban areas would have a share of US$ 35 Billion and urban areas

would account for US$ 25 Billion in the US$ 60 Billion industry.

Anil K Agarwal, President, Assocham (Associated Chambers of Commerce and Industry of

India), reported that a large segment of rural India is still untouched because of long

distances, poor distribution and high return costs.

A Research Analyst at RNCOS says that the progress in the semi-urban and rural areas would

largely fuel the growth in insurance sector. The other factors that would boost the growth in this

sector are improving economic scenario, increasing disposable incomes, and rising product

demands.

4 www.ikw.in, Insurance: Indian and Foreign Firms Test Positive for Growth Steroid5 www.indiaonestop.com, Significance of Life Insurance industry in India6 www.Indiaprwire.com/pressrelease/insurance

10

7Despite a large and growing economy, the insurance market in India is not yet of commensurate

size. Till date, only 20% of the total insurable population of India is covered under various life

insurance schemes, the penetration rates of health and other non-life insurances in India is also

well below the international level. With one of the lowest insurance penetration levels in the

world, there exists significant potential for further growth in both life and general insurance

business.

Confederation of Indian Industry (CII) strongly feels that this higher growth and increase in the

spread of insurance business cannot occur in isolation. The full potential of the Indian insurance

sector can be realized only if all the stakeholders - the public and private insurance players,

government bodies and the regulator - work in unison to achieve the common goal.

However, there is one big reason for alarm. Insurers do need access to substantial capital in order

to keep up this growth despite their initial losses. But many private sector insurers are struggling

to raise the required capital. That’s because the government has not yet raised the ceiling for

foreign direct investment (FDI) in insurance companies from 26 per cent of equity to 49 per cent,

as outlined by the previous government. And this is acting as an artificial constraint on the

sector’s ability to raise capital.

And because of the 26 per cent FDI cap, the burden of funding the growth falls on the Indian

promoter. Many of them have no expertise, usually no sense of a long-term commitment to the

business. They are essentially investors looking for returns, and now not only are they earning

nothing, they are actually losing money.

8“While strong Indian banks that are partners in a life insurance venture can infuse capital,

industrial houses for which this is a diversification do have a capital constraint,” says Vinod

Wadhwani, vice-president, Ambit Corporate Finance Pte.

7 Insurance Industry: Ensuring a secure future, Amity EduMedia, Issue 23, Jan 26th, 09

8 Gasping for Capital, Yassir A. Pitalwalla, Business World Online, Cover Story

11

“Capital constraint is the reason why some of the players in the industry haven’t been able to

grow their business as compared to the top four or five players, who have been bringing in more

capital,” says Ashvin Parekh, national leader (global financial services), Ernst & Young.

As American International Group Inc. (AIG) country head Sunil Mehta says: companies can

require capital at any point of time and ‘sponsors go through cycles, so any artificial barrier to

equity infusion is not conducive to orderly growth and could, in fact, threaten policyholder

confidence’.

With growth on their mind, foreign investors want faster deregulation. With initial success has

come the desire for more, notably the opportunity for foreign players to go up to 49% of the joint

venture. McKinsey’s Puri says the key issue today is ownership. “Each time the global players

invest in information technology, management time and expertise, they get back only 26% in

economic benefits.”

While the market for Life Insurance in India is still small, its growth value has been strong

during the past five years and it is expected to persist throughout most of the next five years. The

expressive research carried out on Juvenile Insurance is mostly in the United States and it looks

into reasons behind buying the Juvenile Insurance and how it has proved beneficial for both the

parents and as well as the child.

O’Connell Vanessa (1996) has carried out a research which discusses whether it makes sense for

parents to own life insurance on a child. The huge business in so-called `juvenile policies';

Controversy surround the decision to insure a child's life; Reasons that insurance companies give

for buying such a policy; Critics' view that such coverage is excessive and expensive. The Child

life insurance policy provides for the child's life, as well as medical and other health related

expenses. It offers death-benefit protection to the insured child. In the event of child's death, the

insurance amount is available for burial and other related expenses.

12

As part of the Federal Balanced Budget Act of 1997, Congress in United States created the

Children's Health Insurance Program (CHIP) as a way to encourage states to provide health

insurance to uninsured children.

Jacob Alex Klerman (1997) in his report Health Insurance among children of unemployed

parents addresses the problem of lack of health insurance for children in the United States. Using

the data from the 1990, 1991, and 1992 panels of the Survey of Income and Program

Participation, this report presents the interrelation between parental unemployment and

children’s health insurance coverage. As per the report nearly half of the children lose their

health insurance because their parents lose or change a job.

Rosemarie, Paul J Boben, Jennifer B. Bonney (2007) evaluates the State Children’s Health

Insurance Program (SCHIP) and how it has given state the freedom in providing more children

with coverage. They found out that because of providing Health Insurance to Children it

provides not only cover against medical bill but also participate in the customer health planning.

Senate Bill Report (United States) (2005) on Regulating Life Insurance by Labor, Commerce and

Financial Institutions evaluates 100 Life Insurance Companies to survey their practices with

regard to the marketing and underwriting of juvenile insurance policies. In many cases, the

average death benefit claimed, upon the death of an insured child, far exceeded the economic

losses, such as funeral expenses. Concern exists that, while many well-meaning adults may

innocently purchase inappropriate or unnecessary amounts of life insurance on children, some

may actually be purchasing the policies with criminal intent. Some news stories indicate that

some children are murdered in order to obtain insurance payments. The report suggest that Life

insurers must develop and implement underwriting standards and procedures designed to detect

and prevent the purchase of juvenile life insurance for speculative or fraudulent purposes, and

maintain records of rejected applications for 10 years.

Deborah Senn (2007) Insurance commissioner United States says that State needs stronger

guidelines for Children’s Life Insurance. The survey conducted indicates that many companies

13

offering juvenile life insurance do not appear to have strong standards in place to help prevent

this kind of tragedy.

Shailesh Bhandari and Elizabeth Gifford (2005) in their paper on Children with Health Insurance

investigate patterns of children’s health insurance coverage and explore the characteristics of

uninsured children. Using the data from the Current Population Survey (CPS), it provides

national estimates of the number and percentage of uninsured children by age, race, family type

and family income.

According to Tom Menezes, in his work on “Life insurance for child”, June, 2007, Child

Insurance is one of the fastest selling insurance products of the new era. Every insurance

company should focus on innovative products and train the advisors to approach prospective

customers.

Smitha Tripathi (2008) looks into how Higher education which used to be remarkably cheap in

India is changing with remarkable swiftness. The paper discusses that parents should start saving

for the child education even before he or she starts going to nursery school. If you are the type

who likes starting early, it might be a good idea to start looking at insurance policies that matures

when your child comes of age. Now that education is getting costlier, insurance companies are

also realizing that it’s important to offer new schemes. So, there are much more policies than

ever before. These policies mature when your child comes of age and the money can be used for

higher education or marriage expenses. The paper provides the information about the different

type of child policies and which one suits you according to your need.

Mr. Ian J Watts, Managing Director, Tata AIG Life Insurance (2006) says that Children Life

insurance products not only meet the educational needs of children but also offer insurance

cover. Considering the costs involved for pursuing higher education and also the competitive

environment that a child is exposed to, the need for planning the education of a child is an

important aspect for any parent.

14

Alison Cuellar, Kelly J Kelleher, Jennifer A Rolls and Kathleen Pajer (2008) discuss that without

the Health Insurance benefits many youths will not receive timely health care. The delinquent

youths who have violated the law have typical poor physical and mental stress which leads to

higher medical costs.

David Gambrill (2008) points out the importance of Child Insurance. It’s a changing world.

Almost nothing remains the same like that your child dreams keep on changing. It’s up to you to

make sure that when time comes, she has the means to make her dreams come true.

Sue Laing (2009) brings forward an often-overlooked issue, the financial impact that a child’s

illness or injury can have on family finances in her research paper Children’s trauma: an

undersold safety net. The author shares her personal experience that clients accept the

vulnerability of their children far more readily than their own…this is just a matter of informing

them of their options. Of those with whom children’s trauma is discussed and perhaps debated,

some will accept the advice to go for child insurance. The overall amount the parent’s will be

committing to their insurance package is relatively inexpensive as compared to the child’s

trauma.

Though the returns are not very high, most financial planners recommend that you buy a

children's policy. Sanjiv Bajaj, director, Bajaj Capital, Says that "Children insurance policies

ensure a disciplined saving mode for the child's future”. Moreover, since the returns are tax-free,

you need not worry about what the tax structure will be like 20 years down the line."

9 The US$ 41-billion Indian life insurance industry is considered the fifth largest life insurance

market, and growing at a rapid pace of 32-34 per cent annually, according to the Life Insurance

Council. Since the opening up of the insurance sector in India, the industry has received FDI to

the tune of US$ 525.6 million. The government is likely to reintroduce the Insurance Bill which

proposes to increase the FDI cap in private sector insurance companies from 26 per cent to 49

per cent

9www.ibef.org, February 2010

15

BASICS OF INSURANCE

About Insurance

Insurance is a precaution against a possible unwanted outcome in life and in business. It is a

financial product where the insured pays a premium or series of premiums in return for monetary

compensation, if a particular event happens. Insurance is annually renewable except for life

insurance. The insurance business works on the principle of collective strength. Insurance

companies group together a large number of people who all feel exposed to the same possible

circumstances. The company knows that, in any one year, the total premium collected from the

group of people should cover the cost of the claims made by the unfortunate few who actually

suffer a loss.

History of insurance

Early insurance goes back to the Egyptian times. At 3000 BC, Chinese merchants were known to

disperse their shipments among several vessels to avoid the possibility of damage or loss. There

are some insurance companies around today in the United States that provided insurance back in

the mid 1700's, as well as some that provided relief to banks during the 1930's and the Great

Depression. Today, there is insurance for innumerable activities: Business, Auto, Health, Life,

Travel, etc. Each of those categories includes sub-categories, branching off into numerous

divisions.

What is Life Assurance?

Life assurance is the term used when the life of a person is insured. Life assurance is a bit

different to most insurance - most policies last many years rather than having to be renewed each

year. And "indemnity rules", whereby you cannot get back more than you have lost, do not

apply.

What is General Insurance?

All non-life Insurance is termed General insurance. It has large area of operation as almost all

kinds of things can be insured. A general insurance policy is valid for 1 year after which it has to

be renewed. This means that the insurer can change both the premium and the benefits each year

depending on the risk involved.

16

3. INDUSTRY ANALYSIS

Global Insurance Sector

In 2009, worldwide insurance premiums amounted to USD 5438 bn. Of this, USD 3274 bn

accounted for Life and USD 2164 bn to non-Life Insurance. In real terms, total premium volume

grew by 3.75 percent. While Life premiums increased by 4.6 percent, non-Life premiums

increased by 1.6 percent. Profitability in Life insurance improved when compared to 2008. Non-

Life business remained profitable despite huge hurricane losses in the United States. 10While

Western Europe, the largest Life market region, expanded by 9.5%, South and East Asia

expanded by 12.5%. Premiums stagnated in North America and marginally increased in Japan

and Oceania. The emerging market has also grown by 9.5% compared to industrialized countries

at 6.4%.

Global Life insurance premium collected and market share across different continents is

given in Exhibit 1

10 http://www.plunkettresearch.com/Industries/Insurance/InsuranceStatistics

17

Reasons for Growth

High economic growth

Moderate inflation

Low interest rates and

Favorable stock markets in Europe, Japan and in the emerging markets

Mergers and Acquisitions

Fast growing incomes of relatively young people which need savings as old age

protection.

Indian Insurance Sector

The Indian insurance market wrote total gross premiums of $57 billion in 2009, this representing

a compound annual growth rate (CAGR) of 30% for the five-year period spanning 2005-2010. In

comparison, the Chinese and the South Korean markets grew with CAGRs of 39% and 6.6%

over the same period, to reach respective gross premiums of $70 billion and $90 billion in 2009.

The Life segment was the market’s most lucrative in 2009, writing total gross premium of 1668

billion INR, equivalent to 79.5% of the market’s overall value. The smaller non-Life segment

contributed 430 billion INR, equating to the remaining 20.5% of the market’s aggregate gross

premiums.

Life and general insurance in India is still a nascent sector with huge potential for various global

players with the life insurance premiums accounting to 4% of the country's GDP while general

insurance premiums to 1.15% of India's GDP.

Assocham (Associated Chambers of Commerce and Industry of India) has stated in a study that

by 2015, Insurance will become $90 billion industry. That is 500% growth in 4 years. India has a

population of over 1 billion and except few million people; millions of people are not insured.

Especially, in the rural areas and small towns, often you cannot find any person who has got

18

insurance in a neighborhood. This is where the revolution is gradually taking place as thanks to

the media, now rural people are even aware about insurance.

Rural and semi-urban India will have a market size of $50 billion by 2015 and that is where the

main growth is going to come. Thus, naturally, in the coming years Insurance companies will try

to cater this market with new insurance schemes.

The other factors that would boost the growth in this sector are improving economic scenario,

increasing disposable incomes, and rising product demands.

11 In 2015, the Indian Insurance market is forecast to have a value of $70 billion, an increase of

41% since 2015. The compound annual growth rate of market in the period 2010-2015 is

predicted to be 10% and it is shown in Exhibit 2.

Indian Life Insurance Sector

Life and general insurance in India is still a nascent sector with huge potential for various global

players with the life insurance premiums accounting to 2.5% of the country's GDP while general

insurance premiums to 0.65% of India's GDP.

And that market is growing rapidly. Total Life Insurance premium grew 40% to nearly $10

billion in the financial year up to march 2010; non-Life premiums grew 18% that year to about

$7 billion. In India Life is roughly three to four times bigger than non-Life. And there is potential

within Life since most consumers see insurance as a tax-saving-cum investment vehicle rather as

then a pure cover.

11 Source: Data monitor, Insurance in India, Industry Profile

19

Life Insurance Performance in the First Half of 2006-2007

The Life Insurers underwrote a premium of Rs1.09lakh crore during the six months in the current

financial year as against Rs. 87108 crore in the comparable period of last year record a growth of

125 per cent. Of the total premium underwritten, LIC accounted for Rs. 70891 crore and the

private insurers for Rs. 38399 crore. The premium underwritten by the LIC and the new insurers

grew by 133.87 percent and 112.42 percent respectively over the corresponding period in the

previous year. The number of policies written at the industry level showed a growth of 18

percent. The number of lives covered by Life Insurers under the group scheme was Rs 102 crore

recording a growth of 112 per cent over the previous period. The Life Insurers covered Rs 92.45

lakh lives in the social sector with a premium of Rs. 80.65 crore. In the rural sector the insurers

underwrote 48 lakh policies with a premium of 3275.65 crore.

There are 23 players in the Indian Life Insurance sector with LIC (Life Insurance Corporation) as

the only public player and 22 private players.

20

4. IMPACT OF LIBERALIZATION ON INDIAN LIFE INSURANCESECTOR

After 9 years of opening up of the Indian Life Insurance industry to foreign joint ventures, the

share of private players have gone up to 36% at the end of FY 2009-10 from 1.4% in FY 2001-

02. This is because unlike China, which imposed severe licensing restrictions, the single

licensing norm has seen new breed of insurance companies established itself and grow market

share by rapidly increasing the market base. The Life Insurance market has registered a growth

of 18% in terms of new business during the FY 2009-10 over previous year.

Life Insurance Industry – Market Share

The entry of new players has brought in an increased product range including insurance and

pension products and therefore more choices for the customer. There has also been a significant

improvement in the level of customer service by the existing player on account of the high level

of service from new companies. All of this has benefited the customer.

21

5.COMPANY PROFILE

About Kotak Group

Kotak Mahindra is one of India's leading financial institutions, offering complete financial

solutions that encompass every sphere of life. From commercial banking, to stock broking, to

mutual funds, to life insurance, to investment banking, the group caters to the financial needs of

individuals and corporate.

22

About Kotak life insurance

Kotak Mahindra Old Mutual Life Insurance Ltd. is a joint venture between Kotak Mahindra

Bank Ltd (KMBL), and Old Mutual plc. Kotak Life Insurance, aim to help customers take

important financial decisions at every stage in life by offering them a wide range of innovative

life insurance products, to make them financially independent.

Old Mutual was established more than 150 years ago and has developed into an International

financial services group whose activities are focused on asset gathering and asset management.

The Old Mutual Group offers a diverse range of financial services in three principal geographies:

South Africa, the United States and the United Kingdom. The company is listed on the London

Stock Exchange with a market capitalization of approximately $6 billion and is a member of the

elite FTSE 100 index. In the 2003 rankings of the World's 500 largest corporations by Fortune

magazine, Old Mutual climbed 87 places to position number 366 and was also listed as the 14th

largest insurance company in the world. Old Mutual is the largest financial services business in

South Africa, through its life insurance, asset management, banking and general insurance

operations. The company serves 4 million life insurance policyholders and employs over 13 000

South Africans in its local operations.

In the USA, Old Mutual is one of the top ten fixed annuity businesses offering an array of

specialist asset management skills through its 23 asset management businesses. The company’s

US Life business recorded sales of $4 billion at the end of 2002. Operations in the United

Kingdom are focused on wealth management, through Gerard as one of the leading private client

stock broking businesses in the UK.

23

4. WHY PEOPLE BUY LIFE INSURANCE?

While taking a policy different people have different perspectives. There can not be a

comprehensive list for this, below mentioned are the most probable reasons for taking up a life

insurance policy.

Reason No.01 - I want to save tax

It’s true that Section 80 of Income Tax Act provides deduction of the amount paid as insurance

premium (with some exceptions) from the assessor’s taxable income subject to limits. If the sole

purpose of buying insurance is to save on tax, then it’s the costliest way to do so. If someone

does this early in his/her life with policies like endowment or money back or even ULIP, their

ability to create wealth diminishes by a very high degree.

Reason No.02 - I want to save/invest

In my opinion, this is the worst reason for someone to buy insurance. Savings is generally

understood as the amount remaining with a person after he/she meets all his/her expenses and

other cash needs. If one has to build wealth, savings need to be channelized into an investment

with specific time horizon and goal. Insurance is preferred choice in this regard.

Reason No.03 - My agent asked (forced) me to buy this policy

This is one of the commonest reasons you get if you ask some one why he/she bought insurance

policy. Insurance advisors are drilled to think that “insurance is always sold and never bought”

and this results in an advisor selling insurance for all wrong reasons. Survival of the insurance

advisor is the sole driver here and not the need of the buyer

Reason No.04 - I want to plan for my retirement

Insurance companies have devised these products keeping in view the tax exemption available

under the Income Tax Act. Investing here gives the option to have immediate annuities or regular

pension after the vesting age.

24

Reason No.05 - I want to provide security for my children for their education

This is one of legitimate reason for which insurance is to be bought. However, the risk to be

covered is not of the child but of the parents and that to remember in mind.

Reason No.05 - My Bank asked to purchase insurance policy

This means it’s only due to the pressure exerted by bank (to safeguard it’s loan, it could be other

types of lenders also like housing finance companies, car finance companies etc) that one will

buy insurance. Otherwise, he/she will not get the loan. In this situation, the purpose is ok but it’

will be much better if the policies are brought with knowing the feature & the charges that are in

built with the product.

Reason No.06 - My Uncle/Aunt recommended to buy insurance

If one’s uncle/aunt is retired and/or has taken up selling insurance as second innings. Its no

secrete that insurance advisors, at least in their initial years, will be asked to target their ‘natural

market’ meaning their own household members, relatives, and friends etc. to sell the minimum

number of policies to keep their license alive. Here again insurance is bought for reasons other

than the one it’s meant for.

Reason No.07 - My friends told me to buy insurance

Here’s another young person who has some awareness about insurance. But even at this stage the

purpose of insurance has not become very clear.

Reason No.08 - My parents told me to buy insurance

This is not surprising, given the fact that including people who graduate from the college have

not much idea about the concept of insurance. The advertisements one sees in TV/Newspaper

which again does not say much how insurance works. It’s always advisable to take an informed

decision rather than to wilt under any pressure.

Reason No.09 - I want to cover my life risk

I have come across very few people giving me this reason for buying a life insurance

policy. Actually, this is the right reason for which insurance is to be bought. The very

25

purpose life insurance product came into existence was to provide economic security to

the dependents of the breadwinner in his/her absence.

5. WHY BRANDING IS NECESSARY?

As there are 23 players in Indian Life Insurance industry, competition is increasing day by day,

so it is very important to establish a company’s name in consumer’s mind. Further explained

analysis will elaborate the importance of branding in Indian Life Insurance industry.

26

6. COMPARATIVE ANALYSIS

New Business and Market Share

Among the private players only some private players have dominated the scene. ICICI Prudential

and Bajaj Allianz are the top two private players’ having market share 8.93% and 7.36%

respectively followed by SBI life in . Kotak Life is at 9th position with the market share of

1.19%.

Market Share and Rank by NewBusiness Premium

27

Performance by Policy Count

LIC sold the maximum number of policies in this financial year. LIC accounts for 88% of the

new policies sold. In terms of policy count the share of private players is just 12%. The reason

for LIC having more no. of policies is low premiums. Almost every private player prefer to take

policies with high premium, so there lower limit of premium is more than that of LIC’s.

Performance by Policy Count

28

Reach and Distribution

LIC has pan India presence having 2048 branches. Kotak Life has presence only in 146

cities having 213 branches.

The reach of insurers covering different cities and number of branches till date is given in

Exhibit 6.

Presence of Insurers across India

29

Distribution Tie-Ups

Insurers No ofAgents

CorporateAgents and

Brokers

Banc assuranceand Referral

Co-operativeBanks

BajajAllianz

125000 400 19 50

ICICIPrudential

100000 325 10 10

SBI Life 40000 45 9 NA

HDFCStandard

60000 170 7 NA

Birla SunLife

35000 220 8 8

Max NewYork

30000 50 5 9

Kotak Life 38000 80 6 39

Aviva 30000 70 6 26

ING Vysya 22000 150 8 55

LIC 1100000 195 50 35

LIC has maximum number of agents that is why it has the maximum reach and leading the

insurance industry whereas Kotak Life has only 12000 agents. It has to expand in terms of

number of agents and should tie up with more banks and corporate agents to reach more number

of customers

30

Customer Satisfaction

The Life Insurance Corporation of India (LIC) enjoys the confidence of two out of every three

customers. Reason behind this is more than 50 years old legacy and the tag of a government

company. When it comes to money matters people still have more faith on LIC. But customers

had one sore point, they were unhappy with LIC’s cumbersome medical examination process.

Customer Satisfaction

Above mentioned comparison on various parameters justify the need to have aggressive

marketing strategies against competitors. Further comparison can be done on basis of various

products offered by different companies.

31

7. PRODUCT COMPARISON

Product Mix

Insurers Endowment MoneyBack

WholeLife

ChildPlan

Pension Term

Plan

Ulip HealthPlan

MortgagePlan

BajajAllianz

√ √ √ √ √ √ √ √ √

ICICIPrudential

√ √ √ √ √ √ √ √

SBI Life √ √ √ √ √ √ √ √

HDFCStandard

√ √ √ √ √ √ √ √ √

Birla SunLife

√ √ √ √ √ √ √ √

Max NewYork

√ √ √ √ √ √ √ √

Kotak

life

√ √ √ √ √ √ √ √

Aviva √ √ √ √ √ √ √ √

INGVysya

√ √ √ √ √ √ √ √

LIC √ √ √ √ √ √ √ √

Although Life Insurance penetration still at 2.53% at the end of year 2004, India offers a broad

range of products covering term insurance to saving related products. Most of the insurers are

now focusing on unit linked plans backed by impressive stock market performance. Most

products are sold to individuals which accounts for 86% of the new business.

32

ULIP (Unit Linked Insurance Plans)

Company FundManagement

Charges(FMC)

EquityExposure (%)

Entry Load(%)

Premium (Rs)

Bajaj Allianz 1.35 90 3 Any Amount

ICICI

Prudential

1.35 100 6 Any Amount

ING Vysya 1.35 90 3 Any Amount

Met Life 1.35 85 4.5 Any Amount

TATA Aig 1.35 100 4.5 Any Amount

Aviva life 1.35 90 3.5 Any Amount

Max new York 1.35 70 6 Any Amount

Birla sun life 1.35 100 4.5 Any Amount

Kotak life 1.35 100 2.5 Any Amount

Reliance life 1.35 100 4.5 Any Amount

SBI Life 1.35 100 5 Any Amount

These ULIP Plans in operation for the last year have given average returns of 13.5%. While none

of them have given a negative return, individual returns are between 9.55% and 15.01%.

33

8. MARKETING STRATEGIES

Applying Marketing Tool to Analyze the Insurance Industry

The insurance industry is growing in leaps & bounds in the post liberalization era, thanks many

to the entry of private insurance firm. Insurance sector has vital role to play in the development

in the nation economy. India’s GDP growth zooming at 9.2 % & a stable & robust economy

cannot take place keeping the insurance sector growth at bay. for the insurance industry to grow

& bring more & more people under the insurance cover an aggressive an effective marketing

trategy needs to be adopted by the insurance firms. I have applied two of the most effective

marketing tools i.e. porter’s five forces model and PEST analysis to analyze the insurance

industry of India.

1). PORTER’S FIVE FORCES MODEL

i) Threat of New EntrantsAs most of the private players enter the Insurance Industry in the form of Joint Ventures the

other companies fear that they might lose out the competition because of huge capital base and

the technical and financial expertise of these new entrants. As the government is planning to

increase the FDI capital to 49% more foreign big players will be attracted. Another threat for

many insurance companies is other financial services companies entering the market.

34

ii) Power of Suppliers

Indian Insurance Industry is still in the early stages with almost 80% of the market untapped. The

player which has more money in its kitty will be able to spend more money on the promotional

activities and reach large number of customers which will give them the edge over the others.

There is also the possibility that the player offering high salary packages will attract the high

performing individuals in the Insurance Industry which will definitely boost their income level.

iii) Power of Buyers

Insurance Industry is always in look out for the high premium paying clients. Corporate these

days also look out for the Insurance companies as providing Insurance cover is a mean of

showing to the employees that the company care about them which not only motivates them but

35

also increase their productivity. This doesn’t pose a threat but increases the competition and

attract more players.

iv) Availability of Substitutes

Insurance companies offer the same type of products thus there is limited differentiation at the

product level. So the substitutes are easily available in the Insurance Industry. But the companies

focusing on Niche market have a competitive advantage as they will be able to reach more

customers and provide better service. The advantage depends upon the size of the niche and the

barriers on other firms to enter that segment.

v) Competitive Rivalry

Insurance Industry is growing at the rate of 15% annually. This is making Insurance highly

attractive and lots of new players are entering resulting in lot of competition. As there is not

much of product differentiation insurance companies are trying to attract new customers and

retain the existing ones through better customer service, customized products and greater

efficiency. As it takes almost 10 years for Insurance companies to break even new players are

entering in the form of Joint Ventures.

2). POLITICAL ECONOMIC SOCIAL TECHNOLOGICAL (PEST) ANALYSIS

DRIVER CONSIDERATION FOR INSURERS ANDCORPORATIONS

PoliticalFDI may go up to 49%No War & internal instability.Consensus across political partiesTerrorism & naxalism underControl

Will there be opportunities for cross-borderbusiness?Will tax & regulation be harmonized?Will cover be available and how much will itcost.Will cross-border competition increase?

EconomicGDP growing @ 9% plusStrong industrial growth

How the traditional insurance meet the riskfinancing needs of global corporations?

Proactive anti inflationarymeasures practicedInsurance is considered as

Increasing dominance towards servicesindustry.Inflation affects interest rates which affect the

36

priority sector. cost of capital and therefore insurance take-up.Will the equity market remain buoyant?What will be the frequency of major marketcatastrophes?

SocialRapid Demographic ShiftsIncrease in awareness amongpeopleMore fragmented & nuclearfamilyIncreasing propensity to invest infinancial instrument

Increasing need for funded pension andsecurities.Increasing need for environmental cover.Increasing need for liability & negligencecoverInsurance better priced for catastrophe andweather risk

TechnologicalAdvanced computation systemfor Modeling capabilitiesAdvanced software for betterstatistical & actuarialReliable & secure data exchangetechnology across geographicbarriersDeveloped web technology formore interactive & resourcefulwebsites.

Competitive advantage through informationoptimizationMore focus on core competencySmall players will find it difficult to competeeffectively.Increasing demand for cover plus additionalvandalism.Increasing need for sophisticated modelingtechniques.Greater need for risk management &prevention

Marketing Mix policies in Insurance

37

Different companies can choose to position themselves differently and hence the marketing mix

would be different. However, there are certain common characteristics that one can cull out from

the possible strategies that companies can adopt.

PRODUCT: The development of flexible products to suit individual requirements is what will

differentiate the winners from the also-rans. The key to success is in providing insurance

solutions, not standardized insurance products. The concept of riders/optional benefits has

already been a huge innovation brought about by the new players, which has led to customization

of products for individual needs. As the insurance products are similar companies can position

their products by providing extra features in the form of add-ons which are called riders. Kotak

Life provides Accident Benefits, Disability Benefits, Term Benefits or Critical Illness Benefits to

the plans at nominal extra costs. However, companies may differentiate themselves on the basis

of product segments that they choose to focus on and excel in.

DISTRIBUTION: Different companies may however choose different channels and different

geographies to focus on. The channel options are - tied agency force, corporate agents and

brokers and this is an area where different companies will make different choices. Many

companies like Kotak Life are focusing on all channels whereas companies like Max New York

Life are focusing on the tied agency force only. Customer interface will be a key challenge for

life insurance companies and includes every that interaction that the customer has with the

company, such as sales, new business underwriting, policy servicing, premium payments, claim

processing and so on.

Technology can play a crucial role in delivering the highest standards of service set by the

company and it will be imperative for any serious player to excel in all of these.

PRICE: Price is a relevant differentiator only in two segments - pure term insurance and in pure

annuities. Here too, service delivery and financial strength will need to be present at a minimum

acceptable level for price to be a relevant differentiator. In case of savings oriented products,

long term returns generated will be more relevant than just the price of the product. A focus on

38

generating good investment performance and keeping a tight control on costs will help in

generating good long-term maturity value for customers. Norms have been laid down on all of

these by IRDA and adhering to these while delivering good returns will be a challenge.

ADVERTISING AND PROMOTION: The level of demand is latent and will have to be

activated considerably. The market needs to be developed. Greater awareness of insurance and

the need to have it as a protection tool rather than as a tax planning measure needs to be

appreciated by the Indian people. Various communication tools including advertising, direct

marketing and road shows will contribute to all this and different companies will take different

approaches on these. As Insurance is product specific, Kotak Life uses word of mouth to

promote its products rather than going for advertisements. They believe that satisfied customers

mean more customers. ICICI Prudential advertises their products through hoardings and banners

to catch the eyes of the customers.

Technology can play a crucial role in delivering the highest standards set by the company and it

will be imperative for any serious player to excel in all these. Overall, the Life Insurance is set

for rapid changes and growth in the years ahead. Delivering service, building trust and being

innovative are key areas in which any company will have to excel in order to do well in the long

road ahead. Different companies will take different approaches and it would be myriad of

solutions that will be found to delight the Indian customer.

Marketing Strategies Adopted by Players in the Insurance Sector

Gone were the days when the customers were forced to take up the kind of products, whatever,

coming from LIC's and GIC's. But now, the customer has been portrayed as the king and to his

delight, the products are redesigned and customized suiting his need taking into account his

paying capacity and multiple benefits. To much of his chagrin, he has also got an option of

withdrawing his offer within a period of 15 days (free-look period) if he is not satisfied with the

policy features.

I. SHIFT IN THE PRODUCT PORTFOLIO

39

Earlier the entire industry was revolving around traditional investment and savings oriented

plans. Now the companies are coming out with Health products as they are profitable for the

companies. The companies are coming out with many more health products to cater to various

emerging categories of health insurance. Tata-AIG has Health Protector Plan that allows hospital

cash, surgical benefit, post-hospitalization benefit and critical illness cover.

Unit linked products are also gaining momentum in this country. Kotak and Birla Sun Life have

launched unit linked schemes focusing on equity, debt and gilt edged stocks. These schemes are

expected to yield better returns when compared to normal insurance schemes. As the awareness

level about these unique products is much lower, the companies resort to educate the customers

about the salient features of the products.

II. VALUE FOR MONEY (VFM)

The sea change since the sector opened up has been on the way the basic products have been

packaged innovatively, often tailor made to provide a bundle of benefits to the customers. This is

possible through the introduction of riders, which have added value to the risk cover at minimal

cost. Riders are nothing but add-ons coming along with the base policies for a slightly additional

premium. Riders have become the major instruments for the organizations to lure the customers

away from the competitors. The removal of 30% cap on the premium of the base policy for the

health riders alone has come as a shot in the arm for many players since this is used as an Unique

Selling Proposition by many private players vis-a-vis the LIC. Later, LIC has also started

announcing riders along with the main policies dancing to the tune of the market forces. This

could see many non-life players going out of the business as life insurers offer a plethora of

personal line products as add-ons. Riders can also be availed by the existing policyholders.

III. TAPPING THE NICHE MARKETS

Private insurers are concentrating much on designing attractive products by investing heavily on

research, studying life expectancy and health statistics across age groups, income levels,

professionals and regions on their own instead of relying on data with state insurers. The

products are designed with a technical team of actuaries and a product development team

40

working closely together to target the niche market. The innovations for the niche markets are

abounded and to name a few…..

* MetLife India Insurance Company has recently launched a Charitable Trust Policy in Kolkata,

which has evoked a lot of interest especially among the Marwaris business community who want

to set up a temple in their name after their death. Similarly a Buy & Sell Agreement cover from

the same company permits a business enterprise to take out a life plan on each of its partners, to

ensure that the company continues.

* The other segments, which have attracted almost all the players, are the women and the

children segments. Though the State insurer has had a chunk of products sufficiently for a longer

time, it faces stiff competition from the private players in these segments.

* Tata AIG has offered a specialized life insurance package where the insured and the employers

of the insured have a say in it. Termed as Worksite Marketing, AIG, which has adopted this

practice in different places across the world, is spreading the concept in India too. Worksite

Marketing is a distribution method used to offer voluntary insurance

products (employee benefits) to employees at their place of work with the sponsorship or

backing of their employer, traditionally done on a deduction from the payroll. The policyholder

carries the policy with himself throughout his life, even if it happens to change the organizations.

* Any other way to promote non-smoking? Or to reward those who give up smoking? Kotak Life

has taken an initiative by offering a term insurance plan - a pure protection product - to non-

smokers at much cheaper price. As against an annual premium of Rs.2400 on an Rs.10 lacs

policy for a 10 year term for a 30 year old under the preferred term plan, the regular term

premium works out to Rs.3400 for a similar cover. Though there are apprehensions in the

industry circle about the success of the policy, the intention of the company is quite appreciated.

41

* Even the unborn child's future can be safeguarded now. The offspring can be insured against

unfortunate congenital defects. State owned General Insurers have started aggressively

marketing these kinds of products.

IV. THRUST TO THE RURAL MARKETS

Thanks to the norms stipulated by the regulator IRDA, all the players have turned their eyes

towards the rural market. Towards ensuring equitable distribution of insurance policies in every

nook and cranny of the country, IRDA stipulates the rural obligations to be met by the players

over the years.

The rural obligation on part of the new private insurance companies is incremental in nature. It

goes from 5% to 15% over the period of 5 years for life insurance and from 2% to 5% in case of

general insurance.

Tata-AIG entered into micro-insurance as a condition for acquiring a license to sell insurance in

India. Unlike many other insurance companies, the company immediately saw the many benefits

of micro-insurance including fulfillment of corporate social responsibility; use of micro-

insurance to get the brand into a new market; and a means of developing a good relationship with

the insurance regulator.

Kotak Life Insurance is looking at roping in co-operative banks, primary agricultural cooperative

societies (PACS), NGOs and self-help groups to sell its products in the rural areas. "We are

planning to have rural tie-ups for distributing our policies," Mr Gaurang Shah, Managing

Director, said.

.

42

V. TAPPING UNCONVENTIONAL DISTRIBUTION CHANNELS

Nevertheless all the players depend heavily on their agents force to reach out they are trying out

other distribution channels also like banks and corporate agencies in addition to the channels

mentioned above. Tata-AIG has a tie up with Punjab National Bank and City Financial for

selling their products.

VI. CAUSE RELATED MARKETING

Cause Related Marketing has become the order of the day in Insurance industry. By creating

goodwill about the organizations, the insurers are making an attempt to change the negative

attitude of the people towards insurance products. For instance,

* Towards serving the society in a better way, LIC has adopted a novel way through its Bima

Grams policy. Accordingly, LIC pays 25% of the premium collected from the villagers or

Rs.25000 whichever is lesser for undertaking developmental work in the villages.

* Birla Sun Life Insurance has adopted 600 villages around Renukoot and actively involved in

improving the lives of the residents

VII. INFUSION OF CAPITAL

Players in the Insurance sector are very confident that their pace of growth will accelerate

tremendously and the infusion of capital will enable them to continue with their expansion plans

and achieve sustained growth.

LIC will make a total investment of Rs 90,000 crore in equity, debt and other instruments during

the current fiscal, said Mr T.S. Vijayan, Chairman. Last year, the corporation had invested Rs

80,000 crore.

43

VIII. EXPANDING THE DISTRIBUTION NETWORK

Kotak Life has already declared its extension plans, which include the opening of 500 full

service branches across the country by March, 2012. The strengthening of its distribution

network will enable the company to cater to a wider group of customers and provide them with

efficient customer service and enhanced support. Network expansion, entry into the pension

segment, and new products are some of the strategies chalked out by private insurer Aviva Life

Insurance. Mr Bert Paterson, Managing Director, Aviva Life Insurance told newspersons that the

company plans to add 79 branches in 2012, taking the total to 191 in the country. The sales force

would be increased from 13,500 to 31,000, he said, adding that the bank is also partnering with

cooperative and regional rural banks in different parts of the country.

The companies generally adopt two types of marketing strategies one is quantity based and other

is quality based. The quantity is driven by volume and this is done through reaching maximum

number of customers. ICICI Prudential and Bajaj Allianz are the leading private players in the

Insurance sector they are infusing large capital to open up various branches across India and

going for the advertisements. Though they are leading in terms of market share their profitability

is very low because of high claim payout ratio. On the other hand Kotak Life is quantity driven

and their profitability is high as compared to the leading players though their market share is

less.

44

12. SALES PROCESS

A sales process is a ‘roadmap’ that identifies a logical sequence of activities that are

consistently implemented from prospecting through to closing to address and satisfy the

customer’s needs.

STEP 1: PROSPECTING

Prospecting is a conscious, directed and continuous activity of seeking, identifying and

qualifying potential customers.

STEP 2: TELEPHONE APPOINTMENT

The telephone is used only to get an appointment i.e. an opportunity to meet the prospect.

STEP 3: PRESENTATION

In order to get in the door or win business, sales presentation is an important part of the

sales process.

· Opening a call effectively helps to create the first favorable impression.

· It is important to create a good rapport with te customer.

· The advisor introduces self and his company and states the purpose of the visit.

45

STEP 4: GOAL FINDING

The goal finding process is based on the need analysis. Taking into consideration the client’s

present financial position, his needs and shortfall are identified ascertaining and understanding

the financial needs of the client.

STEP 5: PRESENTING A SOLUTION

A solution is then worked out after understanding the needs of the client and the amount of

money he/she is ready to commit.

STEP 6: OBJECTION HANDLING

Objection is the prospects statements about why they don’t plan to buy your product or service.

“An objection is an opportunity and not a rejection.”

46

STEP 7: CLOSING

After a buying signal from the customer, the advisor moves in to close the sale.

STEP 8: REFERRALS

Referrals are an excellent source of new business. Beauty of referral- a much more receptive

person at the end.

13. ANALYSIS OF CONSUMER BEHAVIOR

A survey was conducted to understand the consumer perception towards Life Insurance. As

every person has his own views, so it is very important to understand the mind of the customer.

Details of the survey, methodology, sample size and results are mentioned below:

QUESTIONNAIRE FOR CUSTOMERS

1) Have you taken any life insurance policy?

· Yes

· No

2) Given a choice, whom would you prefer to buy a policy from?

· LIC

· Any private player

3) What makes you to insure with LIC (if you prefer it)?

· A government firm

· Performance

· Trust

· Other reason

47

4) How much premium you pay for your insurance policy per year?

· 0-10000

· 10000-30000

· 30000-50000

· More than 50000

5) What is the main reason for taking life insurance policies?

· Tax benefits

· Risk hedging

· Mode of investment

· Liquidity

6) Have you heard of ULIP plans?

· Yes

· No

7) Would you be investing more if insurance policies give good returns?

· Yes

· No

8) What according to you is the best place to put your money?

· Stock market

· Mutual fund

· Government bond and securities

· Insurance policies

· Any other

9) What are your investment objectives?

· Short term dividend

· Long term appreciation

48

· Security

· Liquidity

· Any other

10) Are you aware that KOTAK group as a company operates in the field of life

insurance and investments?

· Yes

· No

11) If yes, how did you come to know about it?

· Friends

· Newspaper

· TV Shows

· Any other (please specify)

12) What influences your investment plans?

· Family need

· Future

· Advice from friends and relatives

· Advertisements and promotions

13) Which mode of interaction/communication from the company would you appreciate

most?

· Personal

· Telephonic

· Online

· Letters

49

14) How often would you like to be intimated by the company regarding the state of your

life insurance policies like ULIP?

· Very frequently

· Frequently

· Quarterly

· Annually

15) Which one is the best place to get a policy from?

· ICICI Life

· KOTAK Life

· Bajaj Allianz Life

· AVIVA Life

· Birla Sun Life

· TATA AIG

· Max Newyork Life

16) What influenced your choice in the last question?

· Brand Name

· Performance

· Word to mouth effect

· Advertisements and promotions

· Trust

· Other

NAME: AGE:

Thank you for your valuable time.

50

QUESTIONNAIRE FOR EXPERTS

(Note: investment in insurance refers to ULIP policies)

1) Do you agree that this is the right time for insurance companies to accept investment

as a part of their business

· Yes

· No

2) Privatization has helped the in recognizing investment a feature in insurance

· Strongly agree

· Agree

· Disagree

· Can’t say

3) Selling investment policies is easier than selling conventional life policies nowadays

· Yes

· No

· Can’t say

4) More competition from increased number of players often lead to unethical practices

to creep in

· Mostly

· Sometimes

· Never

· No unethical practice exist

5) Investment in insurance is the best place to put in your money

· Yes

· No

51

6) If no, rate the following investment options in preference.

· Mutual funds

· Conventional life insurance policies

· Government bonds and securities

· ULIP

· Stock market

· Any other

7) In your opinion, what is the most important factor for people to buy insurance

policies?

· Tax saving tool

· Risk hedging

· Investment tool

· Liquidity

· Any other

8) Why do people refrain from buying insurance policies?

· Lack of awareness

· Lack of proper after sales services

· Insurance is long term investment

· Unavailability of customized products

· Lack of transparency

· Any other

9) Despite similar product features of different companies, what sells the product?

· Trust

· Brand

· Advertisements

· Life advisors

· Distribution channel

· Any other

52

10) Which age group buys maximum number of life insurance policies? (Preference

order)

· 21-25

· 26-30

· 31-40

· 40-50

· Above 50

11) How often does a customer go, for another policy, to the company with whom he has

already taken a policy?

· Almost every time

· Often

· Rarely

· Never

· Can’t say

12) How would you rate the performance of kotak life till now?

· Exceptional

· Good

· Satisfactory

· Below par

13) Do you feel Kotak has enough products to satisfy the needs of the customers?

· Yes

· No

NAME: AGE:

THANKS FOR YOUR VALUABLE TIME

53

ANALYSIS OF SURVEY

A survey was carried out to check the mindset of the people about insurance. Life insurance has

been considered as tax saving tool, investment option and risk hedging device. To support these

assumptions a survey was carried out.

METHOD OF SURVEYTwo separate questionnaires were prepared. One questionnaire was for industry expertand other

was for customers. Both questionnaires are put into appendices.

INDUSTRY EXPERT SURVEYSample taken – 32

Important results from survey:

1. The entry of private players in insurance sector has helped in recognizing investment as

an important feature of insurance.

54

2. ULIP is considered the best place to put money by industry expert

3. Life insurance policy is still considered as tax saving tool than any other device. People still

buy it for its tax saving benefits.

55

4. Lack of awareness and believe that insurance is long term investment refrain people from

buying insurance product.

5. Life insurance agents are still the most important vehicle in selling of life insurance products.

56

CUSTOMER SURVEY

Sample taken- 58

Important results from survey:

1. Most of the clients buy life insurance because it provides a very good tax saving advantage

rather considering it as a risk-hedging tool.

2.With market doing well and mutual fund giving huge return in short term, most people are

interested in making investment in mutual fund followed by ULIP product

3. Majority of people wants security on their investment. They don’t want to put their money in

unknown hands. Long term and short tern gain has equal influence on their investment choice

57

4. Family remains single most important influencer on the investment decision of an individual

followed by secure future

58

Purpose and objectives of undertaking primary data collection:

It helped us to explore the market on a broader basis. Selling might be a difficult issue but

getting the questionnaire being filled was not a difficult issue. In this way, we got a chance to

interact with a number of people.

SIP is meant to give the students a first hand understanding of how the actual work goes on.

Making an analysis from already available data might be anybody’s cup of tea but generating

primary data is something what was expected from us.

The ground realities might be at times very different from our perception and knowledge. A

primary survey is the best way to get a conclusion here.

We got to know as to what is the perception of customers and experts of the industry and the

company as well. The learning was vital and much more than what is depicted in the

questionnaire

A survey makes you better prepared to face the same challenge if given to you

Again

It helps to sharpen one’s analysis skill as well

The survey always helps to check the proximity between whatever which has been read and

what the ground realities are

The people we interacted were broadly based from Hyderabad as far as customers are concerned.

I had the responsibility of getting the questionnaire filled up. After having exhausted all our

connections, I got a number of questionnaires filled by the people living in my apartment in

which most of them are working. Most of the people we interacted had been very new to job like

my friends who have been working in Bhubaneswar mostly in software firms. The list also

included people working as life agents in Kotak life insurance. We also questioned some of the

59

people whom we meant to meet for sales purpose. The expert mainly included employees of

Kotak life insurance.

Learning from the Exercise

People are still reluctant to invest in private players when compared to LIC. Interestingly, it

hardly matters for them that a certain private players are working in collaboration with certain

firms which are much bigger than LIC.

We might perceive LIC as an inefficient company which is not very good at delivering

services but people which includes even the educated youth think differently( the opposite I

mean)

In most of the cases, it was very clear that the brand name matters and LIC happens to be the

biggest brand in India. People might be interested in a similar plan if offered by LIC.

People still do not consider insurance as a need and thus do not hold this industry in very high

terms.

Private players still have a long way to go to compete with LIC as their presence is most of the

areas is negligible

60

14. CONCLUSION

Over the past decade there has been strong consolidation trend in the Global Insurance Industry.

In 2009, worldwide insurance premium volume grew by 3.9%. While Life premiums increased

by 4.1%, non-Life premium increased by 2.01%.

With largest number of life insurance policies in force in the world, Insurance happens to be a

mega opportunity in India. It’s a business growing at the rate of 15-20 per cent annually and

presently is of the order of Rs 450 billion. Improving economic scenario, increasing disposable

incomes, and rising product demands are the reasons behind the growth. The compound annual

growth rate of market in the period 2010-2015 is predicted to be 10%

Indian Life Insurance sector grew 41% to nearly $12 bn in the financial year up to march 2009 in

terms of premium collected. . In India Life is roughly three to four times bigger than non-Life.

And there is potential within Life since most consumers see insurance as a tax-saving-cum-

investment vehicle rather as then a pure cover.

Up To January 2010 LIC’s market share increased to 80% recording a growth of 123% as

compared to last year. Whereas private players like Kotak are striving to increase its market

share and growth to be among the top players in the Life Insurance sector.

Among the private players only some private players have dominated the scene. In terms of new

business premium Bajaj Allianz and ICICI Prudential are the top two private players whereas

Kotak Life is at the Ninth position. LIC has pan India presence having 2048 branches. Kotak

Life has presence only in 146 cities having 213 branches. Kotak Life scores very high in terms of

customer satisfaction. As it has almost 92% persistency rate, which is highest in the market.

Finally it can be said that though it is very tough to compete with LIC, but still private players

have a lot of scope in Indian Life Insurance Industry.

61

Bibliography:

www.kotaklifeinsurance.com

www.wikipedia.com

www.bimaonline.com

www.irdaindia.com

www.ikw.in

www.iaifm.com

www.Indiaprwire.com/pressrelease/insurance

www.marketreserch.com

62