EXECUTIVE SUMMARY

Insurance Sector has not only been playing a leading role within the
financial system in India but also has a significant socio-economic function,
making inroads into the interiors of the economy and is being considered as
one of the fast developing areas in the Indian financial sector too.
It has also been facilitating economic development - with an objective to
build an efficient, effective and a stable insurance business in India as well
as a strong base to career to the needs of both the real economy and socioeconomic objectives of the country.
It has been mobilizing long-term savings through Life-insurance to
support economic growth and also facilitating economic development,
insurance cover to a large segment of people, while the non-life insurance
and reinsurance firms in India are main providers of risk financing for man
made disasters and natural catastrophes.
Therefore, an attempt in this project is highlight the developments of
insurance sector in India in a phased manner and to examine the reasons for
the entry of private and foreign insurance players into Indian insurance
market and present the changing scenario of insurance business in India .
It is also attempted to examine the growth of the Indian insurance sector
during the period of pre and post liberalisation and finally to suggest the
strategies, challenges and future possibilities that need to be adopted by
Indian insurance sector in the light of global scenario so as to enhance its
market share.
The project includes a Case-Study ( 26th July 2005 ) floods in
Maharashtra , which proves the need of Insurance. It also created the
awareness and need of Insurance & includes a survey.

INTRODUCTION OF INSURANCE

Whenever there is uncertainty there is risk. We do not have any control over
uncertainties which involves financial losses. The risk may be certain events
like death, pension, retirement or uncertain events like theft, fire, accident,
etc.
Insurance is a financial service for collecting the savings of the public and
providing them with risk coverage. It comes under service sector and while
marketing this service due care is taken in quality product and customer
satisfaction. The main function of the Insurance is to provide protection
against the possible chances of generating losses.
Contractual definition: In the words of justice Tindall, Insurance is a
contract in which a sum of money is paid to the assured as consideration of
insurers incurring the risk of paying a large sum upon a given contingency.

BRIEF HISTORY OF INSURANCE SECTOR IN INDIA

The insurance sector in India has come a full circle 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. The business of

life insurance in India in its existing form started in India in the year 1818
with the establishment of the Oriental Life Insurance Company in Calcutta .
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 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.
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 (Nationalisation) Act, 1972
nationalized the general insurance business in India with effect from 1st
January 1973 .
107 insurers amalgamated and grouped into four companys 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.

TRADITIONAL INSURANCE

Prior to the nationalization of insurance business in 1972, there were 106

companies, including the branches of foreign insurance companies,
operating in India . They provided a kind of service restricted mainly to
trade, commerce and industry. Besides, they were also providing the
requirements of statutory insurance. The marketing set up of the said
companies, spread over the country, were limited to the branch operations and
a system called Inspectorates. The insurance sector was not a well developed in
India . in traditional days.

TRADITIONAL MARKETING

Very few companies practiced structured training programmer for their

employees and agents. Therefore, the inspectors and agents were ill-trained and
ill equipped to educate the customers and provide the right insurance covers
for the right requirements. Continuation of such a situation, however, came to
an end with the nationalization of general insurance industry in 1972. All the
106 Companies were taken over by the Government and constituted into 4
subsidiary companies under the ownership of General Insurance Corporation
of India.
Since then, the Government intervention and the policy guidelines led to
establishing a systematic marketing set up, on the lines of LIC of India. The
marketing set up was constituted, at the base level, the agents, supervised by
development officers who, in turn, were serviced in the matter of
documentation and claim settlement by the branches/divisional offices.
Further, as a matter of mandate of the nationalisation of the industry, it was a
conscious decision to create branch network in almost all the districts of
India .
Exponential growth of

branch network of four Government owned

companies reached strength of over 4000 and sales officers-, i.e. development
officers, reached a figure of 13,000. There are as many as 1.5 lakh part time
agents working for the state undertakings. No doubt, this is an achievement,
worth commending, on the part of the nationalised set up, which has helped to
carry benefits of the general insurance to the nook and corners of the country.

Despite this massive formation of marketing network, the penetration of

insurance industry in the lower end of the marketing remained unsatisfactory.
The 4 companies, generate a gross direct premium of about 9,000 crore of
which only 2% are from the rural insurance products like Cattle, JPA, GPA,
Kisan package etc. There are 2.5 million mediclaim policy holders in a vast
country like ours. Despite the high rate of road accidents in the country,
consciousness for accident insurance remain to be very low and personal
accident policies are not yet popularized amongst the lower and middle class.
At the time of nationalization, the Government of India intended that low cost
mass-based insurance schemes should be popularized. However, this has not
happened in reality. One of the reasons attributed to our failure is the poor
retail network and skewed service conditions of sales officers called
development officers, in the nationalized industry. One of the aberrations of the
marketing policy of the nationalized industry was to keep the agents out of the
purview of canvassing business which were financed by either banks, financial
institutions etc. It is well known that the need for general insurance products,
are in extricable linked to the world of finance. Therefore, the army of agents
was deprived of income by servicing a large segment of business emanating
through banks, NBFCs, project finance, hire purchase and leasing etc. The
inspectors, having high targets to meet their cost of operation, themselves
concentrated on commercial sector and corporate sector business.
The actual implementation of marketing policy of the insurance industry has
been responsible for keeping the clientele from the household and personal

insurance sector neglected. Indeed, considering the burgeoning middle class,

we are virtually sitting on a gold mine of business. While 50% of policy
holders of LIC come from rural sector, the common man failed to get the
flavors of the general insurance service, as no one has approached them. There
has been no strategic co-operation between LIC and GIC, and they have failed
to synergies their respective strengths. The so-called low cost mass insurance
schemes failed to pick up, paradoxically, because they are low cost. The sales
officials/agents did not feel motivated to mop up individual policies as the
average premium collection per document did not give them enough income.
However, the industry as a whole, sold a large number of group accident
schemes to low income groups, like fishermen, agriculture workers, municipal
workers, railway passengers, railway policemen, village artisans and organised
groups in housing societies etc. Even banks/some NBFCs/co-operatives
extended the benefits of accidental insurance to their loaners, beneficiaries and
members. Some enlightened employers have also group JPA/GPA accident
insurance schemes and various health insurance group policies for their
employees. However, the vast majority of unorganized labour has remained
outside the benefits of such schemes.
Besides, the other reason for slow development has been the cumbersome
procedures for claim settlement. By and large, the impression is that the
claim recovery from insurance companies is not hassle free.
It is a sad commentary on the management of nationalised industry that it has
failed

to simplify the procedure for a mass market, despite the avowed goal

of nationalization, i.e. to carry the benefits of insurance to every house and

homes.

TRADITIONAL TECHNOLOGY
EVOLUTION
Initially, in the late 1950s the insurance companies used Unit Record
Machines (Electro Magnetic Machines) to process data punched into cards.
Computers were introduces in the mid 1960s and by the 1980s the Unit
Phased Machines were phased out and the entire process was computerized.
This brought about greater efficiency and quick service delivery.

COMPUTERISATION
LIC started earlier than GIC, and in the early 1980s procured its first
mainframe computer, the ICL 1900 series computer in 1982. The choice of
the ICL computer looked it in for further replacement by the ICL 2900 series,
and till early 1990, LIC continued with the use of the ICL range of
computers, which by then had become obsolete. Software was being
developed mostly by the hardware vendors themselves as part of the
implementation of hardware.

Back Office Computerization in Insurance Companies

In the mid-1980s the banks in India commenced computerization under the

Rangarajan Committee recommendations for automation in banking. This gave
an impetus for the insurance companies to go in for computerization. In 1986,
NUT was appointed as the consultant, and specialists were recruited from the
open market to play the role of system analyst, and systems engineers. These
specialists were employed at GIC as well as the four subsidiaries. Core teams
were set up and assigned the task of developing software in the areas of
underwriting, claims and accounting. The hardware platforms were similar to
what was adapted by the nationalized banks. These were UNIX systems and
the development software was Unify RDBMS. C and COBOL.
These were mostly referred to as DO (Divisional Office) and RO (Regional
Office) system. Branch offices were not computerized. Branch documents
were sent to their respective Divisional Offices were they were entered into
their DO system.

Computer Staff
Because of union restrictions, only back office computerization was
permitted. Two cadres of staff were created: the programmer, and the dataentry operator. The programmer was wrongly named, and he was the only
cadre who was allowed to start-up and shut-down the computers, take printouts,
take backups, and assign log-in rights to various data-entry operators. The dataentry operators were the only cadre who would actually sit on the terminals, call
up the screens and enter data into the system from policy documents, claims
registers and various other accounting documents.

TRADITIONAL PRODUCT
Most of the products offered by Indian life insurers in earlier are developed
and structured around these "basic" policies and are usually an extension or
a combination of these policies. So, what are these policies and how do they
differ from each other?
(1) ENDOWMENT ASSURANCE: - there are basically two variants of this
policy
(A) NON PARTICIPATING ENDOWMENT ASSURANCE
(B) PARTICIPATING ENDOWMENT ASSURANCE
(A)NON PARTICIPATING ENDOWMENT ASSURANCE:This policy offer a guaranteed amount of money at the maturity date of the
policy in exchange for a single premium at the start of the policy or a
regular premiums throughout the term of policy. If the policyholder dies
before the maturity date then usually the same sum assured is paid on
death.ofcourse, the policy could be structure with a sum assured paid on
death, which is different from that paid at maturity.
(B) PARTICIPATING ENDOWMENT ASSURANCE
The structure of this policy is similar to that of the non participating policy
except that the initial sum assured under the policy is expected to be

enhanced by payment of the bonuses (distribution of the profit made by

insurance co.) to the policyholder. In the Indian context, bonuses usually
take the form of additions to the initial sum assured and become payable in
the event of the insured events i.e. survival up to the maturity date or earlier
death.
(2) MONEY BACK PLAN:This is a popular saving cum protection policy because it provide lump sum
at periodic intervals. For example, given an initial sum assured of Rs 1000
and a term of 20 years, the policy may provide for part payment of sum
assured as followed

20% at the end of 5 years

20% at the end of 10 years

20% at the end of 15 years

40% at the end of 20 years

continuing with the above example, if the guaranteed annual addition is say
Rs100 per 1000 sum assured ,then the policyholder gets 400 of the initial
sum assured plus guaranteed addition of Rs2000 ( =100*20) at the end of the
20 years term.
(3) WHOLE LIFE ASSURANCE:This policy provides a benefit on the death of the policyholder whenever that
might occur .basically it provide long term financial protection to the
dependents. it is particular useful as a mean of protecting some of expected

wealthy transfer that parents would aiming to make to his or her children
when he or she died. Without this policy, the wealth transfer is likely to very
small if parent died young.

(4) UNIT LINKED PLAN:A unit linked plan is also an investment oriented product. As compared to
other investment plans, the investment portion of unit linked plan function
like a mutual fund. it is invested in a portfolio of debt and equity instruments
,in conformity with the announced investment policy.
(5) IMMEDIATE ANNUITY:This type of policy meets the policyholder need for a regular income, for
after his or her retirement. The policy can also be structured to provide an
income for limited period, for example to pay the school fees of the policy
holder children. The regular income is purchased by paying a single
premium at the inception of the policy. Strictly speaking the regular income
ceases on the death of policyholder.

SERVICE TO CONSUMER IN TRADITIONAL DAYS

In world, customer service should be given top priority. Organizations
market share and profit can get affected by the quality of customer service,
more so in case of a service providing organizationally being a service
providing co. Offering invisible and intangible product, evaluating the
performance is quite difficult. Customer satisfaction is dependent on the
factor like the advantage he perceives as accruing from policy, the way the
policy is presented to him the expectation regarding the service from the
agent who is the conduit between the company and the customer.
Furthermore, since the contract runs for a very long period, sometime few
decades, customer must be convinced about the creditability of the service
the agent is going to offer. in fact ,to maintain the quality of the service and
retain customer is main policy of organization.
Organization must focus its attention on the following point.
1) SERVICE AT THE BRANCH: While there is a lot effort to train agents, organization has to give little
attention to improve the service at the various branches. As a result customer
often feels pain at the careless attitude of the branch staff. The
organization also must take serious steps to train its branch staff and make
them more customers friendly.

2) SIMPLIFIED POLICY DOCUMENTS:In an insurance contract the clause must be simple and easy to understand. In
India , policyholder usually do not read the policy document for the simple
reason that the clauses are framed therein they do not make sense to average
reader.
3) RIGHT INSURANCE: The problem of both the insurer and the insured that is confronting the
industry is that the distributor (the agent or broker) is not honest in
communicating a product to the prospect. Little attention is given to the
proponent need and the risk profile and more to personal interest, whether in
form of high commission or achievement of high targets. More so, in
business like insurance where credibility and trust are essential ingredients
for success.
4) TRAINED AGENTS:It would be helpful for the organization to have trained and educated agents
who explain the nuances of the proposed contracts to the prospect and do the
job of primary underwriter. it can increase the satisfaction level of the
insurer and lead to higher retention ratio. an agent is a link between the
insurer and the insured so that the policy holder treats him as a
representative of organization. In absence of the the positive role expected
from these agents, the policy holder may be deprived of the service that they
expect and dissatisfaction. The agent must learn to satisfy their policyholder
in contract that can retain customer interest in their policy and also in agent.
5) INFORMED CUSTOMER: -

While some new product has been introduced in the market, information
related to them is not being communicating completely there by putting the
customer in a quandary. When a new policy is being introduced in the
market it sounds as if is a completive product rather than a genuine useful
product for properly understood by the customers.

MOVE TOWARDS MORDERN INSURANCE

PRIVITIZATION OF INSURANCE SECTOR
Insurance Services
Insurance investors developed economies, particularly from Western
Europe and the US find Indian market as having greater growth potential
than their domestic markets. Therefore, a high level of interest exists for
these companies to acquire insurance concerns. Many international players
are eyeing the vast potential of the Indian market and are already making
plans to enter.
The entry of the foreign players in the sector with more financial resources/
better experience and lower operational costs will have an advantage over
the Indian companies involved in the business. The bigger private players
claim that opening up insurance will give policyholders better products and
service, the opponents of privatization argue that in a poor country like India
insurance needs to have social objectives and newcomers will not have that
commitment.
Better experience provides them with the wherewithal to have a better
product mix and more operational flexibility. Moreover, they will operate

with a lean staff and lower operational cost. The domestic insurance industry
will as a result, have to face a greater competition. But the resources with the
foreign players are limited, as they can invest up to 40 per-cent of the equity
of their joint-venture with Indian firms. This is a great hindrance for them to
perform at their optimum level. IRDA is working out to gradually dismantle
the tariff structure.
Not much threat is perceived as to any price war since the new companies
will stress more on the non-actuarial product differentiation. However, the
Indian Insurers due to their extensive branch networking and long-standing
association with the client still have an advantage.
Further, insurance products can become competing investment product vis-vis other saving, etc. Already LIC has launched Equity linked Indexed
Insurance Policies, which have been received quite well. The new players
are expected to bring in spate of such products.
Insurance is viewed as a tax saving instrument rather than protecting one's
own kith and kin from the vagaries of the future. The rush for insurance
policies to save tax bills can be seen at the end of the financial year. With the
entry of private and global players like HDFC Standard Life, JCTCI
Prudential, Kotak Mahindra Club Insurance, Hindustan Times Commercial
Union to name a few, the insurance industry is going to provide many jobs
and is going to witness phenomenal growth.
The new millennium has exposed the insurance sector to new challenges of
competition and struggle for survival in this era of privatization,

liberalization, deregulation and globalization. The Indian government

nationalized private insurance companies in 1956 [Life Insurance
Corporation of India (LIC) followed by Genera] Insurance in 1972] to bring
this sector under government control.

Two governments fell over the issue of liberalization of insurance sector.

After 40 years of government protectionism of this massive sector the
present government has initiated the process of opening this sector to private
Indian business houses as well as international players. Although the growth
of the Indian Insurance Industry has been slow for the last four decades the
state owned insurance companies have grown creating only inefficiency.
The idea of insurance was first conceptualized in the 12th century. At that
time it: was used more as a tool for protection against financial loss of
seafarers involved in foreign trade. Since then, the concept has undergone
several changes. It is basically the unforeseen contingencies of human life
that have given a totally new looked to the industry.
Gradually as competition increased the benefits given by the industry to its
customers improved by leaps and bounds. The opening up of the sector has
posed new challenges for the public sector insurance companies.
Prior to liberalization, the regulatory environment was primarily based on
consolidated provision of the Insurance Act 1938 and the Controller of
Insurance had wide ranging powers. After nationalization, much of the
powers of the Controller of Insurance were abridged for operational

convenience of state owned LIC and GIC. In 1993, Malhotra Committee

was constituted to review insurance regulations and carry out reforms.
All attempts to even suggest letting private players into vital sector were
met with resistance from the powerful insurance employees unions. Despite
several developments that have taken place in the industry in the postliberalization era, per capita premium for life insurance is as low as $6 and
that for non life insurance is at level of $2. It accounts for 2 percent of the
GDP compared to the world average of 7.8 percent.
LIST OF 10 FOREIGN PLAYERS ENTERING THE INDIAN
INSURANCE SECTOR AND THEIR INDIAN PARTNERS WHO ARE
APPROVED:

COMPANY

INDIAN PARTNER

FOREIGN INSURER

HDFC-STANDARD

HDFC

STANDARD LIFE-U.K

ICICI-PRUDENTIAL

ICICI

PRUDENTIAL- U.K

BIRLA SUN LIFE

ADITYA BIRLA GROUP

SUN LIFE- CANADA

LIFE

MAX

NEW

YORK MAX INDIA

NEW YORK LIFE-U.S.A

LIFE
OM KOTAK

KOTAK

MAHINDRAOLD MUTUAL- S.A

FINANCE
SBI

LIFE SBI

CARDIFF- FRANCE

INSURANCE
ING VYSYA

VYSYA BANK

ING

INSURANCE-

NETHERLANDS
TATA-AIG

TATA

AIG- U.S.A

MET LIFE INDIA

JAMMU AND KASHMIRMET LIFE- U.S.A

BANK
ALLIANZ-BAJAJ

BAJAJ AUTO

ALLIANZ

INSURANCE IS NO MORE A PUBLIC SECTOR

MONOPOLY IN INDIA
The introduction of private players in the industry has added to the colours
in the dull industry. The initiatives taken by the private players are very
competitive and have given immense competition to the on time monopoly
of the market LIC. Since the advent of the private players in the market the
industry has seen new and innovative steps taken by the players in this
sector. The new players have improved the service quality of the insurance.
As a result LIC down the years have seen the declining phase in its career.
The market share was distributed among the private players. Though LIC
still holds the 80% of the insurance sector but the upcoming natures of these
private players are enough to give more competition to LIC in the near
future.

Till the late 1990s the Indian Life Insurance Industry was completely in

the hands of LIC.

After 40 years of nationalization, only 25% of the insurable population

was covered. This was one of the major reasons for opening up the sector
to allow private players.

Per capita premium for life insurance is as low as $6 and that for non life

insurance is $2. This accounts for 2% of the GDP compared to the world
average of 7.8%

Developed economies particularly from Western Europe and the U.S find

the Indian market as having greater growth potential than their domestic
markets.

The insurance sector has been opened upto the private sector, with a

view to making available long-term funds for infrastructure, introducing new

and innovative products and effecting improvement in quality of service to
customers.

The Insurance Regulatory and Development Authority (IRDA) was setup

on 19th April 2000 . It has so far issued licenses to 10 companies.

PRESENT SCENARIO
The Government of India liberalized the insurance sector in March 2000
with the passage of the Insurance Regulatory and Development Authority
(IRDA) Bill, lifting all entry restrictions for private players and allowing
foreign players to enter the market with some limits on direct foreign
ownership. Under the current guidelines, there is a 26 percent equity cap
for foreign partners in an insurance company. There is a proposal to
increase this limit to 49 percent.
The opening up of the sector is likely to lead to greater spread and deepening
of insurance in India and this may also include restructuring and revitalizing
of the public sector companies. In the private sector 12 life insurance and 8
general insurance companies have been registered. A host of private
Insurance companies operating in both life and non-life segments have
started selling their insurance policies since 2001.

MORDERN INSURANCE
The insurance industry in particular has been subjected to numerous changes
in the last few decades since the need for insurance is more evident now than
earlier. People's spending patterns are changing and more & more resources
are needed for immediate consumption.

MORDERN MARKETING
While LIC of India grew by leaps and bounds, to touch upon lives of
individuals, the personal insurance sectors of general insurance industry did
not create the market mainly by neglecting to create a dynamic agency force.
The New Dawn
Amongst so many changes in Indian economy, we are also expecting far
reaching changes in the insurance sector as well.
For the last 40 years in life insurance and 28 years in general insurance, the
customers of insurance services have been provided service by monopoly
companies. Although the monopoly has lent financial strength and ownership
of the Government on the plea side, they failed in the area of customer
service. The insurance sector, particularly, non-life, is a highly commercial
activity. The system of Government ownership came in the way of making
the companies market survey. High potential employees failed to deliver the
expected service, as they were bound by the rigid rules and regulations.
Government companies could not push through enough of internal reforms to
remain market sensitive. They were tardy on technology and up gradation.
The mindset up of their employees \was not customer friendly. The writing

on the wall was there ever since Malhotra Committee Report was published in
1994. In the absence of political consensus, the reforms in the insurance
sectors had to wait till 1999. Now, we have a set of regulations governing the
industry, both for the existing and new players.
Thus, thanks to the commitment of the IRDA, licence for the new insurance
companies have been issued. Such companies however, have a daunting task
ahead. They have to meet the high expectations of the market place.
Monopoly markets have come to its end. It is now to be seen how the new
players take on the challenge of the market place.
The Way Forward
Having experienced, the deficiencies of marketing under the nationalised set
up, the newly licensed insurance companies are now faced with the challenge
of appropriate channels of distribution, which is the key to the success of
marketing insurance products, in a vast country like ours. As we have
observed, historically speaking, neither during the period preceding
nationalisation, i.e. prior to 1972, not after nationalisation for last 28 years, no
good model exists in the matter of agency system in non-life market. The
public sector companies relied on a variety of distribution system like,
direct marketing from office to office, development officer as a semiwholesaler/retailer and part time agents as casual retailers and distributors.
Thus, the entire distribution machinery in non-life was unfocussed.

MORDERN TECHNOLOGY

There has never been a time when the effective use of IT has been more
crucial to the success of the insurance industry. The insurance markets
are being revolutionized by technology at a high speed pace. IT and
software solutions, allowing cross-border trade to become electronic and
paperless, are increasingly on offer to importers, exporters, shipping
companies and financial institutions
Hardware:
Developments in Information Technology have been characterized by
miniaturization and reducing cost with improved performance and better
reliability combined with shortened product development cycles, due to
advances in chip technology.
The early use of huge computers during World War II was for military
purpose. The computer technology went hand in hand with the advances in
electronics. The computers for commercial use in 1960s, made use of
transistors instead of vacuum tubes in the earlier computers. The integrated
circuit (1C) technology of 1970s forms the backbone of latest computers. With
the feasibility of circuits having large scale integration (LSI) and very large
scale integration (VLSI) powerful computers came to the table tops (Micro
computers) and then to laptops and now to palmtops.

Software:

Like the hardware, the computer languages (software) have also undergone
change. The software transitions from very hard to use machine level language
(MLL) through Symbolic / Assembly Level Language (ALL), High Level
Language (HLL like Cobol, Basic etc.), fourth generation (4GLs like relational
databases) have today reached to expert systems. This has brought the
computer closer to business managers who may not be necessarily computer
professionals. With complicated operating systems for mainframes and mini
computers the personal computers came handy with operating systems like
DOS, UNIX. This changed the concept of huge data processing centre into
decentralized data processing units. The recent additions of user friendly
interfaces like Windows brought menu driven, user friendly computing to the
society.
Word processing and spreadsheets made processes more efficient and one
could edit documents or do calculations faster. But there was no sharing of
information.
Computer Interface and Storage Devices:
The dialogue with computer which is through input and output devices has
changed its form and medium. The first interface with computer was the
punched card (Holerith Card). Today the typewriter like keyboard or pointing
and clicking device like mouse are in common use. Digitizers have
introduced the flexibility of translating maps and figures to computer touches as
if they were mouse clicks.
The storage devices have changed from bulky and sequential access
magnetic disks and tapes to handy and flexible floppy disks, hard disks.
Optical disks offer mass storage capabilities. Today's compact disks with
high storage capacity of 600 MB onwards are replacing concepts of

publication of books/manuals and encyclopedia or any other business

information with relatively less cost
INFORMATION TECHNOLOGY FOR INSURANCE
Database Management Systems:
The principles of tracking and measuring responses can pay off for the
insurance industry. To find more clients, we need to consider many factors,
including, lapsation, cash value, premium and competition. But the need to
record and study the characteristics of persistency - the length of time we retain
policies, customers and agents is most important for insurance companies.
A database with five to ten years history of households or clients products and
agents can help you follow the most profitable combinations of the three. Such
historical retention was prohibitively expensive in the past. But clear
advantages of new PC (Personal Computer) and RISC (Reduced Instruction
Set Computing) technology gives companies power to keep tens of millions
of policies on a device with thousands of bytes of data per
policy/client/agent. Now such 10 year database analysis is cost effective. By
reviewing the database one can see how many clients have actually migrated
not just how many policies have lapsed or surrendered. Using database
technology, companies can get a comprehensive view of their business and
analyse the effects of competition, performance, loyalty and lost opportunity.
The insurance industry needs to provide a consistent, long term, systematic
support of the processes that identify customer needs and desires. Database
measurement and research can lead to fulfillment with a combination of
winning products and services marketed by a well trained distribution force.

Insurance companies need to think differently about information and

technology. Insurers historically have been heavy users of technology but
mainly for making administrative functions more efficient. They also had
large quantities of data, but very little useful information. New opportunities
are emerging as technology advances make the capture, access and
management of information easier. Simultaneously the general ability to use
information is becoming competitive weapon in delivering high quality,
efficient service.
The comments in the Chapter on IT and insurance in Report of the Committee
on Reforms in the Insurance Sector include
"Computers are still being used for limited data processing -important
though that is and indeed needs further extension- and not as instruments
for developing Decision Support Systems."
Companies need to utilize decision support systems by implementing data
warehouses that pull information from existing legacy systems into a
customer information database. Such decision support systems will equip the
insurance managers with ability to allow for customized products and services
that are more in line with what customers want.

Any need to analyze historical and demographic data quickly and easily to
improve business profits warrants the need for a Decision Support System.
The earlier databases were designed and built based on products and not

customers. Before the recent advancements in decision support system tools,

a product approach to storing data made it difficult and costly to obtain a
horizontal view of vital customer information.
E-Insurance Benefits:
E-Insurance will derive multiple benefits to the insurer like,
Information collection will be better and cheaper
Speed of Response: Issuance of Policy and settlement of claims will be
faster
New Ways of doing Business in a competitive market
Flexible Pricing and Customized Service
Global Accessibility i.e. Lapse of Physical Boundaries
Increased Sales without additional sales force
Immediate Premium Collection and Funds Transfer

Reduced cost per transaction

24*7 Availability
Improved Service
Real Time Knowledge Base Building

MORDERN PRODUCT
A satisfied customer always tries to find out new product and passes on that
information to many others. People often complain that premium collection
is the main motto of insurance companies. An individual insurance needs
change over time, depending on his age, his profession, the status of his
families, his health etc. Obviously, no single policy can meet all his needs.
Therefore, he has to be told about all option available before he chooses
policy. It is essential system that should be developed to match customer
expectation, involving change in communication format, proposal form and
policy documentation wordings.
In recent past year Indian insurance industry evaluate many new product
Like bancassurance, diabetes insurance, smoke insurance, mobile insurance,
baggage insurance, travel insurance, wedding insurance and many more.

BANCASSURANCE

Bancassurance symbolizes the convergence of banking and insurance. the

term involved distribution of insurance product through a bank branch
network. In concrete term, bancassurance, which also known as Allfinanzdescribe a package of financial service that fulfill both banking and
insurance needs at the same time.
Bancassurance as a means of distribution of insurance product is already in
forced in India in some form of other. Banks are selling personal accident
and baggage insurance directly to consumer as a value addition to their
product. Bank is also participating in the distribution of mortgage linked
insurance product like fire, motor or cattle insurance to their customer. Even
IRDA bill in India has stimulated the growth of bancassurance by allowing
the use of multiple distribution channels by bank and insurance companies.
REASON FOR BANKS ENTERING INSURANCE
Banks have sought to enter insurance markets because of the following
reasons:

Bank managements
potentially profitable.

have

believed

that

such

markets

are

The value of a banking license is continuing to fall due to increased

competition from non-bank banks, disintermediation and the
internationalization of the banking industry. Moreover, income earned by
traditional bank activities has fallen. Banks have, therefore, been under great
pressure to extend their business scope. This pressure has lead to systematic
consideration of the possible use of the large branch banking networks for
cross-selling non-banking financial products.
Furthermore, banks possess significant, high quality information on the
financial circumstances and requirements of customers. This offers the
opportunity for highly targeted marketing of other financial services including
insurance.

SWOT ANALYSIS OF BANCASSURANCE

STRENGTH

Experience of bank in cross selling and customer segmentation.

Positive regulatory change in favour of bancassurance.

Reach of bank even in remote area.

good range of personal line product (life & non life)

WEAKNESS

Bank staff is not adequately trained to distribute insurance product.

Bank staff has low level of insurance awareness.
Bank has weak customer database & infrastructure support.
Major regulatory barriers still exists.

OPPORTUNITY
High catch up potential in both direct and bancassurance market.
Foreign joint venture entering the Indian market is key to use bank
branches as their main distribution channel.
Life insurance &non life personal line product are under sold.
New player leverage on bank assurance to take market share.
THEARTS
Strong competition from other exisisting and emerging channel.
Problem of unsophisticated customers.
Overly restricted regulation with frequent change in guideline.
Uncertainty over consolidation of banking and insurance sector as well
as foreign direct investment.

Sl.No
01
02
03
04
05
06
07
08
09
10
11

Insurer
Bajaj Alliance (General
Insurance)
United India Insurance
Company Ltd.
New India Assurance Company
Ltd.
SBI Life

Banks / Corporate Agencies

Jammu & Kashmir Bank, Karur Vysya Bank, Punjab
& Sindh Bank
Andhra Bank, Indian Bank, South India Bank,
Federal Bank
Punjab National Bank (General Insurance) Vijaya
Bank (Life Insurance)
SBI branches and branches of its subsidiaries
Allahabad Bank, Bank of India, Citibank, Federal
ICICI Prudential
Bank, Lord Krishna Bank, Punjab and Maharashtra
Co-operative Banks
LIC of India
Corporation Bank, Oriental Bank of Commerce
Karnataka Bank, Dhanalakshmi Bank, Jammu &
Metlife
Kashmir Bank
Kerala based Co-operative Banks Peruntalmanna
AMP Sanmar
Bank and Manjeri Bank
Citibank, Deutsche bank, IDBI Bank, Catholic
Birla SunLife
Syrian Bank, Bank of Rajasthan, Bank of Muscat
HDFC Standard Life Insurance Indian Bank, Union Bank
Lakshmi Vilas Bank, Canara Bank, Amex, ABN
Dabur CGU Life
Amro Bank

DIABETES INSURANCE

Diabetes is becoming a widely prevalent condition in India . in fact, one in

eight adult Indians is diabetic, thank to factor like sedentary lifestyle, poor
eating habits and genetic predisposition .in addition, thousand are
developing pre diabetic conditions (Impaired Fasting Glucose IFG/
Impaired Glucose Tolerance-IGT)Which, if not managed properly, can lead
to diabetes in the future.
Diabetes not only impact human lifestyle, it can also causes serious health
complications. it is a major risk factor for heart disease, stroke, kidney
failure, adult blindness and amputations. a diabetic is 3-4 time more likely to
get any of complications as compared to non diabetic. However, if diabetes
is managed effectively, one can avoid these complications altogether.
Moreover, diabetes related complication can also seriously impact human
finances. This is compounded by the fact that conventional medical
insurance does not cover diabetes insurance.

ICICI PRUDENTIAL
ICICIPRUDENTIAL is the 1st critical illness insurance policy for type 2
diabetics and pre diabetics. Diabetics care aims to provide financial support
in the form of a lump sum payment for critical illness caused diabetes. it also
aims to encourage, enable and incentives human to manage his/her diabetes
more effectively with the help of a specially designed wellness program and
through partnership with leading healthcare provider.

DIABETES INSURANCE BY ICICI PRUDENTIAL

SMOKE INSURANCE
Because smoking is a health hazard, life insurance companies may charge
customer a higher premium if they smoke. Worse yet, smoking may even
prevent them from obtaining life insurance coverage at all. How does an
insurance company find out if you smoke and how much? In most cases,
they start by simply asking you. Almost every application for life insurance
contains questions about health issues, including smoking. their responses to
any smoking-related questions will play a part in a company's decision about
whether to sell them life insurance and at what price.
KOTAK OLD MUTUAL LAUNCHING SPECIAL SMOKE
INSURANCE IN INDIA FOR PROHIBITING CUSTOMER
SMOKING HABIT
PUBLISHED ARTICLE
Lately, the market has been inundated with a variety of term plans with
players trying to differentiate their products with innovative features and
lower premiums. Om Kotak has come out with a variant of its existing
Kotak Term Assurance plan.
The Kotak Preferred Term Plan rewards non-tobacco consuming men over

the age of 25 and women over the age of 25 who are smokers/non-smokers.
A point to be noted is that this plan is only for men who do not consume
tobacco in any form, provided that they have not consumed tobacco in the
past three years, did not give up tobacco intake for medical reasons and their
blood tests show that they do not currently consume tobacco.

Women over the age of 25 years do not need to undergo any nicotine test.
The plan is also ideal for covering outstanding debts like mortgages, home
loans etc. The Preferred Term Plan is different from the existing Kotak Term
Assurance with respect to lower premium rates i.e. it is 30-35% cheaper, and
increased term of coverage, to 30 years.
Like other innumerable term plans in the market today, this one too is a pure
risk

product,

with

no

maturity

benefits

payable

on

survival.

The plan can be converted into any other plan (except a term plan) provided
there are at least five years remaining before the cover ceases. The plan
offers a feature whereby in the event of non-payment of premium, a grace
period of 30 days from the date of unpaid premium is granted.
Let's say, a 30-year-old male takes the Om Kotak Preferred Term Plan for a
sum assured (SA) of Rs 10 lakh. He would have to shell out an annual
premium of Rs 2400. In the event of his death, his beneficiary would receive
SA of Rs 10 lakh. The insured has the option to attach riders like Accidental
Death, Permanent Disability and Critical Illness at a nominal premium.
Now, incase the insured takes the Accidental Death and Permanent
Disability riders for a SA of Rs 5 lakh each, he will have to pay an extra

premium of Rs 600. In the event of death due to accident, his beneficiary

would receive a sum of Rs 15 lakh.
The only differentiating feature of the Om Kotak Preferred Term Plan is the
special treatment to certain class of customers, which is not being offered in
other plans

WEDDING INSURANCE
There are a lot of Insurance companies, both Public sector insurance
companies & private insurance companies which offer wedding insurance in
India .
Insurance cover is offered for postponement or cancellation of wedding, as
they cover accidental death of a close relative or bride or bridegroom,
burglary of jewellery, valuables of the insured gifts (wedding suits, sarees,
silver articles, etc) and so on, and damage to marriage halls by forces such as
fire, lightning, domestic (in-house) explosion and terrorism attacks.
The insurance covers also include the impossibility of a bride or bridegroom
to reach the wedding hall on time owing to stranding of train and/or
unavoidability of road conveyance or local law and order problem, police
action of arrest or search of marriage party for reasons other than child
marriage or criminal acts by any of the member of the household of the bride
or the bridegroom.

The period of insurance is 24 hours prior to the start of the customary

functions or rituals or programmer of events mentioned in the printed
invitations till the end of the function or five days from the beginning
whichever occurs earlier.

In a nutshell insurance covers:

1. Expenses actually and already incurred or advances paid in connection
with marriage hall, cooks, catering, purohits, priests, pandits, beauticians,
decorators, accommodation reserved for the bride, bridegroom, guests,
music parties, photos and videography and entertainment programs
2. Cost of consumables which can neither be returned not used after lapse of
time
3. Loss on cancellation of travel tickets, forfeiture of caution or security or
deposits. Liability is restricted only when such cancellation arises out of
cancellation or postponement of marriage itself due to any of the causes
mentioned above.
4. Burglary of jewellery, silver articles costly items like wedding suits,
wedding sarees, and bridal sets etc
5. Third party liability of insured arising out of functions at the marriage

Insurance Cover does not cover:

1. Dispute between marriage parties
2. Criminal acts
3. Willful negligence
4. Criminal misconduct of the bride, bridegroom or their parent

BAGGAGE INSURANCE
What can be Insured
Under this policy, an individual's accompanied baggage (suitcase, trunk,
additional items, etc) during a specified journey (including air travel) can be
insured.
Risks covered
The policy provides cover against loss or damage to accompanied baggage
owing to fire, riots, strike, terrorist activity or theft or accident in the course
of a journey including periodical halts en route anywhere across the Indian
sub-continent.
Compensation Offered
This policy will pay compensation for the contents of the baggage in event
of any damage or loss owing to any of the perils mentioned in the policy.
Exclusions
The baggage policy is subject to the exclusions of:

Loss or damage to articles of consumable nature, cash, jewellery,

securities, precious stones, fur, watches, etc.

Loss or damage to any property transported by a carrier under receipt.

Loss or damage due to depreciation, wear and tear, consequential loss,

legal liability and theft from unsecured car.

Loss or damage owing to perils of war, nuclear strike, vermin,

cleaning and repairing processes.

This policy is offered by:

The National Insurance Company Ltd.

The Oriental Insurance Company Ltd.

The United India Insurance Company Ltd.

The New India Assurance Company Ltd.

MODERN SERVICE TO CONSUMER

What customers Want ?

Customers could get different and better service though the Internet. It is
possible to obtain quotes from a number of companies. In some cases, the
Internet provides rating agencies' evaluations of insurers. The Internet and
outsourcing can provide additional cost savings to the consumer. Technology
can bring the customer closer to the insurance contract, by removing layers of
inefficiencies.
Consumers will also obtain price comparisons for relatively generic
contracts, such as life insurance and rates for a standard set of auto insurance
coverage for given vehicle and driver characteristics.
Consumers also could have access to internal records to see where their claims
are in terms of payment, when their next annuity payment is due, and how
their mutual fund is performing. This can be done without calling a
burdensome voice-mail system, being put on hold, or finding a person who
can give them the desired information efficiently.
Overcome the Limitations Quoted by Public.
a) Low rate of returns as compared to other investments.
b) Too much time taken for processing claims
c) No regular reminders sent to renew policy & payment of premiums
which resulted in lapse of policy and a innocent person suffered due to this.
d) No adequate awareness campaigns to reap the maximum benefit.

CASE STUDY

INCREASING VALUE OF INSURANCE IN INDIA

26/7/2005 Mumbai under water

Mumbai will never be the same again. And so will the insurance sector in
Mumbai after the 26/7 floods. Torrential rains which killed thousands and
rendered many homeless, also led to loss of business and vehicles.

The facts:

As fallout of the torrential rains, the non-life insurance sector was flooded
with more than 10000 claims totaling over Rs. 2000 crores. However, these
did not include the 50000 cars that have been damaged in Maharashtra .
While the top four private sector general insurance companies, ICICI
Lombard General Insurance, Bajaj Allianz General Insurance, Iffco Tokio
General Insurance and Tata AIG have together received claims worth over
Rs 1,000 crore; the four state-owned general insurance companies New India
Insurance, Oriental Insurance, United Insurance and National Insurance
received claims close to Rs 1,500 crore.
Private insurer, Bajaj Allianz General Insurance Company Ltd (BAGICL)
alone had received claims for at least 10,000 motor vehicles after the recent
floods in Mumbai.
As several companies temporarily closed down their operations and godown
stocks went missing, corporate claims were the highest, in terms of value.

Next came claims for cars and household goods and from shopkeepers and
traders for their warehouses. A majority of individuals and small and
medium entrepreneurs also submitted claims.
ONGC's insurance claim is considered to be the largest given its loss of $
500 million after fire gutted the Bombay High rig.
Insurance firms set up special cells to visit victims and settle claims. In
many firms, the special teams worked round-the-clock to take stock of the
loss and speed up the settlement process.
Bajaj Allianz settled claims worth about Rs 200 crore without any
documentation, to the victims of the recent floods in Mumbai.
After the natural calamity, the Finance Minister sought speedy redressal of
claims. He directed the Chairmen and Managing Directors of the four public
sector general insurance companies that claims below Rs 50,000, arising out
of the recent floods in Maharashtra and Gujarat , should be settled by August
31.
Public sector player, National Insurance Company received 3,000 claims for
Rs 350 crore from its customers in Mumbai for damage to property caused
by the recent rains.

While some insurers had taken a re-insurance cover, some have not. Mumbai
floods brought to fore the ill-preparedness both among the mega polis

administrative officials and the insurance sector. While the latter seems to
have realized the damages, the former is still grappling with the situation. As
death toll continues to rise, insurance firms have realized the need to better
manage natural calamities. The premium for flood covers may rise in
coming years.

The effect:

Heres a warning to the lakhs of Mumbaikars who are planning to insure

their houses in the wake of the recent deluge. One will have to read the fine
print carefully. Public sector insurance firms are quietly planning to drop the
word flood from the policy.
As of now, a household insurance policy is basically a fire insurance policy,
which also incorporates a flood insurance policy. However, with 10,000
policy-holders filing claims totalling Rs 1,500 crores, insurance firms are
looking at new ways to keep their heads above water. After the last calamity
the Latur quake of 1993 insurance firms had dropped earthquakes from
the household insurance policy.
Those wanting to insure their homes against flooding may now have to pay a
separate premium. The insurance sector has suffered losses of about Rs
1,500 crore. These companies may not get re-insurance for these policies as
they had not taken re-insurance for these small individual polices

THE PATH AHEAD

Job opportunities are likely to increase manifold. The number of people

working in the insurance sector in India is roughly the same as in the UK
with a population that is 1/7 India 's; the US with a population 1/4 the size of
India has nearly 4 times the number. In the emerging markets, the picture is
no less encouraging. In S Korea , the no of full time employees more than
doubled over a ten year period. Thailand added 50 per cent more jobs in four
years.
The liberalization of the insurance sector promises several new jobs
opportunities for those employed in the finance sector who are equipped
with degrees in finance. Finance professionals who had witnessed a slump in
the job market would be a much-relieved lot to hear about the privatization
of the insurance sector.
Let us look into the type of jobs that will be created once the private players
come on the scene. Certainly, it won't be far different from the traditional
streams in any other industry. There will be demand for marketing
specialists, finance experts, human resource professionals, engineers from
diverse streams like the petrochemical and power sectors, systems
professionals, statisticians and even medical professionals. Apart from this,
there will be high demand for professionals in the streams like Underwriting
and claims management and actuarial sciences.
There could be a huge inflow of funds into the country. Given the industry's
huge requirement of start-up capital, the initial years after opening up are
bound to see a strong inflow of foreign capital. Moreover, given that the
break-even, typically, comes much later than in the case of other sectors,
odds is that the first remittance of dividend will not happen before a good
10-15 years.

However, increased competition is very likely to result in rate reductions in

certain classes of business, but in those areas that have so far been cross
subsidized; an increase in rates may be possible. Overall, the rate reductions
may outweigh the increases, thus bringing down the re-insurance premium
volume available.
Substantial shift in the distribution of insurance in India is likely to take
place. Many of these changes will echo international trends. Worldwide,
insurance products move along a continuum from pure service products to
pure commodity products. Initially, insurance is seen as a complex product
with a high advice and service component. Buyers prefer a face-to-face
interaction and place a high premium on brand names and reliability.
As products become simpler and awareness increases, they become off-theshelf, commodity products. Sellers move to remote channels such as the
telephone or direct mail. Various intermediaries, not necessarily insurance
companies, sell insurance. In the UK for example, retailer Marks & Spencer
now sells insurance products. In some countries like Netherlands and Japan ,
insurance is marketed using post office's distribution channels. At this point,
buyers look for low price. Brand loyalty could shift from the insurer to the
seller.
In other markets, notably Europe , this has resulted in banc assurance: banks
entering the insurance business. The Netherlands led with financial services
firms providing an entire range of products including bank accounts, motor,
home and life insurance, and pensions. Other European markets have
followed suit. In France over half of all life insurance sales are made through
banks. In the UK , almost 95% of banks and building societies are
distributing insurance products today.

In India too, banks hope to maximize expensive existing networks by selling

a range of products. Various seminars and conferences on banc assurance are
taking place and many bankers have clearly shown their inclination to enter
insurance market by leveraging their strengths in the areas of brand image,
distribution network, face to face contact with the clients and telemarketing
coupled with advanced information technology systems. The mergers of
Citibank with Travelers in USA and of Winterthur , the largest Swiss Co.
with Credit Suisse are recent examples of the phenomenon likely to sweep
India too.
Another potential channel that reduces the need for an owned distribution
network is worksite marketing. Insurers will be able to market pensions,
health insurance and even other general covers through employers to their
employees. These products may be purchased by the employer or simply
marketed at the workplace with the employers co-operation.
Worldwide interest in E-commerce and India 's predominant position in
information technology and software development is also likely to be a
major factor in the marketing of insurance products in the immediate future.
The internet account is increasing in arithmetic progression and the trend has
already been set by some of the leading insurers and insurance brokers
worldwide.
Finally, some potential Indian entrants into insurance hope to ride their
existing distribution networks and customer bases. For example, financial
organizations like ICICI, HDFC or Kotak Mahindra intend to tap the
thousands of customers who already buy their deposits, consumer loans or
housing finance. Other hopeful entrants anticipate specific alliances such as
with hospitals to provide health cover.

FIRST HAND INFORMATION

What ever I have collected through interaction, questionnaire, opinionaire,
schedules etc are incorporated in this chapter.
RESEARCH METHODOLOGY
OBJECTIVES
1) To understand the importance of insurance- before the nationalization
and after the nationalization.

2) To know the changes in the Indian insurance sector after liberalizations,

privatization and globalization
3) To understand comparison between private insurance companies and
public insurance companies
4) To know the role of insurance with a case-study ( 26th July 2005 ,
Maharashtra flood.)
5) To create an awareness of value of insurance & its new launching
product.
METHODOLOGY
The report was based on both Primary and Secondary data.
1) Primary Data: Several people to whom the survey was conducted with a
help of a Questionnaire.
2) Secondary Data: The sources of secondary data were a combination of
information from the internet, magazines, articles & Mr. Keith Lewis from
GIC.
SUITABILITY
This survey will be useful to draw a line of comparison between people who
think they will be benefited in buying insurance policies issued by public
insurance companies and private insurance companies
Not only that, this survey will also tell us about the companies
marketing strategy weather it had a positive impact or a negative impact on
the minds of the general public.

LIMITATIONS
The main limitations were as follows:
1) Preparing the questionnaire for conducting the survey was the major
Obstacle faced.
2) Deciding the coverage of data was also a problem.
3) To get the information regarding new launching product.

WHAT THE MARKET SAYS?

Q: 1 Do you have a life insurance?
No. of person
100

Yes
65

No
35

Expected quotes:
When quizzed about how many people have a life insurance, around 65 %
were insured and about 35% were uninsured. So most of the people like to
secure themselves first as life is precious to everyone.

Q: 2 which insurance companys products would you prefer?

Total No of Persons

Private Insurance Co. (Persons)

Public Insurance Co.

(Persons)

78

27

49

Expected quotes:
Around 80% of the people prefer public company for life insurance as they
are more secured compared to private one. Even through private companies
provide better and fast service then public companies.

Q: 3 Are you satisfied with the scheme and policies offered by the company?
No. of person
100

Yes
78

No
22

Expected quotes:
Around 78% of the people interviewed were satisfied with the services
provided by their respective
companies. if consumer not satisfied with the service they switch over to
another company which provide better & fast services

Q: 4 Grade the different types of insurance products with which you would
Like to insure yourself on priority basis?
Total No of
Persons

Life Insurance General Insurance

(Persons)
(P)

100

48

15

Mediclaim
(Persons)

Others
(Persons)

30

Expected quotes:
Most of the people prefer life insurance more than any other form of
insurance as it serves the dual purpose of meeting saving needs as well as
investment needs. It is than closely followed by mediclaim as it is beneficial
in event of any illness.

Q: 5 Are you aware of new insurance products, apart from the traditional
Ones? Specify them?
No of person
100

Yes
75

No
25

Expected Quotes:
Wedding Insurance, Aviation Insurance, Dental insurance, Smokers
Insurance & Many others. From this the need to spread the awareness of
insurance is determined. There are many more new insurance product is
about to come.

Q: 6 Do you feel insurance companies have taken effective measures to

Spread the awareness of the new product and value of insurance?
No. of person
100

Yes
75

No
25

Expected quotes:
Around 1/3rd of the people agree with the fact that companies have taken
enough measures to spread the awareness of the product largely due to there
aggressive marketing strategy.

Q: 7 if insurance company offer new schemes and policies and along

with
better services, would you like to change over from your
current policy?
No. of person
100

Expected quotes:

Yes
60

No
40

If any insurance company offers new products will the customer change over
to them, the answer was yes indicating that the company has a very volatile
customer base. A satisfied customer always tries to find out new product.

THE FINAL WORD

Observing the trends the industry has been moving for the last 10 years, the
commitment of the players to take the business forward is quite apparent.
The introduction of private players in the industry has added to the colours
in the dull industry. The initiatives taken by the private players are very
competitive and have given immense competition to the on time monopoly
of the market LIC. Since the advent of the private players in the market the
industry has seen new and innovative steps taken by the players in this
sector. The new players have improved the service quality of the insurance.
As a result LIC down the years have seen the declining phase in its career.
The market share was distributed among the private players. Though LIC
still holds the 80% of the insurance sector but the upcoming natures of these
private players are enough to give more competition to LIC in the near
future.

With the increase in awareness level about the insurance and the products,
the day is not far off all the insurable population in the country would have
been brought under the insurance net. The Governments resolve to continue
with the reforms coupled with investor friendly IRDA's regulations will
surely take the business far.

BIBLIOGRAPHY

INDIAN INSURANCE INDUSTRY. By - D. C Srivastava

INSURANCE. By M. J. Mathew

SERVICE SECTOR MANAGEMENT. By - Romeo Mascreaneous

TIMES OF