STUDY OF CUSTOMER RETENTION IN IDBI FEDERAL LIFE

INSURANCE CORPORATION LIMITED

A Project Report
submitted in partial fulfillment of the requirements for
the award of the degree of Masters of Business Administration

by

U.SINDHU
11MBA0108

Under the Guidance of

Prof. Sudipto Battacharya PhD

VIT Business School

fostering innovation

JULY 2012

CERTIFICATE

This is to certify that Institutional Training Report submitted by Ms.U.sindhu, Reg. No.
11MBA0108 to VIT Business School, VIT University, Vellore in partial fulfillment of the
requirements for the degree of Master of Business Administration is a bonafide record of work
carried out by her under my supervision. The contents of this report, in full or in parts have not
been submitted in any form to any other institute or university for the award of any degree or
diploma

Faculty Guide

Programme Manager

Internal Examiner

External Examiner

Declaration

I, Sindhu.U (11MBA0108), a Bonafide student of the VIT Business School, VIT University,
Vellore, hereby declare that the Institutional Training Report submitted in partial fulfillment of
the requirements of the Degree of Master of Business Administration of the VIT University, is my
original work.

.
Date:

Place: Vellore

Sindhu.U

ACKNOWLEDGEMENT
I express my sincere thanks to the Chancellor, Dr. G. Vishwanathan for providing me with
adequate infrastructure and a congenial academic environment.
I wish to express my thanks to the Vice Chancellor, Dr. V. Raju, for his patronage.
I am grateful to the Programme Manager of VIT Business School, Dr. Bhanu Sree Reddy, for
encouraging and providing me with the necessary assistance in accomplishing the project.
I am also thankful to my guides, Dr. Sudipto Bhattacharya PhD, VIT Business School and
Mrs.Shanthi Yagyanath , IDBI Federal Life Insurance Corporation Limited, whose timely
guidance and persistent encouragement helped me in completing the project successfully and
making it a wonderful learning experience.
I convey my sincere thanks to all the teaching and non-teaching staff of the business school for
their support and co-operation during the project.
Finally I thank my parents and colleagues who have helped me in the successful completion of
the project.

(SINDHU.U)

CONTENTS

S.NO

TITLE

PAGE NO

List of Tables and Charts

Introduction

Review of Literature

Company Profile

17

Research Methodology

27

Analysis and Interpretation

29

Findings

51

Recommendation

53

Conclusion

55

Appendix

57

10

Bibliography

62

LIST OF TABLES AND CHARTS

S.NO

TITLE

PAGE NO

Decision Criteria for Univariate Analysis

30

Age Distribution

31

Gender

32

Marital Status

33

Education Qualification

34

Occupation

35

Income

36

Service Satisfaction

37

Concern Solvation

38

10

Benefit Satisfaction

39

11

Courteous Service

40

12

Quick Call

41

13

Knowledge Representative

42

14

Highest Benefits

43

15

Policy & Procedure Understanding

44

16

Easy Payment Mode

45

17

Long Relationship

46

18

Recommend IDBI

47

19

Friends Insisted

48

20

Another Policy in IDBI

49

21

Overall Mean & Stranded Deviation Value

50

1. INTRODUCTION

IMPORTANCE OF THE STUDY

Customer satisfaction and customer retention are two of the most important factors
regarding the long term success of a company. These factors are known to be a huge influencing
factor in relation to the economic success of a company.
Customer retention is one of the most important factors of profit growth. It's so important
because it costs so much to influence customers to buy and so little to induce a repurchase. These
are the benefits of customer retention:
i.

New customers cost more than keeping existing ones. Help executives make the most
of existing relationships by helping their customers make repeat purchases. Existing
customers have made an emotional commitment that required a large investment of time
to earn.

ii.

Company already knows how to do business with existing customer. An executive

doesn't have to invest additional resources training to do business with the existing
customer. This saves time and allows them to serve existing customers faster.

iii.

Satisfied customers are already convinced of value. They have already proven they
can serve the customer, and have provided proof. Executives don't have to invest the
resources necessary to start from scratch again.

iv.

Strengthening of the unique selling proposition

STATEMENT OF PROBLEM
IDBI Federal life insurance co ltd is a joint venture company between three financial
companies IDBI Bank, federal Bank and European Insurer Ageas. With effective utilization of
digital marketing tools IDBI federal life insurance are able to reach potential customers. IDBI inhouse technology for customer inquiries and query resolution are deeply entrenched in terms of
processes and call to action with respective customer.
Though such technologies for the customer retention are prevailed there are some
drawbacks in it. Premium collection of the insurance company fell down by 34% during April
December 2011.I wanted to know the relinquishment level of IDBI federal life insurance
corporation limited and the ways that could make the customer retain.
9

OBJECTIVES OF THE PROJECT

1. To identify the present situation of IDBI Federal Life Insurance
2. To identify the ways to retain the customer

SCOPE OF THE PROJECT

Successful companies are constantly working in the field of customer retention, because
without customer retention it isnt and wasnt possible to be successful in the long term.
Currently many companies are facing an aggressive battle regarding customer retention. This
study will help IDBI to know the relinquishment level and how to retain the customers.

PERIOD OF THE STUDY

The Period of Study is 6 weeks.

COLLECTION OF DATA
Two types of data are collected: Primary and secondary data

Primary data
The data are collected by the questionnaire method. The questionnaire consists of a
number of questions interviewed to the customers for their response.
Interview: Telephonic Interview

Secondary data
Secondary data is the data that have been already collected by and readily available from
other source. The secondary data for this study are already available in the firm's enrolled
feedback, journals, books, newspapers and other related report - policy book, Magazine

SAMPLE DESIGN
The research will be carried out among the customers of IDBI federal life insurance. And
sample will be around 100.
10

LIMITATIONS OF THE STUDY

Although there were very few limitations to enlist but every research work carried out has
to face some limitations.
i.

It is planned to collect 200 responses from the company .Due to some restrictions only
100 responses are collected.

ii.

The survey conducted was more objective and completely based on the views of the
respondent.

iii.

Survey was conducted among customers of Coimbatore branch only so the result may not
be accurate.

11

2. REVIEW OF LITERATURE

12

INTRODUCTION
A literature review discusses published information in a particular subject area, and
sometimes information in a particular subject area within a certain time period. A literature
review can be just a simple summary of the sources, but it usually has an organizational
pattern and combines both summary and synthesis. A summary is a recap of the
important information of the source, but a synthesis is a re-organization, or a reshuffling, of that
information. It might give a new interpretation of old material or combine new with old
interpretations. Or it might trace the intellectual progression of the field, including major debates.
And depending on the situation; the literature view may evaluate the sources and advice the
reader on the pertinent or relevant. This chapter began with retention, measuring retention,
importance of customer retention, advantage of customer retention, benefits of customer
retention.

CUSTOMER RETENTION
In todays challenging economy and competitive business world, retaining their customer
base is critical to organization success. If the company doesnt give their customer some good
reason to stay, organizations competitors will give the customer a reason to leave. Customer
retention and customer satisfaction drive profits. Its far less expensive to cultivate organization
existing customer base and sell more service to the customer than it to seek new, singletransaction customers. Most surveys across industries shows that keeping one existing customer
is five to seven times more profitable than attracting one new customer. A customer-focused
approach among its employees is still not present. In this era of intense competition .it is very
important for any service company to understand that merely acquiring customer is not sufficient
because there is a direct link between customer retention over time and profitability & growth.
Customer retention to a great extent depends on service quality and customer
satisfaction. Complaints are natural part of any service activity as mistakes are an unavoidable
feature of all human endeavor and thus also of service recovery. Service recovery is the process
of putting things right after something goes wrong in the service delivery. Customer retention is
the maintenance of continuous trading relationships with customers over the long term.
Customer retention is the mirror image of customer defection or chum.

13

High retention is equivalent to low defection. In an industry where there are a multiple
purchases over the years, organizations entire team should be very focused on retaining those
customers:
i.

Delivering service thats consistent with your value proposition and brand

ii.

Cross-selling, up-selling and asking for referrals from existing customers

iii.

Developing programs to increase customer loyalty and decrease turnover

iv.

Prioritizing retention as a major focus in your annual marketing plan.

v.

Knowing the lifetime value for different segments and using that data to improve the
marketing.
Studies say it costs ten times more to generate a new customer than to maintain an

existing one. If organization has a small number of customers, losing a few could cripple
company. Even if there are a large number of customers, a small increase in the rate should
dramatically increase profits.
The maintenance of the patronage of people who have purchased a companys goods or
services once and the gaining of repeat purchases. Customer retention occurs when a customer is
loyal to a company, brand, or to a specific product or service, expressing long-term commitment
and refusing to purchase from competitors. Of critical importance to such strategies are the wider
concepts of customer service, customer relations, and relationship marketing. Companies can
build loyalty and retention through the use of a number of techniques, including database
marketing, the issue of loyalty cards, redeemable against a variety of goods or service,
preferential discounts, free gifts, special promotions, newsletters or magazines, members clubs
or customized products in limited editions. It has been argued that customer retention is linked to
employee loyalty, since loyal employees build up long-term relationships with customers.
Customer retention has always been an important topic for the marketing. For sure, the
advantages of loyal clients are obvious. Often CRM is only implementing new systems for data
mining and client segmentation or operational system like a complaint management. But the
thing is: data mining system or client clubs are not the basis. They are the cherry of the cake
called client retention. A key principle of relationship marketing is the retention of customers
through varying means and practices to ensure repeated trade from preexisting customers by
satisfying requirements above those of competing companies through a mutually beneficial
relationship.
14

This techniques is now used as a means of counter balancing new customer and
opportunities with current and existing customers as a means of maximizing profit and
counteracting the leaky bucket theory of business in which new customer gained in order
direct marketing oriented businesses were at the expense of or coincided with the loss of older
customers. This process of "churning" is less economically viable than retaining all or the
majority of customers using both direct and relationship management as lead generation
via new customers requires more investment.
Many companies in competing markets will redirect or allocate large amounts of resources
or attention towards customer retention as in markets with increasing competition it may cost 5
times more to attract new customers than it would to retain current customers, as direct or
"offensive" marketing requires much more extensive resources to cause defection from
competitors. However, it is suggested that because of the extensive classic marketing theories
center on means of attracting customer and creating transactions rather than maintaining them,
the majority usage of direct marketing used in the past is now gradually being used more
alongside relationship marketing as its importance becomes more recognizable. According to
Buchanan and Gilles the increased profitability associated with customer retention efforts occurs
because of several factors that occur once a relationship has been established with a

customer.
i.

The cost of acquisition occurs only at the beginning of the relationship, so the longer the
relationship, the lower the amortized cost.

ii.

Account maintenance costs decline as a percentage of total costs or as a percentage of

revenue.

iii.

Long-term customers tend to be less inclined to switch, and also tend to be fewer prices
sensitive. This can result in stable unit sales volume and increase in dollar-sales volume.

iv.

Long-term customer may initiate free word of mouth promotions and referrals.

v.

Long-term customers are more likely to purchase ancillary products and high margin
supplemental products.

vi.

Customer that stay with company tend to be satisfied with the relationship and are less
likely to switch to competitors, making it difficult for competitors to enter the market or
gain market share.
15

IMPORTANCE OF CUSTOMER RETENTION

There are a number of reasons for this. To begin with, to acquire a customer a company
incurs promotional costs like advertising, sales promotion etc. It is said that it costs five times
more to attract a new customer than retaining one. The operating cost decrease when a customer
stays. Service being rich in experience and credence qualities, it takes some time for customers
to get accustomed to it and once they are used to the service and are satisfied with the service
provider, they tend to purchase more over a period of time. As they remain satisfied with a
service provider, they spread a positive word of mouth, which is very effective in case of service
for attracting new customers. Longer the customer stays with an organization, more the
organization knows about him, which enables it to offer a customized service which makes it
difficult for the customer to defect. This may even provide opportunities to the organization to
charge price premium by offering individualized service which may be difficult for the
competitors to offer. Considering the importance of retaining customers in service business,
Reichheld & Sasser coined a term Zero Defection. They highlighted that companies can boost
profits by almost 100% by retaining just 5% more of their customers. Further, it is also very
important to understand the life time value of a customer. Further, if by a positive word of
mouth, he brings just one more customer to the organization, his value to the organization
doubles. Therefore, it is important for all the employees in the organization to understand the life
time value of their customers.

ADVANTAGES OF CUSTOMER RETENTION

POSSIBILITY OF REPEAT BUSINESS

This is probably the most obvious advantage of customer retention. Effective services
that lead to customer satisfaction will make customer coming back to again, thus giving repeat
business. Repeat business is a win-win proposition for the business or service and the customer.
The business reduces the cost of customer acquisition, while the customer reduces the cost of
finding a reliable vendor and thus also saves on costs associated with switching vendors.

16

REDUCED COSTS FOR CUSTOMER ACQUISITION

Acquiring a customer has certain associated costs. These include the costs associated
with advertising, following up, sales demos, travel and meeting cost etc. having a repeat
customer means that the customer means that the customer is already aware of your processes
and can predict certain quality of output, thus minimizing the cost involved in new customer
acquisition. Having a repeat customer also has the potential to open up another channel to
advertise your business word of mouth. Word of mouth advertising / recommendations are
perhaps the most important outcome of having a satisfied customer.

FOSTERING

GREATER

INTERACTION

BETWEEN

BUSINESS

AND CUSTOMER
Todays markets are increasingly moving away from mass produced standard products
and service, towards a more customized market, where products and service are tailored to meet
customers specific requirements. Having a repeat customer is an opportunity for you to build a
more focused relationship based on your customers specific needs and requirements. Being
ensured of having a customer who comes back, you have more confidence to suggest
improvements, provide an insight to better understand their needs and consequently design
products and services that are relevant. Having a repeat business also provides an opportunity for
the buyer and the seller to co-create products and services.

HAVING MORE DELIGHTED CUSTOMERS

Effective customer retention strategies allow you to move from the zone of
customer satisfaction to customer delight. Studies have shown that customer delight is achieved
only when there is a perfect synergy between the buyer needs and the buyer understands what the
seller can deliver exactly what the customer need. If you are able to deliver your customers, you
have better chance of them coming back to you, since they now know why you are different from
the rest of competition.

17

CUSTOMER RETENTION: STATISTICS

i.

Acquiring new customer can cost five times more than satisfying and retaining current
customers. (Source: http://www.parature.com/tag/customer-service-statistics-2012)

ii.

2% increase in customer retention has same effect on profits as cutting costs by 10%.
(Source: http://www.bautomation.com/resources/articles/startling-statistics-on-customerretention-acquisition/489/)

iii.

The

average

company

losses

10%

of

its

customer

each

year.(Source:

http:/www.dbmarketing.com/index.html)

iv.

5% reduction in the customer defection rate can increase profits by 25-125%, depending
on the industries. (Source: http://www.parature.com/tag/customer-service-statistics-2012)

v.

The customer profitability rate tends to increase over the life of a retained
customer.(Source: http:/www.dbmarketing.com/index.html)

vi.

Companies can boost profits anywhere from 25 to 125% by retaining merely5% more
existing customers. (Source: http://www.parature.com/tag/customer-service-statistics2012)

vii.

Only one out of 25 dissatisfied customers will express dissatisfaction. (Source:

http://www.bautomation.com/resources/articles/startling-statistics-on-customer-retentionacquisition/489/)

viii.

Happy customer tells 4 to 5 others of their positive experience. Dissatisfied customers tell
9 to 12 how bad it was. ( Source: http://www.parature.com/tag/customer-servicestatistics-2012)

ix.

Two-thirds of customers do not feel valued by those serving them. (Source:

http://www.dbmarketing.com/article/Art232.htm)

18

MEASURING CUSTOMER RETENTION

Retention rate is normally calculated as the number of customers who have been lost over
a period of time, usually calculated over a quarterly or annual period. The key is to calculate the
percentage versus existing customers, and not underestimate the loss rate by tallying new
customer acquisitions into the mix. The customer retention rate refers to the number of customer
lost over a period of time. It is normally calculated by the percentage of lost customer versus
existing customers over a quarterly or annual period, without tallying new customer acquisitions.
While there are obvious benefits to keeping customers loyal and maintaining retention rates, it
can be extremely challenging for management to keep retention rates up.
Some companies can measure retention rate using their CRM system, since any of the
vendors with solid sales modules should offer this capability. Customer service expert Lori
Bocklund recommends that companies look for this functionality when evaluating CRM
solutions, even though it is unlikely to be the differentiating factor. Companies like witness,
Performix, AIM, and Merced offer these types of tools. To measure this, some companies
combines data from the CRM system and data from other systems, such as your systems, such as
your quality monitoring system, ACD or CTI solution handling contact routing and reporting.
There are no hard and fast rules on calculating customer defection and customer retention,
according to Lowenstein. It can depend on the industries or the type of business, since companies
have long-term arrangements with customers.
However, several consulting and database management companies have succeeded in
creating them. However, the appropriate interval over which retention rate should be measured is
not always one year. Rather, it depends on the customer repurchase cycle. Car insurance and
magazine subscriptions are bought on an annual basis. Carpet tiles and hi-fis are not. If the
normal hi-fi replacement cycle is four years, then retention rate is more meaningful if it is
measured over four years instead of twelve months. Additional complexity is added when
companies a sell a range of products and services, each with different repurchase cycles.
Automobile dealers might sell cars, parts, fuel and service to a single customer. These products
have different repurchase cycles which make it very difficult for the dealer to have a whole of
customer perspective on retention. Sometimes companies are not clear about whether an
individual customer has defected. This is because of the location of customer related data, which
might be retained in product silos, channel silos or functional silos.
19

TYPE OF CUSTOMER RETENTION RATE

RAW CUSTOMER RETENTION RATE

This is the number of customer doing business with a firm at the end of a trading period,
expressed as percentage of those who were active customer at the beginning of the period.

SALES-ADJUSTED RETENTION RATE:

This is the value of sales achieved from the retained customers, expressed as a percentage
of the sales achieved from all customers who were active at the beginning of the period.

PROFIT-ADJUSTED RETENTION RATE:

This is the profit earned from the retained customers, expressed as a percentage of the
profit earned from all customers who were active at the beginning of the period.

20

3. COMPANY PROFILE

21

THE INSURANCE INDUSTRY:

The insurance sector has gone through a number of phases and changes. Insurance in
India used to be tightly regulated and monopolized by state-run insurers. Following the move
towards economic reform in the early 1990s, various plans to revamp the sector finally resulted
in the passage of the Insurance Regulatory and Development Authority (IRDA) Act of 1999.
Significantly, the insurance business was opened on two fronts. Firstly, domestic private-sector
companies were permitted to enter both life and non-life insurance business. Secondly, foreign
companies were allowed to participate, albeit with a cap on shareholding at 26%. With the
introduction of the 1999 IRDA Act, the insurance sector joined a set of other economic sectors
on the growth march.
During the 2003 financial year, life insurance premiums increased by an estimated 12.3%
in real terms to INR 650 billion (USD 14 billion) while non-life insurance premiums rose 12.2%
to INR 178 billion (USD 3.8 billion). Growth in insurance premiums has been averaging at
11.3% in real terms over the last decade. There are strong arguments in favor of sustained rapid
insurance business growth in the coming years, including Indias robust economic growth
prospects and the nations high savings rates.

COMPANY PROFILE
IDBI FEDERAL LIFE INSURANCE CO. LTD.:
IDBI Fortis Life Insurance Co. Ltd., is a joint venture between three financial
companiesDevelopment

and

Commercial

Bank, IDBI

Bank, Indias

private

sector

Bank, Federal Bank and European insurer Ageas (formerly Fortis).

IDBI Fortis Life Insurance Co. Ltd. was formed on March 2008. In this venture, IDBI
Bank owns 48% equity while Federal Bank and Ageas own 26% equity each. The Headquarters
is located in Mumbai, India.
IDBI Bank Ltd. continues to be, since its inception, Indias premier industrial
development bank. Created in 1956 to support Indias industrial backbone, IDBI Bank has since
evolved into a powerhouse of industrial and retail finance.
22

Today, it is amongst Indias foremost commercial banks, with a wide range of innovative
products and services, serving retail and corporate customers in all corners of the country from
720 branches and 1228 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 Indias 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 Indias leading private sector banks, with a dominant presence in
the state of Kerala. It has a strong network of 708 branches and 749 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, and Any Where Banking, debit cards,
online bill payment and call center 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.
Fortis is an international insurance group composed of AG Insurance, the overall market
leader in life and non-life insurance in Belgium, distributing its insurance products through the
network of BNP Paribas Fortis Bank and independent insurance brokers, and Fortis Insurance
International with subsidiaries in the UK, France, Hong Kong, Luxembourg (Non-life),
Germany, Turkey, Russia and Ukraine, and joint ventures in Luxembourg (Life), Portugal,
China, Malaysia, Thailand and India.

23

VISION AND VALUES

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.

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 and build quality
human capital in order to achieve our mission.

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.

EXCELLENCE
"In every aspect of work ranging from the in-house training institute to the detailed
Personal Insurance Plan. IDBI Fortis is focused on achieving the highest standards of quality in
every aspect of their business".

24

HONESTY
"Is the heart of the Life Insurance business? IDBI Fortis believes that above all, Life
Insurance is based on trust. Transparency, Dependability and Integrity will form the cornerstones
of the IDBI Fortis experience."

KNOWLEDGE
"Is what makes experts. IDBI Fortis is focused on the Life Insurance business. Perfectly
combining global expertise with local knowledge, IDBI Fortis is the Indian Life Insurance
specialist."

CARING
"For the customer IDBI Fortis is redefining the Life Insurance paradigm to focus on the
needs of the customers. The IDBI Fortis service process is responsive, personalized, humane and
empathetic."

CULTURE
Our "in house culture recipe" has some of the finest ingredients going into its making.
Some of the more prominent aspects of our culture are stated below:
i.

Customer comes first

ii.

Do it right the first time

iii.

Bias for result oriented action

iv.

Financial strength and discipline

v.

Clarity of purpose

vi.

International quality standards

vii.

Inclusive Meritocracy

viii.

learning opportunities

ix.

Fun at work

x.

Commitment to published value system

25

TECHNOLOGY
To monitor and manage its network equipment across 34 sites, IDBI Fortis uses Tulip
Proactive Managed CE solution. The solution includes device management, proactive
troubleshooting and notification support. With the implementation of the solution, IDBI has
reported improvement of network performance and availability, with a faster, more effective
change and configuration management.

PRODUCTS
IDBI Fortis launched its first set of products across India in March 2008, after receiving
the requisite approvals from the Insurance Regulatory and Development Authority (IRDA). IDBI
Fortis offers services through a nationwide network across the branches of IDBI Bank and
Federal Bank in addition to a network of advisors and partners. IDBI Fortis has 35 branches
across the country.

SPONSORSHIPS, AWARDS
IDBI Fortis Life Insurance Company was selected as the title sponsor for the India-Sri
Lanka Cricket Series. This was followed by the IDBI Fortis Wealthsurance Twenty20.
Wealthsurance Made Easy (WME), a knowledge aid by IDBI Fortis for its sales force, won
The Bronze Dragon in the category for Best Dealer/Sales Force activity at the Promotion
Marketing Awards of Asia (PMAA).

26

ORGANIZATIONAL STRUCTURE
SALES ORGANIZATIONAL STRUCTURE

G.V NAGESHVAR
RAO (MD & CEO)

MURLIIYER (country
Head sales)

North
Zonal Head

Area
agency
head

Bank
assurance
head

Manager
distribution
deputy
chief senior

Corporate
head

Distributer
& trainees
& agencies

South
Zonal Head

Area
agency
head

East
Zonal Head

Bank
assurance
head

Area
agency
head

Bank
assurance
head

West
Zonal Head

Area
agency
head

Manager
distribution
deputy
chief senior

Manager
distribution
deputy
chief senior

Manager
distribution
deputy
chief senior

Corporate
head

Corporate
head

Corporate
head

Distributer
& trainees
& agencies

27

Distributer
& trainees
& agencies

Bank
assurance
head

Distributer
& trainees
& agencies

HUMAN RESOURCE ORGANIZATIONAL STRUCTURE

G.V NAGESHVAR RAO

(MD &CEO)

MURLIYER (Country
Head Sales)

MALLIKA
SARASWATH (Human
Resource Head)

Service Department

Pay Roll

Recruitment

Senior Manager
Chief Manager

Assistant
Manager

There are no Zonal Heads in the Human Resource Department the area Human Resource
executive only acts as the Human Resource Manager and reports all the activities to the Head
Office that is in MUMBAI.
28

OPERATIONS ORGANIZATIONAL STRUCTURE

G.V NAGESHVAR
RAO (MD &CEO)

MURLIYER
(Country Head
Sales)

MARKET &
PROMOTION
DEPARTMENT

UNDERWRITING
DEPARTMENT

FINIANCE
DEPARTMENT
ANIL SHRIVATSAV

North Zonal
Support Manager

PRODUCT
DEPARTMENT

South Zonal
Support Manager

East Zonal
Support Manager

West Zonal
Support Manager

The Zonal Managers are supported by Branch Support Executives and the Operations
department is present only in the Head Office which is in MUMBAI.

29

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 members 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.
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).

30

4. RESEARCH METHODOLOGY

31

INTRODUCTION
The system of collecting data for research projects is known as research methodology.
The data may be collected for either theoretical or practical research for example management
research may be strategically conceptualized along with operational planning methods and
change management. Research methodology is to describe how to gather information (method)
this can be survey interview, litterateur review etc. And then explain each method what are they,
what are the method. Some important factors in research methodology of measure most of your
work is finished by the time you finish the analysis of data. Formulation of research questions
along with sampling weather probable or non-probable is followed by measurement that includes
surveys and scaling. This is followed by research design, which may be either experimental or
quasi-experimental. Methodology includes a philosophically coherent collection of theories,
concepts or ideas as they relate to a particular discipline or field of inquiry.

METHOD OF DATA PRESENTATION

Any research finally leads to a result, which would be analyzed, from the data that have
been received by the researcher. Data analysis is meant to be the most sensitive part of any
research work. On achieving this various methods can be adopted there are three different
methods using for data analysis such as univariate statistic.

The univariate analysis consist of mean, standard deviation, percentage etc. although the
mean most commonly seen representation of central tendency and the stranded deviation takes
into account each observations distance from the mean. The obtained data were presented
through table based on the percentage of the respondents and were analysis through spread sheet
under the univariate measures such as mean, standard deviation.

32

5. ANALYSIS & INTERPRETATION

33

METHOD OF DATA EVALUATION

After the data analysis, it must be evaluate to get the decision. Here the decision rule will
be applied that is univariate measure calculated to the decision. The likers scale is given 1-3 to
each statement in the questionnaires.
Based on the value indicated in the questionnaire, the average value for each factor is considered.
The mean value lies between 1-3 which follows.
1) Agree
2) Neutral
3) Disagree

Further three types of degree of consideration that can be derived regarding differentiation
variables are show in the following table

Decision Criteria for Univariate Analysis

Range

Decision Attribute

1<X=2.5

Low Level Relinquishment

2.5<X=3.5

Moderate Level Relinquishment

3.5<X<=5.0

High Level Relinquishment

PERSONAL INFORMATION
The research is to identify the customer retention in IDBI federal insurance Co limited in
Coimbatore branch. Retaining the customer is based on the customer satisfaction. Age, sex, civil
status, education level, occupation, income also decide the satisfaction.

34

AGE DISTRIBUTION
Age distribution pattern of the customer in Coimbatore branch its represented by the
sample 100. Age distribution class was categories in to three classes.63% of customer
represented the age categories of 18-35 years. 5% of customer represented the age categories of
36-50 years. 32% of customer represented the age categories of over 50 years.
Age Distribution

Frequency

Percentage

18-35 Years

63

63%

36-50years

5%

Over 50 Years

32

32%

Total

100

100%

Age Distribution
70
60
50
40
30
20
10
0
18 - 35

36 - 50

35

above 50

GENDER
In this research the factor of gender represent 76% of sample male & 24% of samples
female.
Gender

Frequency

Percentage

Male

76

76%

Female

24

24%

Total

100

100%

Gender
80
70
60
50
40
30
20
10
0
Male

Female

36

MARITAL STATUS
Out of 100 samples, 77% samples were unmarried and 23% of samples were married.
Marital status

Frequency

Percentage

Unmarried

77

77%

Married

23

23%

Total

100

100%

Marital status
90
80
70
60
50
40
30
20
10
0
Unmarried

Married

37

EDUCATION QUALIFICATION
33% of samples were found in the category of UG degree holder. 58% of samples were
found in the category of PG degree holder. 19% of samples were found in the category of other
or none.
Education Qualification

Frequency

Percentage

UG degree holder

33

33%

PG degree holder

58

58%

Other or none

19

19%

Total

100

100%

Education Qualification
70
60
50
40
30
20
10
0
UG Degree Holder

PG Degree Holder

38

Other or None

OCCUPATION
64% of samples were found in the category of professional. 10% of samples were found
in the category of clerical. 26% of samples were found in the category of unskilled workers.
Occupation

Frequency

Percentage

Professional

64

64%

Teacher

0%

Clerical

10

10%

Unskilled workers

26

26%

Total

100

100%

Occupation
70
60
50
40

30
20
10
0
Professional

Teacher

Clerical

39

Unskilled workers

INCOME
Income was categories in to four classes. 5% customer represents the income Rs 1000020000.12% customer represents the income Rs 20000-30000. 83% customer represents the
income above Rs 300000.
Income range (per month)

Frequency

Percentage

Rs 10000-20000

5%

Rs 20001-30000

12

12%

Above Rs 300000

83

83%

Total

100

100%

Income
14

12
10
8
6
4

2
0
10000 - 20000

20001 - 30000

40

Above 30000

RESEARCH INFORMATION
The data collected from 100 customers who were statement in order to evaluate. The
mean and standard deviation are calculated to evaluate the research details.
Mean = fx / f
Standard deviation = (fx^2 / f)-(fx / f) ^2

EVALUATED RESEARCH DATA

7. In thinking about the recent experience with IDBI Federal life insurance, rate the satisfaction
with the customer service received by you?
Frequency

Percentage

Agree

78

78%

Neutral

0%

Disagree

22

22%

100

100%

Total

Service Satisfaction
100
80
60

40
20
0
Agree

Neutral

Disagree

fx

x^2

fx^2

Agree

78

78

78

Neutral

Disagree

22

66

198

100

144

Mean = 1.44
Standard deviation = 0.69
41

276

8. The process for getting your concerns resolved is fast?

Frequency

Percentage

Agree

83

83%

Neutral

0%

Disagree

17

17%

100

100%

Total

Concern Solvation
90
80
70
60
50
40
30
20
10

0
Agree

Neutral

Disagree

fx

x^2

fx^2

Agree

83

83

83

Neutral

Disagree

17

51

153

100

134

Mean = 1.34
Standard deviation = 0.56

42

236

9. Please think about the features and the benefits of the insurance you took. Are you satisfied
with the insurance?
Frequency

Percentage

Agree

32

32%

Neutral

45

45%

Disagree

23

23%

100

100%

Total

Benefit Satisfaction
50
45
40
35
30
25
20
15

10
5
0
Agree

Neutral

Disagree

fx

x^2

fx^2

Agree

32

32

32

Neutral

45

90

180

Disagree

23

69

207

100

191

Mean = 1.91
Standard deviation = 0.54
43

419

10. a. The customer service representative was very courteous

Frequency

Percentage

Agree

53

53%

Neutral

17

17%

Disagree

30

30%

100

100%

Total

Courteous Service
60
50
40
30

20
10
0
Agree

Neutral

Disagree

fx

x^2

fx^2

Agree

53

53

53

Neutral

17

34

68

Disagree

30

90

270

100

177

Mean = 1.77
Standard deviation = 0.78

44

391

b. The customer service representative handled your call quickly

Frequency

Percentage

Agree

56

56%

Neutral

5%

Disagree

39

39%

100

100%

Total

Quick Call
60

50
40
30
20
10
0
Agree

Neutral

Disagree

fx

x^2

fx^2

Agree

56

56

56

Neutral

10

20

Disagree

39

117

315

100

183

Mean = 1.83
Standard deviation = 0.56

45

391

c. The customer service representative was knowledgeable

Frequency

Percentage

Agree

68

68%

Neutral

12

12%

Disagree

20

20%

100

100%

Total

Knowledge Representative
80
70
60
50
40
30

20
10
0
Agree

Neutral

Disagree

fx

x^2

fx^2

Agree

68

68

68

Neutral

12

24

48

Disagree

20

60

180

100

152

Mean = 1.52
Standard deviation = 0.65

46

296

11. The policy plans of IDBI Federal Company provide highest benefits for you?
Frequency

Percentage

Agree

80

80%

Neutral

15

15%

Disagree

5%

100

100%

Total

Highest Benifits
90
80
70
60
50
40
30
20
10
0
Agree

Neutral

Disagree

fx

x^2

fx^2

Agree

80

80

80

Neutral

15

30

60

Disagree

15

45

100

125

Mean = 1.25
Standard deviation = 0.25

47

185

12. The insurance plans policy and procedure of IDBI insurance company are understandable
easily?
Frequency

Percentage

100

100%

Neutral

0%

Disagree

0%

100

100%

Agree

Total

Policy & Procedures Understandability

120
100
80
60
40
20
0
Agree

Neutral

Disagree

fx

x^2

fx^2

Agree

100

100

100

Neutral

Disagree

100

100

Mean = 1
Standard deviation = 0
48

100

13. Is the premium payment mode of IDBI federal insurance is easy?

Frequency

Percentage

100

100%

Neutral

0%

Disagree

0%

100

100%

Agree

Total

Easy Payment Mode

120
100
80
60
40
20
0
Agree

Neutral

Disagree

fx

x^2

fx^2

Agree

100

100

100

Neutral

Disagree

100

100

Mean = 1
Standard deviation = 0
49

100

14. Do you like to have a long term relation with IDBI insurance company?
Frequency

Percentage

Agree

34

34%

Neutral

24

24%

Disagree

42

42%

100

100%

Total

Long Relationship
45
40
35
30
25
20
15
10
5

0
Agree

Neutral

Disagree

fx

x^2

fx^2

Agree

34

34

34

Neutral

24

48

96

Disagree

42

126

378

100

208

Mean = 2.08
Standard deviation = 0.73

50

508

15. Do you recommend IDBI Insurance Company to your friends?

Frequency

Percentage

Agree

43

43%

Neutral

52

52%

Disagree

31

31%

100

100%

Total

Recommend IDBI
60
50
40
30
20

10
0
Agree

Neutral

Disagree

fx

x^2

fx^2

Agree

43

43

43

Neutral

26

52

104

Disagree

31

93

279

100

188

Mean = 1.88
Standard deviation = 0.73
51

426

16. You insure in IDBI because friends insisted?

Frequency

Percentage

Agree

68

68%

Neutral

10

10%

Disagree

22

22%

100

100%

Total

Friends Insisted
80
70
60
50
40
30
20
10
0
Agree

Neutral

Disagree

fx

x^2

fx^2

Agree

68

68

68

Neutral

10

20

40

Disagree

22

66

198

100

154

Mean = 1.54
Standard deviation = 0.69

52

306

17. Would you like to have another insurance policy in IDBI in future?
Frequency

Percentage

Agree

32

32%

Neutral

23

23%

Disagree

45

45%

100

100%

Total

Another Policy In IDBI

50
45
40
35
30
25
20
15
10
5
0
Agree

Neutal

Disagree

fx

x^2

fx^2

Agree

32

32

32

Neutral

23

46

92

Disagree

45

135

405

100

213

Mean = 2.13
Standard deviation = 0.75
53

529

OVERALL MEANS & STANDARD DEVIATION VALUE

Statement

Agree

Neutral

Disagree

Mean

In thinking about the recent experience

with IDBI Federal life insurance, rate
the satisfaction with the customer
service received by you?
The process for getting your concerns
resolved is fast?
Please think about the features and the
benefits of the insurance you took. Are
you satisfied with the insurance

78

22

1.44

0.69

83

17

1.34

0.56

32

45

23

1.91

0.54

The customer service representative was

very courteous

53

17

30

1.77

0.78

The customer service representative

handled your call quickly

56

39

1.83

0.56

The customer service representative was

knowledgeable
The policy plans of IDBI Federal
company provide highest benefits for
you?
The insurance plans policy and
procedure of IDBI insurance company
are understandable easily?
Is the premium payment mode of IDBI
federal insurance is easy?
Do you like to have a long term relation
with IDBI insurance company?
Do you recommend IDBI Insurance
company to your friends?
You insure in IDBI because friends
insisted?
Would you like to have another insure
policy in IDBI in future?

68

12

20

1.52

0.65

80

15

1.25

0.25

100

100

34

24

42

2.08

0.75

43

26

31

1.88

0.73

68

10

22

1.54

0.69

32

23

45

2.13

0.75

No of Response

Mean

Std deviation

100

20.69

6.95

The above table shows that IDBI federal insurance is having a high level of customer
relinquishment.
54

Std.Dev

6. FINDINGS

55

CUSTOMER RELINQUISHMENT
IDBI federal insurance is having a high level of customer relinquishment.

WAYS TO RETAIN THE CUSTOMER

The IDBI federal insurance company in Coimbatore branch has to take some action to have
customers for long time.
i.

Free some amount of premium on continuous purchase.

ii.

Give some gifts which must satisfy the needs of the customers.

iii.

Establish membership cards and membership programs

iv.

Frequent buyer programs which permit customers to build up fair play

v.

Databases that keep track of customers purchases, preferences, complements and

complaints, which are used to carry out loyalty building services and dialogs.

vi.

Integrated marketing programs where the advertising, direct communications, customer

service, database marketing and sales programs are all orchestrated together and designed
to build loyalty.

56

7. RECOMMENDATION

57

RECOMMENDATIONS
The unmarried people are actually not interested to take insurance. They wanted to invest
their money in other fields like buying a house, bike, buildings, and real-estate etc. They are even
ready to take risk for more earnings.

The married peoples are interested in insurance for the benefit of their partner as well as their
children and medical expenses. Generally educated people understand easily so most of graduate
clearly understand the benefits of insurance policies.

So IDBI Federal Life Insurance Corporation Limited can develop a new policy by targeting
the unmarried people.

IDBI have to increase their promotional activities in such a way that even unskilled persons
understand the importance of their Insurance add value to their customer.

58

8. CONCLUSION

59

CONCLUSIONS
The data were collected from the customers response of the IDBI Federal Life Insurance
Corporation Limited Coimbatore branch. Based on the percentage of the customers 100 sample
size was collected. The age, gender, marital statuses, educational qualification, occupation,
monthly income, were analyzed as personal information in the questionnaire. According to the
collected personal information, most of the sample customers were young age, single, educated,
higher income customers who got insurance. According to the research the IDBI Federal Life
Insurance Corporation Limited Coimbatore have high customer relinquishment because most of
the customers did not insure out of their own interest. Parents, Friends who are working or doing
their project or internship in IDBI Federal Life Insurance wanted them to have a policy. This is
the reason why customers move out of IDBI Federal.

60

9. APPENDIX

61

QUESTIONNAIRE
Good morning is this Mr./Ms.
I am Sindhu from IDBI federal one of the leading wealthsurance solution provider in India.
Do you have a moment to talk?
I work extensively in the area of proving future financial planning solution to people. My
expertise includes planning for your familys financial security, your childrens education,
marriage or your personal retirement.
The reason why I called you today is to get your idea and feedback about IDBI federal can I
continue?

PART A: PERSONAL DETAILS

1. Is your age
a) 18-36 years
b) 36-45 years
c) Over 50 years

2. Gender
a) Male
b) Female

3. Marital status
a) Single
b) Married

4. Education qualification
a) UG degree holder
b) PG degree holder
c) Other or none

62

5. Occupation
a) Professional
b) Teacher
c) Clerical
d) Unskilled workers

6. Monthly income
a) Rs 10000-20000
b) Rs 20000-30000
c) Above Rs 300000

PART B: RESEARCH DETAILS

Evaluate the statement on the basis of the point given below
1. Agree
2. Neutral
3. Disagree

7. In thinking about the recent experience with IDBI Federal life insurance, rate the satisfaction
with the customer service received by you?

8. The process for getting your concerns resolved is fast?

9. Please think about the features and the benefits of the insurance you took. Are you satisfied
with the insurance?

63

10. Customer service Representative

Pertain to the customer service representative you spoke with most recently please indicate
whether you agree or disagree or none to the following statements
1

The customer service

Representative was
Very courteous

The customer service

Representative handled
your call quickly

The customer service

Representative was
Knowledgeable

11. The policy plans of IDBI Federal Company provide highest benefits for you?

12. The insurance plans policy and procedure of IDBI insurance company are understandable
easily?

13. Is the premium payment mode of IDBI federal insurance is easy?

64

14. Do you like work or held the relationship between you and IDBI insurance company at long
time?

15. Do you recommend IDBI Insurance Company to your friends?

16. You insure in IDBI because friends insisted?

17. Would you like to have another insure policy in IDBI in future?

Thanks a lot for your response

Have a nice day

65

10. BIBLIOGRAPHY

66

Books

1. Research Method for Business Students-Pearson Education-Mark Saunders, Philip Lewis,

and Adrian Thorn hill.

2. Questioner design-Ian Brace

3. Developing a Questionnaire (Real World Research) by Bill Gill ham

4. Questionnaire Design by A.N. Oppenheim

5. Analysis of Questionnaire Data with R by Bruno Falissard

6. Kothari C.R. (1990) Research Methodology: Method and Techniques, WishvaParkashan,

New Delhi. PP115-117

7. Bodie. Z, Kane. A & Marcus. J: Essentials of Investments PP242-243

Websites
1. http://www.economywatch.com/indianeconomy/indian-insurance-sector.html

2. http://www.indianmba.com/Occasional_Papers/OP85/op85.html

3. http://www.banknetindia.com/finance/insure2011.htm

4. Student Insurance: www.ingletravel.com

5. Vehicle Insurance OffersApnaPaisa.com/Vehicle-Insurance

67