Vaibhav Idbi Final

Factors Determining Buying Behavior of Consumers While Purchasing Life Insurance

Page 1

TABLE OF CONTENTS

SL. NO. Particulars Page No. 1 Executive Summary 2

2

2.1

2.2

Introduction

Literature Review

Buying Behavior

3

3

5

3

3.1

3.2

3.3

3.4

3.5

Industry Overview

Structure of the Industry

Why do we take Insurance policy

What is Life and General Insurance

Insurance Industry in India

Global Scenario

9

9

10

11

14

25

4

4.1

4.2

4.3

4.4

4.5

Company Overview

About IDBI Life Insurance Co Ltd

Product Profile

Vision, Mission and Values

S.W.O.T Analysis

Organizational Chart

31

31

34

36

37

39

5

5.1

5.2

Project Profile

Objectives of Study

Methodology

42

42

42

6

6.1

6.2

Analysis

Sample Distribution

Factor Analysis

44

44

49

7 Findings 55

8 Recommendation 57

9 Conclusion 59

10 Learning Outcome 61

11 Limitations 62

12

12.1 Annexure

Questionnaire

63

63

13 References 68

TABLE AND CHARTS

Table No. Particulars Page No.

1 Structure of the Company 9

2 Market Share 24

3 Organizational Chart 39

4 Sample Distribution (Pie Charts) 44


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EXECUTIVE SUMMARY

Our Internship in IDBI Federal Insurance Co Ltd. Kick started on 23rd

April 2011.We

started our training session on 25th

April. The training was imparted to give us in

depth knowledge regarding the product, Incomesurance and the different sales

techniques to pitch for our prospective clients.

The work assigned to me was to achieve a sales target of 1.5 lakhs in terms of

premium amount collected. I managed to make total sales of 1.15 lakhs. While

making these sales I got a chance to meet many different people from diverse

backgrounds and occupations to discuss on insurance related topics.

Along with this I prepared my report titled ―Factors determining Buying Behavior of

consumers while purchasing Life Insurance‖. Buying behavior is a vast and important

marketing subject. The primary objective of my project is to identify the key factors

which influence a prospective consumer of life insurance the most when considering

the purchase of an insurance product. A questionnaire was prepared with the help of

my company guide and I surveyed 100 respondents. The analysis was done using an

SPSS technique called factor analysis.

From the study and analysis done is this report, we can conclude that there are 5

major factors which influence a consumer of life insurance. They are Customer

service, Transactions options, Favorable compatibility, corporate image and

Safety.


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INTRODUCTION

PURPOSE OF THIS REPORT:

Literature Review:

Consumer behavior is the study of how individuals, groups, and organizations select,

buy, use and dispose of goods, services, ideas, or experiences to satisfy their needs

and wants.

With respect to financial products from an insurance company the consumer behavior

is not clearly defined.

Consumer behavior for services generally vary from that of products, however when

it comes to financial products the available literature on buying behavior falls short.

The aim of this project is to identify all possible factors which influence consumers

one way or the other with respect to Life Insurance financial products.

In today‘s corporate and competitive world, I find that insurance sector has the

maximum growth and potential as compared to the other sectors. Insurance has the

maximum growth rate of 70-80%.According to the report by Market research firm

RNCOS, analyzing ―the Indian Insurance Market‖. Life insurance is a sector which is

largely driven by propensity of people to save. Thus, life insurance products which

provide higher elements of saving as compared to protection will be more popular

with customers. In India unit linked insurance products (ULIPS) account more than

half of the insurance sales. Ulip‘s provide package of benefits in a single product

which include risk cover, investment and tax saving facility.


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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. Together with

banking services, it adds about 7 per cent to the country's GDP. Gross premium

collection is nearly 2 per cent of GDP and funds available with LIC for investments

are 8 per cent of GDP.

Yet, nearly 80 per cent of Indian population is without life insurance cover while

health insurance and non-life insurance continues to be below international standards.

And this part of the population is also subject to weak social security and pension

systems with hardly any old age income security. This it is an indicator that growth

potential for the insurance sector is immense.

In the introduction stage of the Product Life Cycle, a firm seeks to build awareness

and develop a market for the product, and IDBI Federal Life Insurance Co Ltd is in its

introduction stage of its PLC.

So this report will help me recommend to IDBI Federal Life Insurance Co

Ltd , those crucial factors which influence a prospective Life insurance customer the

most when they go ahead in purchasing a life insurance product, so that they can

attract maximum customers by concentrating on these crucial factors and thus develop

a market for their product.


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BUYING BEHAVIOR



and wants.

Five Stages to the Consumer Buying Decision Process (For complex decisions).

Actual purchasing is only one stage of the process. Not all decision processes lead to a

purchase. All consumer decisions do not always include all 6 stages, determined by

the degree of complexity.

The 5 stages are:

Problem Recognition

Information Search

Evaluation of alternatives

Purchase Decision

Post purchase Behavior


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The four type of consumer buying behavior are:

Routine Response/Programmed Behavior--buying low involvement frequently

purchased low cost items; need very little search and decision effort;

purchased almost automatically. Examples include soft drinks, snack foods,

milk etc.

Limited Decision Making--buying product occasionally. When you need to

obtain information about unfamiliar brand in a familiar product category,

perhaps. Requires a moderate amount of time for information gathering.

Examples include Clothes--know product class but not the brand.

Extensive Decision Making/Complex high involvement, unfamiliar, expensive

and/or infrequently bought products. High degree of

economic/performance/psychological risk. Examples include cars, homes,

computers, education. Spend a lot of time seeking information and deciding.

Information from the companies MM; friends and relatives, store personnel

etc. Go through all six stages of the buying process.

Impulse buying, no conscious planning.

Categories that Affect the Consumer Buying Decision Process

A consumer, making a purchase decision will be affected by the following three

factors:

1. Personal

2. Psychological

3. Social

The marketer must be aware of these factors in order to develop an appropriate MM

for its target market.


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HOW DO WE FIND OUT BUYING BEHAVIOR WHEN IT COMES TO LIFE

INSURANCE FINANCIAL??

1. Historically the factors affecting consumer behavior have been broadly

classified as:

· Cultural Factors

· Social Factors

· Personal Factors

For financial products however we can‘t use this framework, we can say that buying

of insurance can be attributed to Personal Factors, but these also include the concepts

of PERSONALITY and SELF-CONCEPT which do not explain the buying behavior

of insurance.

2. The motivational theories of consumer behavior which have been formulated

are:

· FREUD‘S Theory

· MASLOW‘S Theory

· HERZBERG‘S Theory

However, none of these theories give valuable insight when it comes to motivation for

buying financial products.

3. The Five-Stage Buying Decision Model is widely accepted as a basic framework

for the consumer behavior:

Problem Recognition – Information Search – Evaluation of alternatives – Purchase

Decision – Post purchase Behavior

It is known that consumers do not always pass through all five stages in buying a

product; they might skip or reverse some. Keeping this in mind we can say this model

is helpful to get a basic idea of how consumers buy financial products. The

information sources are vital in educating the consumers and this can be done through

Personal, Commercial and Public Sources. The evaluation of alternatives however


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can‘t be explained for financial products. There is no information available as to how

people filter out alternatives when it comes to deciding on a particular financial

product offering.

4. Elaboration Likelihood Model

Richard Petty and John Cacioppo‘s model of attitude formation and change, describes

how consumers make evaluations in both low- and high- involvement circumstances.

They describe the Central Route where attitude formation is based on diligent,

rational consideration of the most important product information; and the Peripheral

Route where attitude formation is due to association with some positive or negative

peripheral cues which include celebrity endorsement as well as insurance agents.

This particular model gives a basic idea as to how people may develop attitudes

towards insurance products. The central route will not differ as the products offered in

this industry are tailored to suit the needs of the consumer. The peripheral cues are the

most important as the brand name; advertisements, agents etc. play an important role

in attitude formation for the consumer.

It would thus be helpful to understand all these cues in order to create favorable

attitude towards IDBI Federal Financial Products.

5. Low-Involvement Marketing Strategies

One type of Low-Involvement Marketing Strategy is to design advertising to trigger

strong emotions related to personal values or ego-defense. This can be observed in the

insurance industry as most advertisements are designed in order to trigger feelings of

uncertainty which can be quelled by purchase of an insurance product.


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INDUSTRY OVERVIEW

STRUCTURE OF THE INDUSTRY

In India, the Ministry of Finance is responsible for enacting and implementing

legislations for the insurance sector with the Insurance Regulatory and Development

Authority (IRDA) entitled with the regulatory and developmental role. The

government also owns the majority share in some major companies in both life and

non-life insurance segments. Both the life and non-life insurance sectors in India,

which were nationalized in the 1950s and 1960s, respectively, were liberalized in the

1990s. Since the formation of IRDA and the opening up of the insurance sector to

private players in 2000, the Indian insurance sector has witnessed rapid growth.


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Why do we take insurance policies?

Most of us may think that insurance is for those who have married and have a family.

But let us check why do we take insurance and what are the benefits or insurance

policies. Now the insurance companies are mushrooming with so many insurance

products and try to attract more customers by putting old wines in new fancy bottles.

At this scenario we may think that these policies are only for making money for

insurance companies. But there are so many advantages for insurance policies. Let us

discuss some of them.

The insurance policies can be classified into life insurance and other insurance

policies. The life insurance policies secure our family or dependents when the policy

holder‘s death or disability occurs due to any reason. Other insurance policies protect

the financial loss due to any special circumstances such as accident, theft, illness,

natural calamities etc. etc.

The main benefit of life insurance policies is when the death or disability of the policy

holder occurs they will provide an amount as per the terms of life insurance to the

dependents of the policy holder and it will be a relief for them.

Through insurance policy one can secure the future of his/her children by providing

financial help for higher education or for marriage etc.

The person can avail tax benefit according to the law of the land from the insurance

policy and from the premium amount he/she is paying.

You can take an immediate loan from insurance companies with the help of policy

you are holding as per the terms of the policy you have joined.

When you get back the maturity value of insurance policy you can satisfy any

financial needs such as buying property, higher education of children, paying off any

existing loan etc.


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What is INSURANCE?

Insurance is a risk management technique primarily used to hedge against the risk of a

contingent, uncertain loss that may be suffered by those individuals or entities that

have an insurable interest in scarce resources, by transferring the possibility of this

loss from one interested person, persons, or entity to another. The scarce resources

referred to here fall into three divisions: human resources, financial resources, and

capital, or tangible resources.

What is LIFE INSURANCE?

Human life is subject to risks of death and disability due to natural and accidental

causes. When human life is lost or a person is disabled permanently or temporarily,

there is a loss of income to the household. The family is put to hardship. Sometimes,

survival itself is at stake for the dependants. Risks are unpredictable. Death/disability

may occur when one least expects it. An individual can protect himself or herself

against such contingencies through life insurance.

Life insurance is insurance on human beings. Though Human life cannot be valued, a

monetary sum could be determined which is based on loss of income in future years.

Hence in life insurance, the Sum Assured (or the amount guaranteed to be paid in the

event of a loss) is by way of a ‗benefit‘ in the case of life insurance. Life insurance

products provide a definite amount of money to the dependants of the insured in case

the life insured dies during his active income earning period or becomes disabled on

account of an accident causing reduction/complete loss in his income earnings.


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An individual can also protect his old age when he ceases to earn and has no other

means of income – by purchasing an annuity product.

There are a number of life insurance products which offer protection and also coupled

with savings.

A term insurance product provides a fixed amount of money on death during the

period of contract.

A whole life insurance product provides a fixed amount of money on death.

An Endowment Assurance product provided a fixed amount of money either on death

during the period of contract or at the expiry of contract if life assured is alive.

A money back assurance product provides not only fixed amounts which are payable

on specified dates during the period of contract, but also the full amount of money

assured on death during the period of contract.

An annuity product provides a series of monthly payments on stipulated dates

provided that the life assured is alive on the stipulated dates.

A linked product provides not only a fixed amount of money on death but also sums

of money which are linked with the underlying value of assets on the desired dates.

There are a variety of life insurance products to suit to the needs of various categories

of people—children, youth, women, middle-aged persons, old people; and also rural

people, film actors and unorganized labourers.

Life insurance products could be purchased from registered life insurers notified by

the IRDA. Insurers appoint insurance agents to sell their products. Public who are

interested to buy life insurance products should receive proper advice from insurance


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agents/insurer so that a right product could be chosen to suit particular financial

needs.

Thus life insurance policies offer protection and security to families and provide

happiness to society.

What is GENERAL INSURANCE?

Insurance other than ‗Life Insurance‘ falls under the category of General Insurance.

General Insurance comprises of insurance of property against fire, burglary etc,

personal insurance such as Accident and Health Insurance, and liability insurance

which covers legal liabilities. There are also other covers such as Errors and

Omissions insurance for professionals, credit insurance etc.

Non-life insurance companies have products that cover property against Fire and

allied perils, flood storm and inundation, earthquake and so on. There are products

that cover property against burglary, theft etc. The non-life companies also offer

policies covering machinery against breakdown, there are policies that cover the hull

of ships and so on. A Marine Cargo policy covers goods in transit including by sea,

air and road. Further, insurance of motor vehicles against damages and theft forms a

major chunk of non-life insurance business.


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Insurance Industry in India:

Indian insurance is a flourishing industry, with several national and international

players competing and growing at rapid rates. Thanks to reforms and the easing of

policy regulations, the Indian insurance sector been allowed to flourish, and as Indians

become more familiar with different insurance products, this growth can only

increase, with the period from 2010 - 2015 projected to be the 'Golden Age' for the

Indian insurance industry.

The insurance sector in India has started from being an open competitive market to

nationalization and back to a liberalized market again. Tracing the developments in

the Indian insurance sector reveals the 360-degree turn witnessed over a period of

almost two centuries.

Indian insurance companies offer a comprehensive range of insurance plans, a range

that is growing as the economy matures and the wealth of the middle classes

increases. The most common types include: term life policies, endowment policies,

joint life policies, whole life policies, loan cover term assurance policies, unit-linked

insurance plans, group insurance policies, pension plans, and annuities. General

insurance plans are also available to cover motor insurance, home insurance, travel

insurance and health insurance.

Due to the growing demand for insurance, more and more insurance companies are

now emerging in the Indian insurance sector. With the opening up of the economy,

several international leaders in the insurance sector are trying to venture into the India

insurance industry.


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A brief history of the Insurance sector:

The history of the Indian insurance sector dates back to 1818, when the Oriental Life

Insurance Company was formed in Kolkata. A new era began in the India insurance

sector, with the passing of the Life Insurance Act of 1912.

The Indian Insurance Companies Act was passed in 1928. This act empowered the

government of India to gather necessary information about the life insurance and non-

life insurance organizations operating in the Indian financial markets.

Some of the important milestones in the life insurance business in India are:

1912: The Indian Life Assurance Companies Act enacted as the first statute to

regulate the life insurance business.

1928: The Indian Insurance Companies Act enacted to enable the government to

collect statistical information about both life and non-life insurance businesses.

1938: Earlier legislation consolidated and amended to by the Insurance Act with the

objective of protecting the interests of the insuring public.

1956: 245 Indian and foreign insurers and provident societies were taken over by the

central government and nationalized. LIC formed by an Act of Parliament, viz. LIC

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

The General insurance business in India, on the other hand, can trace its roots to the

Triton Insurance Company Ltd., the first general insurance company established in

the year 1850 in Calcutta by the British.


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Some of the important milestones in the general insurance business in India are:

1907: The Indian Mercantile Insurance Ltd. set up, the first company to transact all

classes of general insurance business.

1957: General Insurance Council, a wing of the Insurance Association of India,

frames a code of conduct for ensuring fair conduct and sound business practices.

1968: The Insurance Act amended to regulate investments and set minimum solvency

margins and the Tariff Advisory Committee set up.

1972: The General Insurance Business (Nationalization) Act, 1972 nationalised the

general insurance business in India with effect from 1st January 1973.

107 insurers amalgamated and grouped into four companies‘ viz. the National

Insurance Company Ltd., the New India Assurance Company Ltd., the Oriental

Insurance Company Ltd. and the United India Insurance Company Ltd. GIC

incorporated as a company.

INDIAN INSURANCE MARKET HISTORY

Insurance has had a very long history in India, life insurance was introduced in India

with the starting of Oriental life insurance Company in Kolkata in the year

1818.General insurance came a quite later, and it started its operations with the onset

of Triton Insurance Company which had a base in Kolkata. History of insurance can

be further divided in three areas a) pre-nationalization, b) nationalization and c) post

Nationalization. Life insurance was first nationalized in 1956, followed by general

insurance in 1973.General insurance corporation of India was set as controlling body,

all this was initiated against the economic reforms of 1991.This was followed by

many such acts and amendments including insurance regulatory development act


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(IRDA) passes in 1999.Private players were encouraged in the insurance sector and

they effectively started operations from 2001.

INSURANCE MARKET-PRESENT

Insurance sector was opened for private players with the starting of the 20th

century.

After economic reforms in 1991, economy was liberalized. Since then there has a

rampant and dynamic growth in the field of insurance. Most of private players have

entered this sector with joint collaborations across the globe. There are now 29

insurance companies operating in the Indian market – 14 private life insurers, nine

private non-life insurers and six public sector companies. The insurance sector has

intensified and companies are formulating survival strategies due to immense

competition in a de-tariff scenario. There is pressure from both within the country and

outside on the Government to increase the foreign direct investment (FDI) limit from

the current 26% to 49%, which would help this sector to expand.

Indian Insurance: Sector Reforms:

In 1993, Malhotra Committee headed by former Finance Secretary and RBI Governor

R.N. Malhotra was formed to evaluate the Indian insurance industry and recommend

its future direction. The aim of the Malhotra Committee was to assess the

functionality of the Indian insurance sector. This committee was also in charge of

recommending the future path of insurance in India.

The Malhotra committee was set up with the objective of complementing the reforms

initiated in the financial sector. The reforms were aimed at "creating a more efficient

and competitive financial system suitable for the requirements of the economy

keeping in mind the structural changes currently underway and recognizing that


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insurance is an important part of the overall financial system where it was necessary

to address the need for similar reforms…"

In 1994, the committee submitted the report and some of the key recommendations

included:

1) Structure

Government stake in the insurance Companies were to be brought down to 50%.

Government should take over the holdings of GIC and its subsidiaries so that these

subsidiaries can act as independent corporations.

All the insurance companies should be given greater freedom to operate.

2) Competition

Private Companies with a minimum paid up capital of Rs.1bn should be allowed to

enter the industry.

No Company should deal in both Life and General Insurance through a single entity.

Foreign companies may be allowed to enter the industry in collaboration with the

domestic companies.

Postal Life Insurance should be allowed to operate in the rural market.

Only One State Level Life Insurance Company should be allowed to operate in each

state.

3) Regulatory Body

The Insurance Act should be changed.

An Insurance Regulatory body should be set up.

Controller of Insurance (Currently a part from the Finance Ministry) should be made

independent.


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4) Investments

Mandatory Investments of LIC Life Fund in government securities to be reduced from

75% to 50%.

GIC and its subsidiaries are not to hold more than 5% in any company (There current

holdings to be brought down to this level over a period of time).

5) Customer Service

LIC should pay interest on delays in payments beyond 30 days.

Insurance companies must be encouraged to set up unit linked pension plans.

Computerization of operations and updating of technology to be carried out in the

insurance industry The committee emphasized that in order to improve the customer

services and increase the coverage of the insurance industry should be opened up to

competition.

But at the same time, the committee felt the need to exercise caution as any failure on

the part of new players could ruin the public confidence in the industry. Hence, it was

decided to allow competition in a limited way by stipulating the minimum capital

requirement of Rs.100 crores. The committee felt the need to provide greater

autonomy to insurance companies in order to improve their performance and enable

them to act as independent companies with economic motives. For this purpose, it had

proposed setting up an independent regulatory body.

The Insurance Regulatory and Development Authority Act of 1999 brought about

several crucial policy changes in the insurance sector of India. It led to the formation

of the Insurance Regulatory and Development Authority (IRDA) in 2000.


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The goals of the IRDA are to safeguard the interests of insurance policyholders, as

well as to initiate different policy measures to help sustain growth in the Indian

insurance sector.

The Authority has notified 27 Regulations on various issues which include

Registration of Insurers, Regulation on insurance agents, Solvency Margin, Re-

insurance, Obligation of Insurers to Rural and Social sector, Investment and

Accounting Procedure, Protection of policy holders' interest etc. Applications were

invited by the Authority with effect from 15th August, 2000 for issue of the

Certificate of Registration to both life and non-life insurers. The Authority has its

Head Quarter at Hyderabad.

Major Policy Changes

Insurance sector has been opened up for competition from Indian private insurance

companies with the enactment of Insurance Regulatory and Development Authority

Act, 1999 (IRDA Act). As per the provisions of IRDA Act, 1999, Insurance

Regulatory and Development Authority (IRDA) was established on 19th April 2000

to protect the interests of holder of insurance policy and to regulate, promote and

ensure orderly growth of the insurance industry. IRDA Act 1999 paved the way for

the entry of private players into the insurance market which was hitherto the exclusive

privilege of public sector insurance companies/ corporations.

Under the new dispensation Indian insurance companies in private sector were

permitted to operate in India with the following conditions:

Company is formed and registered under the Companies Act, 1956;


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The aggregate holdings of equity shares by a foreign company, either by itself

or through its subsidiary companies or its nominees, do not exceed 26%, paid

up equity capital of such Indian insurance company;

The company's sole purpose is to carry on life insurance business or general

insurance business or reinsurance business.

The minimum paid up equity capital for life or general insurance business is

Rs.100 crores.

The minimum paid up equity capital for carrying on reinsurance business has

been prescribed as Rs.200 crores.

The Authority has notified 27 Regulations on various issues which include

Registration of Insurers, Regulation on insurance agents, Solvency Margin, Re-

insurance, Obligation of Insurers to Rural and Social sector, Investment and

Accounting Procedure, Protection of policy holders' interest etc. Applications were

invited by the Authority with effect from 15th August, 2000 for issue of the

Certificate of Registration to both life and non-life insurers. The Authority has its

Head Quarter at Hyderabad.

Insurance companies:

IRDA has so far granted registration to 12 private life insurance companies and 9

general insurance companies. If the existing public sector insurance companies are

included, there are currently 13 insurance companies in the life side and 13 companies

operating in general insurance business. General Insurance Corporation has been

approved as the "Indian reinsurer" for underwriting only reinsurance business.


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Protection of the interest of policy holders:

IRDA has the responsibility of protecting the interest of insurance policyholders.

Towards achieving this objective, the Authority has taken the following steps:

IRDA has notified Protection of Policyholders Interest Regulations 2001 to

provide for: policy proposal documents in easily understandable language;

claims procedure in both life and non-life; setting up of grievance redressal

machinery; speedy settlement of claims; and policyholders' servicing. The

Regulation also provides for payment of interest by insurers for the delay in

settlement of claim.

The insurers are required to maintain solvency margins so that they are in a

position to meet their obligations towards policyholders with regard to

payment of claims.

It is obligatory on the part of the insurance companies to disclose clearly the

benefits, terms and conditions under the policy. The advertisements issued by

the insurers should not mislead the insuring public.

All insurers are required to set up proper grievance redress machinery in their

head office and at their other offices.

The Authority takes up with the insurers any complaint received from the

policyholders in connection with services provided by them under the

insurance contract.


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MAJOR PLAYERS IN THE INSURANCE SECTOR:

Govt. Regulated

Postal Life Insurance.

LIC.

Pvt. Players

Bajaj Allianz Life Insurance Co. Ltd

Birla Sun Life Insurance Co. Ltd

HDFC Standard Life Insurance Co. Ltd.

ICICI Prudential Life Insurance Co. Ltd.

ING VYSYA Life Insurance Co. Ltd.

MAX New York Life Insurance Co. Ltd.

Met Life India Insurance Co, Pvt. Ltd.

Kotak Mahindra Old Mutual Life Insurance Co. Ltd.

SBI Life Insurance Co. Ltd.

TATA AIG Life Insurance Co. Ltd.

Reliance Life Insurance.

Aviva Life Insurance Co. Pvt. Ltd.

Sahara India Life Insurance Co. Ltd

IDBI FEDERAL Life Insurance Co. Lt


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NAME OF THE PLAYER MARKET SHARE (%) Name of the Player Market share (%)

LIFE INSURANCE CORPORATION OF INDIA 68.7

ICICI PRUDENTIAL 6.25

SBI LIFE INSURANCE 6.01

HDFC life 3.23

Bajaj Allianz 2.75

IDBI Federal 0.40

others 12.66

http://blog.bharatbuysell.com/news/1537/lic-wins-race-in-market-share-

private-insurers-gloomed

http://www.capitalmarket.com/cmedit/story25-0.asp?SNo=465376


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GLOBAL SCENERIO OF INSURANCE COMPANIES

Life insurance not plays an important role in national economy but also in

international economy. Marine cargo insurance provides risk coverage for shipper

sand the banks, which finance international trades. This role becomes all the more

important in the context of an active government policy to encourage exports. Indian

life insurers operates in more than 30 countries through agencies, branches, associates

companies. These operations earn foreign exchange.

The global insurance industry is one of the largest sectors of finance. It ranges from

consumer to corporate and industrial insurance, and even reinsurance, or insurance of

insurance. The major insurance markets of the world are obviously the US, Europe,

Japan, and South Korea. Emerging markets are found throughout Asia, specifically in

India and China, and are also in Latin America.

Given the evolving and growing socio-economic conditions worldwide, insurance

companies are increasingly reaching out across borders and are offering more

competitive and customized products than ever before.

With the internet and other forms of high-speed communication, companies and

individuals are now able to purchase insurance and related financial products from

almost anywhere in the world. Increasing affluence, especially in developing

countries, and a rising understanding of the need to protect wealth and human capital

has led to significant growth in the insurance industry. Given the evolving and

growing socio-economic conditions worldwide, insurance companies are increasingly

reaching out across borders and are offering more competitive and customized

products than ever before. Some of the foreign insurance companies are mentioned

below:

1. Prudential plc. , Est. in London in 1848, through its business in the US and Asia,

the UK and Europe, provides retail financial services and products to more than

16 million customers, policy holder and unit holders worldwide. Prudential has


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brought to market an integrated range of financial services products that now

includes life assurance, pensions, mutual funds, banking, investment management

and general insurance. In Asia, Prudential is the leading European life insurance

company with a vast network of 23 life and mutual fund operations in twelve

countries –China, Hong Kong, India, Indonesia, Japan, Korea, Malaysia, the

Philippines, Singapore, Taiwan, Thailand and Vietnam.

2. American International Group, Inc. (AIG) is a major American insurance

corporation based at the American International Building in New York City. The

British headquarters are located on Fenchurch Street in London, continental

Europe operations are based in La Defense, Paris, and its Asian HQ is in Hong

Kong. According to the 2008 Forbes Global 2000 list, AIG was the 18th-largest

company in the world. American International Group, Inc. is the leading U.S.

based and financial services and international insurance organization and the

largest underwriter of commercial and industrial insurance in the United States. Its

member companies write a wide range of commercial and personal insurance

products through a variety of distribution channels in over 130 countries and

jurisdictions throughout the world. AIG's Life Insurance operations comprise of

the most extensive worldwide network of any life insurer. AIG's global businesses

also include financial services and asset management, including aircraft leasing,

financial products, trading and market making, consumer finance, savings

products.

3. AXA The insurance world revolves around this AXA. The company, which

started as a sleepy collection of mutual insurance companies, is today one of the

world's largest insurers and a financial management powerhouse. In the US, AXA

owns AXA Financial, which controls life insurance firm AXA Equitable and

investment manager Alliance Bernstein. The company also has major subsidiaries

in the UK (AXA UK), Japan (AXA Life), Germany (AXA Konzern), Australia

(AXA Asia Pacific), and Belgium (AXA Belgium). The companies offer life


Page 27

insurance, personal and commercial property and financial services, casualty

insurance, and asset management services. It has about E1 trillion (or $1.45

trillion) in assets under management.

4. Allianz SE Allianz SE offers a range of insurance products and services --

including life, health, and property/casualty coverage for individuals and

businesses -- through some 100 subsidiaries and affiliates operating all over the

globe (though its key markets are France, Germany, Italy, and the US) is one of

the world's biggest insurers,. In addition to selling insurance, Allianz provides

private equity investment through Allianz Capital Partners, institutional asset

management and retail services through Allianz Global Investors, and banking

services through Allianz Bank. Allianz operates as a Societas Europaea, a joint

stock company that is ruled by European Union standards.

5. ING Grope N.V., a financial services company, provides banking, investment,

life insurance, and retirement services worldwide. The company offers wealth

accumulation, savings, and mortgage products and services to individuals, and

small-and medium-sized businesses, as well as a range of banking products

through independent banking agents; and credit products through agents, brokers,

and vendors. It provides current account services and payments systems, such as

savings accounts, mortgage loans, consumer loans, credit card services,

investment products, and life and non-life insurance products, as well as asset

management services. The company also provides wealth management services to

high net worth individuals. In addition, it offers various financial products, such as

mutual funds, e-brokerage, payment accounts, and pensions; and lending,

payments and cash management, structured finance, leasing and commercial

finance, and financial markets products and services. Further, the company offers

life insurance, investments, and retirement services for retail customers; a range of

traditional, unit-linked, and variable annuity policies written for individual and

group customers; mandatory and voluntary pension funds; fire, motor, disability,


Page 28

transport, and third party liability insurance for individual and commercial/group

clients; and disability insurance products and complementary services for

employers and self-employed professionals, such as dentists, general practitioners,

and lawyers, as well as manages equity, fixed income, and structured investments

for institutional investors and private label investment funds. As of December 31,

2009, ING Group N.V. had approximately 250 retail banking branches in the

Netherlands; 800 in Belgium; 430 in Poland/central Europe; and 460 in Asia. The

company was founded in 1991 and is based in Amsterdam, the Netherlands.

6. New York Life New York Life is the largest mutual life insurance company in the

United States and one amongst the largest life insurers in the world. The

company's clients include The NY Bar Association, the Air Line Pilots

Association, American College of Surgeons, and The American Institute of

Architects. The company has also insured many U.S. Presidents, entertainers and

professional athletes. On the side of investments New York Life's affiliates

provide institutional asset management and trust services and, NYLIFE Securities

LLC, a subsidiary, provide an array of securities products and services such as

institutional and retail mutual funds, including 401(k) products. The company was

founded in 1845 as Nautilus Insurance and became New York Life in 1849. The

company is mutually held, not publicly-traded. New York Life has 10,000 sales

agents across the U.S. and offices in Argentina, China, Hong Kong, India,

Mexico, South Korea, Taiwan, and Thailand. In 2009, the company reported total

revenues of $14.4 billion. Insurance sales were almost $2.7 billion. The company

had total assets of $286.7 billion under management in 2009.

7. Aviva plc.is engaged in the provision of financial products and services, fund

management and general insurance and health, focused on long-term insurance

and savings business. The Company's business is managed on a geographic basis

http://www.corporateinformation.com/Company-Snapshot.aspx?cusip=C826A4310


Page 29

through a regional management structure based on four regions: Europe, United

Kingdom, North America and Asia Pacific. The four regions function as six

operating segments as both the United Kingdom and Europe regions are split into

two operating segments. United Kingdom region it is split into the UK Life and

UK General Insurance segments, which undertake long-term insurance and

savings business and general insurance respectively. In Europe, Delta Lloyd is

managed separately from the other European businesses; therefore the region is

split into Aviva Europe and Delta Lloyd operating segments. General insurance

and health insurance together accounted for 20% of its total sales during the year

ended December 31, 2009.

8. Lombard Canada Ltd. (LCL) is responsible for the insurance management

services for all of the Lombard group's commercial and personal insurance

companies. LCL also provides insurance management services for external clients

including the Tokyo Marine & Nichido Fire Insurance Co., Ltd. LCL and the

member entities of the Lombard companies that it manages, are wholly owned

subsidiaries of Northbridge Financial Corporation. Lombard General Insurance

Company (Canada) is an underwriter of commercial lines business through select

brokers across the country. Lombard General brokers have access to one of the

industry's most powerful underwriting tools: Business Choice ®, a specialized

point of sale software developed by Lombard Canada. Beyond providing small

and medium sized businesses with the specialized insurance coverage they

require, Lombard General also offers custom marketing services and specialized

coverage designed to meet the needs of businesses across the country. Lombard

Insurance Company is an underwriting insurance provider of personal lines

committed to providing Canadians with the most innovative personal lines

insurance solutions. Lombard Insurance was well ahead of the competition when




Page 30

it introduced its packaged homeowner and automobile product Personal Choice ®

- a package that remains popular today.


Page 31

COMPANY PROFILE

IDBI Federal Life Insurance Co Ltd is a joint-venture of IDBI Bank, India‘s

premier development and commercial bank, Federal Bank, one of India‘s leading

private sector banks and AGEAS, a multinational insurance giant based out of

Europe. In this venture, IDBI Bank owns 48% equity while Federal Bank and Ageas

own 26% equity each. At IDBI Federal, we endeavor to deliver products that provide

value and convenience to the customer. Through a continuous process of innovation

in product and service delivery we intend to deliver world-class wealth management,

protection and retirement solutions to Indian customers. Having started in March

2008, in just five months of inception we became one of the fastest growing new

insurance companies to garner Rs 100 Cr in premiums. The company offers its

services through a vast nationwide network across the branches of IDBI Bank and

Federal Bank in addition to a sizeable network of advisors and partners. As on

January 31st 2011, the company has issued over 2.68 lakh policies with over Rs 14,

230 Cr in Sum Assured.


Page 32

SPONSORS OF IDBI LIFE INSURANCE CO. LTD

IDBI Bank Ltd. continues to be, since its inception, India‘s premier industrial

development bank. Created in 1956 to support India‘s industrial backbone, IDBI Bank

has since evolved into a powerhouse of industrial and retail finance. Today, it is

amongst India‘s foremost commercial banks, with a wide range of innovative

products and services, serving retail and corporate customers in all corners of the

country from over 700 branches and more than 1180 ATMs. The Bank offers its

customers an extensive range of diversified services including project financing, term

lending, working capital facilities, lease finance, venture capital, loan syndication,

corporate advisory services and legal and technical advisory services to its corporate

clients as well as mortgages and personal loans to its retail clients. As part of its

development activities, IDBI Bank has been instrumental in sponsoring the

development of key institutions involved in India‘s financial sector – such as the

Securities and Exchange Board of India (SEBI), National Stock Exchange of India

Limited (NSE) and National Securities Depository Ltd.

Federal Bank is one of India‘s leading private sector banks, with a dominant

presence in the state of Kerala. It has a strong network of over 660 branches and 690

ATMs spread across India. The bank provides over four million retail customers with

a wide variety of financial products. Federal Bank is one of the first large Indian

banks to have an entirely automated and interconnected branch network. In addition

to interconnected branches and ATMs, the Bank has a wide range of services like

Internet Banking, Mobile Banking, Tele Banking, Anywhere Banking, debit cards,

online bill payment and call centre facilities to offer round the clock banking

convenience to its customers. The Bank has been a pioneer in providing innovative

technological solutions to its customers and the Bank has won several awards and

recommendations.


Page 33

AGEAS is an international insurance company with a heritage spanning more than

180 years. Ranked among the top 20 insurance companies in Europe, Ageas has

chosen to concentrate its business activities in Europe and Asia, which together make

up the largest share of the global insurance market. These are grouped around four

segments: Belgium, United Kingdom, Continental Europe and Asia and served

through a combination of wholly owned subsidiaries and partnerships with strong

financial institutions and key distributors around the world. Ageas operates successful

partnerships in Belgium, UK, Luxembourg, Italy, Portugal, China, Malaysia, India

and Thailand and has subsidiaries in France, Germany, Hong Kong and UK. It is the

market leader in Belgium for individual life and employee benefits, as well as a

leading non-life player, through AG Insurance, and in the UK, it has a strong presence

as the second largest player in private car insurance and the over 50‘s market. It

employs more than 13,000 people.


Page 34

PRODUCT PROFILE

WEALTHSURANCE: The Wealthsurance Milestone Plan enables the

policyholder to save and build wealth to meet their financial goals. This Plan

comes with a wide range of 13 investment options and 7 insurance benefits - all

packaged with a low charge structure and unmatched flexibility.

HOMESURANCE: IDBI Federal Homesurance Protection Plan provides full

insurance cover for properties even under construction, thus ensuring that the

beneficiary gets the full sanctioned amount in case of any unfortunate event. It

also has an innovative fixed period cover for those who would aim to prepay their

loans early.

BONDSURANCE: Bondsurance is designed for customers looking for

guaranteed returns which will not get affected by financial market conditions.

It offers guaranteed return on investment along with life insurance cover.

MICROSURANCE: IDBI Federal Microsurance Plan is a one of its kind

insurance plan which can be very useful for various Micro Financial

Institutions and NGOs, wherein not only the members but even the member‘s

family gets an insurance cover.

TERMSURANCE: IDBI Federal Termsurance Protection Plan offers the

unique Increasing Cover option that automatically increases the cover every

year without increasing the premium.

http://www.idbifederal.com/Products/Termsurance


Page 35

INCOMESURANCE: Knowing the customer helped us to combine the

Endowment & Money Back plans into a single plan. It linked the returns to the

G-Sec rates, transparently declared by the government. Also, the Guaranteed

Annual Payout and other benefits upon death are tax-free under Sec 10(10D).

HEALTHSURANCE: This new insurance plan offers a host of features and

benefits that are designed to help manage the extra financial burden that comes

with hospitalization.

http://www.idbifederal.com/Products/Healthsurance


Page 36

Vision and VALUES

We maintain integrity through our values.

Our Vision

To be the leading provider of wealth management, protection and retirement solutions

that meets the needs of our customers and adds value to their lives.

Our Mission

―To continually strive to enhance customer experience through innovative product

offerings, dedicated relationship management and superior service delivery while

striving to interact with our customers in the most convenient and cost effective

manner.‖

―To be transparent in the way we deal with our customers and to act with integrity.‖

―To invest in quality human capital and build it in order to achieve our mission.‖

Our Values

Transparency: Crystal Clear communication to our partners and stakeholders.

Value to Customers: A product and service offering in which

customers perceive value.

Rock Solid and Delivery on Promise: This translates into being financially

strong, operationally robust and having clarity in claims.

Customer-friendly: Advice and support in working with customers and

partners.

Profit to Stakeholders: Balance the interests of customers, partners,

employees, shareholders and the community at large.


Page 37

SWOT ANALYSIS

STRENGTH

· Superior customer service vs. competitors.

· Products have required accreditations.

· Good place to work.

· Lower response time with efficient and effective service.

· Dedicated workforce aiming at making a long term career in the field.

· Large pool of technically skilled manpower with in depth knowledge and under

· Standing of the market.

WEAKNESSES

· Customer service staff needs training.

· Some gaps in range for certain sectors.

· Sectorial growth is constrained by low unemployment levels and competition

for Staff.

· Low customer confidence on the private players.

OPPORTUNITIES

· Insurable population: According to IRDA only 10% of the population is insured

which represent around 30% of the insurable population. This suggests more than

300m people, with the potential to buy insurance, remain uninsured.

· International companies will help in building world class expertise in local

market by introducing the best global practice.


Page 38

· An applied research center to create opportunities for developing techniques to

provide value-added services.

· Fast-track career development opportunities on an industry-wide basis.

THREATS

· Big public sector insurance companies like Life Insurance Corporation (LIC) of

India, National Insurance Company Limited, Oriental Insurance Limited, New India

Assurance Company Limited and United India Insurance Company Limited. People

trust and go to them more.

· Very high competition prevailing in the industry.

· Vulnerable to reactive attack by major competitors.

· Lack of infrastructure in rural areas could constrain investment.


Page 39

IDBI FEDERAL LIFE INSURANCE LIMITED

ORGANIZATIONAL CHART

CHIEF EXECUTIVE

OFFICER

Mr. Nageshwara Rao

COUNTRY HEAD

Mr. Murali

HUMAN RESOURCES

HEAD

Mrs. RadhikaVenkatraman

MARKETING HEAD

Mr. AmitTripathi

TRAINING HEAD

Mrs. Vaishali


Page 40

ZONAL-WISE ORGANIZATIONAL STRUCTURE

COUNTRY HEAD

Mr.Murali

NORTH

ZONAL

HEAD

EAST ZONAL

HEAD WEST ZONAL

HEAD

SOUTH

ZONAL

HEAD

Mr.Balaji

MUMBAI

LUCKNOW

COIMBATORE

AREA HEAD

Mr. Vijay

Kumar

BENGALURU

AREA

HEAD

HYDERABAD

AREA HEAD


Page 41

AREA – WISE ORGANIZATIONAL STRUCTURE

Source: IDBI Federal Life Insurance Co Ltd

COIMBATORE AREA HEAD

Mr. Vijay Kumar

BRANCH HEAD

CHIEF MANAGER

Mrs.ShanthiYagyanath

DEPUTY MANAGER SENIOR

EXECUTIVE

BAND

1

BAND 2 BAND

3

BAND

1 BAND 2 BAND 3 BAND 1 BA

ND

2

BA

ND

3

AGENCY

BANKS

DISTRIBUTION CENTER

MANAGEMENT TRAINEES

CORPORATE

CHANNELS


Page 42

PROJECT PROFILE

OBJECTIVES OF THE STUDY:

Primary Objective

To identify the key factors which influence consumers the most when they

purchase a life insurance product.

Secondary Objectives

To understand the most common purpose behind taking a life insurance

policy.

To find out the best option of people when it comes to making an investment.

To spread awareness of IDBI Federal and its Incomesurance product.

METHODOLOGY:

Research Design: Causal Research

Data sources: Primary data and Secondary data.

Research instrument: Questionnaire. (Close Ended)

Analysis has been done using SPSS by Factor Analysis.


Page 43

Data collection:

Primary Data:

Responses collected in the survey by the use of questionnaire.

Secondary Data:

Newspapers.

Articles.

Product Brochures.

Internet.


Page 44

ANALYSIS

AGE DISTRIBUTION OF THE SAMPLE:

44% of the sample is between the age group of 18-30 years.



8% of the sample is between the age group of 50+.


Page 45

OCCUPATION DISTRIBUTION:

37% of the sample is doing service.

17% of the sample does business.

27% of the sample consists of professionals.

19% of the sample is self-employed.


Page 46

INCOME DISTRIBUTUON:

7% of the sample has income up to 1.8 lakhs per annum.

52% of the sample has income between 1.8 and 5 lakhs per annum.

22% of the sample has income between 5 and 8 lakhs per annum.

19% of the sample has income above 8 lakhs.


Page 47

BEST INVESTMENT OPTION ACCORDING TO THE SAMPLE.

21% of the sample chose Shares as the best option for investment.

9% of the sample chose Bank deposits as the best option for investment.

16% of the sample chose Mutual funds as the best option for investment.

20% of the sample chose Real estate as the best option for investment.

5% of the sample chose Post office savings as the best option for investment.

22% of the sample chose Gold as the best option for investment.

7% of the sample chose Insurance as the best option for investment.


Page 48

PURPOSE FOR HAVE TAKEN OR FOR TAKING AN LIFE INSURANCE

PRODUCT:

25% of the sample said Future Security.

18% of the sample said Childs marriage.

6% of the sample said Childs education.

30% of the sample said Tax benefits.

21% of the sample said Savings tool.


Page 49

FACTOR ANALYSIS

The analysis regarding the project was done using SPSS, where FACTOR

ANALYSIS was used to find out the degree of correlation between the variables and

reduce them into factors. The 11 factors in the analysis are Rate of return, Company

goodwill, Advertising effectiveness, Flexible Premium payment options, Flexible

payout option, Approval and conviction of the insurance agent, After sale reminders

and updates, Tax benefits, Simplicity of insurance plan, Friend/Relative referral,

Government stake,

KMO and Bartlett's Test

Kaiser-Meyer-Olkin Measure of Sampling Adequacy. .501

Bartlett's Test of Sphericity

Approx. Chi-Square 128.421

df 55

Sig. .000

The KMO and Bartletts Test measures the sampling Adequacy.

KMO value is .501 which means that the data is appropriate for factor analysis.

Bartlett's Test of Sphericity – it is significant as the value is .000 which is less than

.005.


Page 50

Communalities

Initial Extraction

Rate of return 1.000 .733

comp goodwill 1.000 .751

adv_effectiveness 1.000 .707

flexible_premium_paymnt_opt 1.000 .481

flexible_payout_opt 1.000 .709

appr_conviction_of_ins_agnt 1.000 .572

after_sale_remndrs_updates 1.000 .716

tax_benefits 1.000 .531

simplicity_of_ins_plan 1.000 .660

frnds_rlativ_referral 1.000 .697

govt_stake 1.000 .788

Extraction Method: Principal Component Analysis.

The table of communalities depicts how much of the variance in the variables has

been accounted for by the extracted factors. For example 73.3% of variance in RATE

OF RETURN has been accounted for by the extracted factors.


Page 51

Total Variance Explained

Component

Initial Eigenvalues Extraction Sums of Squared Loadings

Total % of Variance Cumulative % Total % of Variance Cumulative %

1 1.858 16.895 16.895 1.858 16.895 16.895

2 1.586 14.422 31.317 1.586 14.422 31.317

3 1.464 13.308 44.625 1.464 13.308 44.625

4 1.351 12.286 56.911 1.351 12.286 56.911

5 1.084 9.855 66.766 1.084 9.855 66.766

6 .885 8.048 74.815

7 .786 7.145 81.959

8 .574 5.219 87.179

9 .550 5.003 92.182

10 .439 3.991 96.173

11 .421 3.827 100.000

Extraction Method: Principal Component Analysis.

The total variance table shows the factor extractable from the analysis along with their

Eigen values and % of variance attributed to each factor.

Based on the Eigen values 5 factors have been identified.

Theses 5 factors have been identified as their Eigen values are above 1.

In this case the first factor accounts for 16.89% of variance, the second factor

accounts for 14.42% of variance and the 3rd

4th

and 5th

factor account for 13.3%

12.28% and 9.8% respectively.

These 5 factors together explain 66.76 % of total variance.


Page 52

Component Matrix

Component

1 2 3 4 5

after_sale_remndrs_updates -.751

appr_conviction_of_ins_agnt -.697

flexible_payout_opt .605 -.404 .403

flexible_premium_paymnt_opt .562

frnds_rlativ_referral .411 .531 .311

Rateofreturn .435 -.529 .408

tax_benefits -.425 .344 .363

comp_goodwill .663 -.478

adv_effectiveness .600 .572

simplicity_of_ins_plan .469 -.497 .415

govt_stake .522 .641

Extraction Method: Principal Component Analysis. 5 components extracted.

The above table shows the loading of the variables on 5 factors extracted. The higher

the absolute value of loading, the more the factor contributes to the variable.


Page 53

Rotated Component Matrix

Component

1 2 3 4 5

after_sale_remndrs_updates .831

Rateofreturn -.751 -.348

appr_conviction_of_ins_agnt .616 -.430

flexible_payout_opt .801

flexible_premium_paymnt_opt .684

tax_benefits -.521 -.333 .366

frnds_rlativ_referral .771

simplicity_of_ins_plan .755

comp_goodwill .854

adv_effectiveness .622 .547

govt_stake .877

Extraction Method: Principal Component Analysis. Rotation Method: Varimax with Kaiser Normalization. Rotation converged in 7 iterations.

The values in this panel of the table represent the distribution of the variance after the

Varimax rotation. Varimax rotation tries to maximize the variance of each of the

factors, so the total amount of variance accounted for is redistributed over the

extracted factors. A varimax solution yields results which make it as easy as possible

to identify each variable with a single factor. This is the most common rotation

option. The rotated component matrix clearly shows the five factors which influence

consumers most when comes to purchasing an insurance product.


Page 54

COMPONENT MATRIX

COMPONENT 1 COMPONENT 2 COMPONENT 3 COMPONENT 4 COMPONENT 5

AFTER SALES

REMINDERS AND

UPDATES

FLEXIBLE PAYOUT

OPTION

FRIENDS/RELATIVE

REFERRAL

COMPANYS

GOODWILL

GOVERNMENT

STAKE

APPROACH AND

CONVICTION OF

AGENT

FLEXIBLE

PREMIUM

PAYMENT

OPTIONS

SIMPLICITY OF THE

INSURANCE PLAN

ADVERTISING

EFFECTIVENESS

FACTORS CUSTOMER SERVICE TRANSACTIONS

OPTIONS

FAVOURABLE

COMPATIBILITY

CORPORATE

IMAGE

SAFETY


Page 55

FINDINGS

5 factors have been found to influence a prospective life insurance customer when

they are to buy product:

1. Customer service

2. Transactions options

3. Favorable compatibility

4. Corporate image

5. Safety

These factors have their respective variables inside them.

Customer service includes Approach and conviction of insurance agent and after sales

reminders and updates.

Transaction options include Flexible payout option and Flexible premium payment

options.

Favorable compatibility includes Simplicity of the insurance plan and Friends/relative

referral.

Corporate image includes Company goodwill and Advertising effectiveness.

Safety includes government stake.

With regard to the reports Secondary objectives, following are the findings.

Regarding best investment option, findings were:

21% of the sample chose Shares as the best option for investment.

9% of the sample chose Bank deposits as the best option for investment.

16% of the sample chose Mutual funds as the best option for investment.

20% of the sample chose Real estate as the best option for investment.


Page 56

5% of the sample chose Post office savings as the best option for investment.

22% of the sample chose Gold as the best option for investment.

7% of the sample chose Insurance as the best option for investment.

Thus we see that Shares, Gold and Real estate were considered best my majority, best

being Shares.

Purpose for taking a life insurance policy, findings were:

25% of the sample said Future Security.

18% of the sample said Childs marriage.

6% of the sample said Childs education.

30% of the sample said Tax benefits.

21% of the sample said Savings tool.

Tax benefits and Future security were found to be the major purpose.


Page 57

RECOMMENDATIONS

Approach and conviction of insurance agents is very important and so the

best effort should be made to recruit and train agents to handle their clients.

After sales reminders and updates are very important when it comes to

insurance products. It should be kept in mind to make these reminders helpful

and not annoying.

The transaction options should be flexible. There should be easy and

various ways to make premium payment and to withdraw or take payouts for

the customer.

Simplicity of the insurance plan is very important. In the race to provide

more benefits, simplicity of the plan should not be compromised.

Since friends/relative referral is considered as an influencing and important

factor for a prospective life insurance customer, every step to keep existing

customers fully satisfied must be taken.


Page 58

Since advertising effectiveness is a key for insurance companies, one type

of Low-Involvement Marketing Strategy is to design advertising to trigger

strong emotions related to personal values or ego-defense. This can be

observed in the insurance industry as most advertisements are designed in

order to trigger feelings of uncertainty which can be quelled by purchase of an

insurance product. So continuous effort to make them more effective should

always be in practice.

Since life insurance is taken keeping in mind uncertainties and as we have

seen that future security was chosen to be main purpose of taking life

insurance, investing customer premiums in government securities make

customers feel secure and feel positive.


Page 59

CONCLUSION

The life insurance industry in India has immense potential with nearly 80 per cent of

Indian population without life insurance cover. Life insurance is a sector which is

largely driven by propensity of people to save, and unlike the west, Indians have a

higher propensity to save than to spend.



and wants.

Historically the factors affecting consumer behavior have been broadly classified as:

· Cultural Factors

· Social Factors

· Personal Factors

For financial products however we can‘t use this framework, we can say that buying

of insurance can be attributed to Personal Factors, but these also include the concepts

of PERSONALITY and SELF-CONCEPT which do not explain the buying behavior

of insurance.

The two ways which we can see that actually makes difference to a prospective life

insurance consumer are

1. Elaboration Likelihood Model

They describe the Central Route where attitude formation is based on diligent,

rational consideration of the most important product information; and the Peripheral

Route where attitude formation is due to association with some positive or negative

peripheral cues which include celebrity endorsement as well as insurance agents. This


Page 60

particular model gives a basic idea as to how people may develop attitudes towards

insurance products. The central route will not differ as the products offered in this

industry are tailored to suit the needs of the consumer. The peripheral cues are the

most important as the brand name; advertisements, agents etc. play an important role

in attitude formation for the consumer.

2. Low-Involvement Marketing Strategies

One type of Low-Involvement Marketing Strategy is to design advertising to trigger

strong emotions related to personal values or ego-defense. This can be observed in the

insurance industry as most advertisements are designed in order to trigger feelings of

uncertainty which can be quelled by purchase of an insurance product.

From the study and analysis done is this report, we can conclude that there are 5

major factors which influence a consumer of life insurance. They are Customer

service, Transactions options, Favorable compatibility, corporate image and Safety.

With special care to make these factors present in a product of life insurance, that is

by showing them in advertisements and then actually delivering them will make IDBI

Federal Life Insurance develop their market and increase sales.


Page 61

LEARNING OUTCOME

I worked for 14 weeks with IDBI Federal and my profile was of Marketing

Research and Sales. I got acclimatized to the corporate culture. How things

work in an organization? What kind of hierarchy is followed in an

organization? Such an understanding is very essential because it would make

us Industry ready and would serve as a platform when we join an organization

Full-time after completion of MBA.

As I was carrying out my sales part I realized how tough it was to approach,

explain and convince a consumer. Time management is a very important tool.

To achieve sales targets one should be clear as to how many customers to meet

and how much time to spend with each customer. Selling of Life Insurance

indeed in a very difficult art and there are no short cuts is what I have learnt.

One can, only by experience and meeting maximum numbers of clients

achieve success.

I got valuable knowledge about Insurance sector. I got to know about the

different Insurance plans available in the market, the different companies

dealing in this industry.

Another important learning is that a consumer is not interested in what you

think about your product, the consumer has to be told how the product will

meet his/her needs better than other similar products in the market.


Page 62

LIMITATIONS

LIMITATIONS OF THE STUDY

· People refrain from giving personal details.

· People feel hesitant and hence sometimes misrepresent data.

· It is difficult to extract all required information from people.

· The study is confined only to a small segment of the entire population.

· The scope of the project is limited as there much more that can be analyzed

under buying behavior but since buying behavior of financial products especially

insurance products is very tough to study and because of my hectic sales target I hope

I have done justice.


Page 63

ANNEXURE

QUESTIONNAIRE

I am Vaibhav Joshi pursuing my MBA from Alliance University.

This research, titled “FACTORS DETERMINING BUYING

BEHAVIOUR OF CONSUMERS WHILE PURCHASING

INSURANCE” is part of my internship program. Your feedback will

be strictly confidential. This information will be used only for

academic purpose and will be very important for my project.

1. NAME -

________________________________________________

2. AGE – 18 – 30 ____

30 – 40 ____

40 – 50 ____

50 + ____

3. GENDER - _____________


Page 64

4. OCCUPATION -

a) Service ____

b) Business ____

c) Professional ____

d) Self employed ____

5. INCOME –

a) Up to 1,80,000 P.A _____

b) 1,80,000 – 5,00,000 P.A _____

c) 5,00,000 – 8,00,000 P.A _____

d) Above 8,00,000 P.A _____

6. E MAIL -

______________________________________________________

_____


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7. DO YOU HAVE AN INSURANCE POLICY? IF YES, ARE

YOU THE PERSON INSURED OR YOUR DEPENDANT?

YES - _____ SELF - _____

NO - _____ DEPENDANT - _____

8. DOES THE POLICY GIVE YOU – A LUMP SUM AT

MATURITY ______ OR

GAURANTEED ANNUAL PAYOUTS

_______

9. WHICH IS THE BEST INVESTMENT OPTION TO YOU?

a) Shares ______

b) Bank deposits ______

c) Mutual funds ______

d) Real estate ______

e) Post office savings ______

f) Gold ______

g) Insurance ______


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10. YOUR PURPOSE OF TAKING A POLICY –

a) Future security ______

b) Childs marriage ______

c) Childs education ______

d) Tax benefit ______

e) Savings tool ______

11. RATE EACH FACTOR FROM 1 – 5 GIVEN BELOW

ACCORDING TO HOW MUCH IT INFLUENCES YOU

WHEN CONSIDERING THE PURCHASE OF A LIFE

INSURANCE PRODUCT.

(1 - No difference / 2 - least influential / 3 – influences a little / 4 –

influences a lot / 5 - influences the most)

a) Rate of return - ____

b) Companies name (goodwill) - ____

c) Advertisement effectiveness - ____

d) Flexible premium payment options - ____

e) Flexible pay-outs (withdrawal) options - ____

f) Approach and conviction of the insurance agent - ____

g) After sale reminders and updates - ____

h) Tax benefits - ____

i) Simplicity of the insurance plan - ____

j) Friends/relative referral - ____


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k) Government stake in the company - ____

12. DO YOU KNOW ABOUT THE “INCOMESURANCE”

PRODUCT OF IDBI? CAN I EXPLAIN IT TO YOU IF YOU

HAVE NOT?

I DO - _____

I DON‘T AND NO - _____

I DON‘T AND YES - _____


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REFERENCES

www.idbifederal.com

www.licindia.co.in

http://www.acadjournal.com/2008/V22/part7/p2/

http://en.wikipedia.org/wiki/IDBI_Federal_Life_Insurance

http://www.eindiainsurance.com/insurance/insurance-articles.asp

http://articles.timesofindia.indiatimes.com/2011-04-30/mumbai/29490561_1_public-

sector-insurance-insurance-companies-insurance-firms

www.economictimes.com

www.businesstoday.com

www.businessworld.com

BOOK REFERENCE

Dr.C.R.kothari, ―Research Methodology‖, New Age International Publishers,

second revised edition, 2006. Pg.191.

Kotler Philip, ―Marketing Management‖, 8 th edition, June, 1995, Pg.142-165.

Robert A. Krueger, ―Business Forecasting: A Practical, Comprehensive Resource

for Managers and Practitioners.‖ BookSurge Publishing, 2008. Pg. 130.

http://www.idbifederal.com/

http://www.licindia.co.in/

http://www.acadjournal.com/

http://en.wikipedia.org/wiki/IDBI_Federal_Life_Insurance

http://www.eindiainsurance.com/insurance/insurance-articles.asp

http://articles.timesofindia.indiatimes.com/2011-04-30/mumbai/29490561_1_public-sector-insurance-insurance-companies-insurance-firms

http://articles.timesofindia.indiatimes.com/2011-04-30/mumbai/29490561_1_public-sector-insurance-insurance-companies-insurance-firms

http://www.economictimes.com/

http://www.businesstoday.com/

http://www.businessworld.com/

Documents

Vaibhav Idbi Final