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EXECUTIVE SUMMARY

In this project I have covered the factors of insurance selling; and in this can be

further subdivided into two aspects i.e. the recruitment and training process as well as the

consumer buying behavior of insurance policies.

The first part of this project introduces insurance, talks about the types of insurance, why

do people need insurance and its history.

The next part of the project talks about the IRDA, which is the main authority for

insurance in India. It also covers the various challenges that the insurance sector faces

and also about the distribution channels it uses.

The further part deals with the recruitment and training procedure followed by

LIC. It also covers the history of the company, its objective, its members and also the

organization structure. The recruitment procedure also deals with the type of agents that

are recruited and their eligibility for the job.

Then the final part of the project covers the consumer perception towards the

insurance industry (LIC). A research is carried out by me and analysis of the data is done.

Findings and recommendations are also provided. This project helps to understand what a

customer expects when he/she takes out an insurance policy.


 
 
   
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OBJECTIVE OF THE STUDY- the objective of the project undertaken is as under:

r? To explain what is insurance.

r? ëhy people take insurance.

r? Ãn what basis do customers choose an agent?

r? Ãn what basis do customers choose a policy?

r? To understand on what basis are the agents recruited and trained?

METHODOLOGY-

The source of this project is mostly collected from secondary source i.e. from websites,

books & newspapers. Primary data has been collected through a survey conducted in a

locality with the help of a questionnaire. The purpose was to find out the way people

expect about the service after they invest in a policy and also the way they choose an

agent. The data thus gathered has been analyzed and compiled to form the project report.

LIMITATIONS OF THIS STUDY-

The limitations of this project are as follows:

r? Lack of primary data.

r? Ãnly the positive points have been mentioned.

r? The project is limited to only the city of Mumbai.


 
 
   
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CHAPTER ARRANGEMENT:

The project in all consists of 6 chapters:

r? Chapter I ± includes executive summary, objectives, methodology and limitations of the

study.

r? Chapter IIV includes the introduction about insurance as well as the overview of the

insurance company.

r? Chapter IIIV the third chapter talks about the history of insurance industry in India and

the main authority in India i.e. the IRDA.

r? Chapter IVV speaks about the challenges that the insurance company faces, the ways

they reach to the rural population, the wide distribution channels and also the effect that

the budget has on the insurance.

r? Chapter VV the fifth chapter contains the details of LIC, its objective, its operations and

its organization structure.

r? Chapter VIV the sixth chapter talks about the recruitment process carried out in LIC as

well as the training that is provided to the agents.

r? Chapter VIIV the final chapter deals with the consumer perception and the way they

choose a policy and before that the agent, who takes out the policy. Research is carried

out and suitable conclusions are also drawn.


 
 
   
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INTRODUCTION

r? Ãne of the major problems that the insurance sector is facing today is the
underperformances well as attrition of advisors. People join as advisors thinking it to be a
source of quick money, not realizing the amount of hard work that it would require.
ëhen not being able to achieve it, they get frustrated and either discontinue or don¶t give
their best shot, leading to their underperformance.

r? The objective of the project was to maximize the business of the company by increasing
the channel of the company. More importantly, it was expected to help in identifying the
potential advisors. The focus was intended to be on those people who were interested in
becoming part time or full time Financial Advisors by identify loose strings, their way of
towards insurance business and their problem handling techniques. Also the consumer
perception toward insurance is taken in this project. By learning the perception of the
consumers (policy holders) it would help in creating ultimate customer satisfaction.

r? The recruitment activity done is the initial screening process, after which prospective
advisors would have to undergo an intense training as well they will have to clear a
written exam as per the IRDA (Insurance Regulatory And Development Authority)
norms, before they get their license and begin to sell the policies. My role was to search
for people who could accomplish this task efficiently and with full dedication.

r? In Life Insurance industry, the products are designed and introduced by the actuarial department
and the top management. Then they are marketed through Insurance Agents, who work under the
guidance and leadership of Development officers. The development officers are the employees of
the corporation and responsible for the recruitment of the agents. But the Agents who work under
the Development Ãfficers are not the employees but the representatives of the Insurance
Company.


 
 
   
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INDUSTRY OVERVIEW (LIFE INSURANCE INDUSTRY)

What is insurance?

Insurance in law and economics is a form of risk management primarily used to hedge
against the risk of potential financial loss. Insurance is defined as the equitable transfer of
the risk of potential loss from one entity to another, in exchange for a premium and duty
of care.

What Is Life Insurance?

Life insurance is a contract that pledges payment of an amount to the person assured (or
his nominee) on the happening of the event insured against.
The contract is valid for payment of the insured amount during:
o†The date of maturity, or
o†pecified dates at periodic intervals, or
o†Ênfortunate death, if it occurs earlier.

Why We Need Insurance :

Life insurance is a contact by which you can protect yourself against specific
uncertainties by paying a premium over a period. ince each one of us during our lives
are faced with numerous risksVfalling health, financial losses, accident and even fatalities.
Protection
You need life insurance to be there and protect the people you love, making sure that
your family has a means to look after itself after you are gone. It is a thoughtful business
concept designed to protect the economic value of a human life for the benefit of those
financially dependent on him.


 
 
   
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Retirement
Life insurance makes sure that you have regular income after you retire and helps you
maintain your standard of living. It can ensure that your postVretirement years are spent in
peace and comfort.
Savings and Investments
Insurance is a means to ave and Invest. Your periodic premiums are like avings and
you are assured of a lump sum amount on maturity. A policy can come in handy at the
time of your child¶s education or marriage! Besides, it can be used as supplemental
retirement income.
Tax Benefits
Life insurance is one of the best tax saving options today. Your tax can be saved twice on
a life insurance policyVonce when you pay your premiums and once when you receive
maturity benefits. Money saved is money earned.
Myths of Insurance:
i) Insurance is just meant for saving tax.
ii) Insurance does not give good returns
iii) Insurance products are not flexible

How an insurance company makes money?

A customer might pay one or more premium payments overtime. The company collects
these payments from one or more customers. If something happens this triggers a claim,
the company then pays out a certain amount of money. If, during the lifetime of all of the
company¶s insurance contracts, it pays out less than it has taken in, it makes what is
known as underwriting profit. Ãne measure of an insurance company¶s performance is
their loss ratio (incurred losses and lossVadjustments expenses divided by net earned
premium.) the loss ratio is added to the expense ratio (underwriting expenses divided by
net premium written) to determine the company¶s combined ratio (explained in glossary).

 
 
   
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The combined ratio is a reflection of the company¶s overall underwriting profitability. A

combined ratio of less than 100 percent indicates a profit, while anything over 100 is a
loss.

In many cases a company¶s combined ratio is greater than 100 percent; however
the company still manages to make money. This is because in between the time the
company collects premiums and when it pays out claims, it can invest that money. The
return from these investments may offset an underwriting loss resulting in profit. For
example, if a company has to pay out 10 percent more than it took in, but made a 20
percent return on its investments, then it made a 10 percent profit. However, since most
insurance companies consider it only prudent (and may be mandated to do so by laws
controlling insurance business in the territory in which they operate) to invest in riskVfree
government bonds, or other lower risk and lower return forms of investments it¶s
important that the extra amount it has to pay out compared to what it has to take in is less
than the percent return of these investments. If it isn¶t, the company loses money. The
extra amount that a company has to pay out can be considered a ³cost of funds´ and be
compared to an interest rate of the same company borrowing money. Because of this,
most insurance companies don¶t have a goal just to have any amount of profit over the
cost of funds, but rather to have this cost of und be lower than what they would have been
able to get by borrowing somewhere else. If this isn¶t the case, the insurance company
does not add value to their owners, who theoretically could have borrowed money from
somewhere else and made the same investments themselves.

Traditionally the insurers depended upon underwriting profit to earn the operating
profit, but the market forces now require that the insurers earn the bulk of their profit on
investment income on premium held pending claims occurrences. This is a form of
financial leveraging.


 
 
   
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Types of insurance

Insurance business is classified from two viewpoints:

a)? From business point of view.

b)? From risk point of view.

A)? From business point of view

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B)? From risk point of view

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FOCUS ON LIFE INSURANCE INDUSTRY- ITS HISTORY AND

MAJOR PLAYERS

³Life insurance isn¶t for people who die; it¶s for people who live.´

Having seen the major types of insurances that are being offered in the market,
let¶s focus mainly on the Life Insurance ector, which has a very high annual growth rate
and a greater scope of expansion in the future.

The History of Life Insurance In India

The origin of insurance can be attributed to the basic urge of man to secure him
against all forms of uncertainties and risks. The insurance came to India from Ê.K, with
the establishment of Ãriental Life Insurance Corporation in 1818. Gradually regulatory
bodies were formed to check the performance of the industry, in this regard; the Indian
life insurance company act 1912 was the first statutory body that started to regulate the
life insurance business in India. By 1956 about 154 Indians, 16 foreign and 75 provident
firms were established in India.

µGrowth of life insurance in India¶, in the book µApplications of Life

Assurance¶(edition 2000) very vividly brings out the historical back ground of Life
Insurance industry. The year 1818, saw the advent of Life Insurance Business in India,
with the establishment of µÃriental Life Insurance Company ¶ in Calcutta. This company
was mainly formed to provide help to the widows of the Europeans. Later, due to the
persuation of one of its Directors, ri. Babu Muttyal eal, Indians were also insured by
the company but were considered as subVstandard lives and charged an extra premium of
15% to 20%. Due to the pioneering efforts of reformers and social workers like Raja Ram

 
 
   
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Mohan Roy, Dwarakanath Tagore, Ramatam Lahiri, Rustomji Cowasji and others,
Indians entered Life Insurance Business. The first Indian Insurance Company ³Bombay
Life Assurance ociety´, started its business in 1870, insuring Indian lives at standard
rates. ëith the encouragement of many eminent political figures like Mahatma Gandhi
and Pandit Nehru, many Indians entered insurance business. There were about 44
companies in 1914 which grew into 195 companies in 1940 and around 245 in 1956.
ëith the mushrooming of many Insurance companies, the competition became very
heavy. To sustain in the trade, some companies started indulging in malpractices and a
number of companies went into liquidation. It was then that the Government of India
nationalized the life insurance industry by merging around 245 companies and formed the
LIFE INÊRANCE CÃRPÃRATIÃN ÃF INDIA, which started functioning from
1.9.1956.

Later, the central government took over those companies and a result the LIC
was formed, which is the most trusted name till date. The entry of the entrance of foreign
players after liberalization increased the competition immensely. The root of General
insurance business in India can be traced back to the Triton Insurance Company Ltd, the
first general insurance company established in the year 1850 in Calcutta by the British. In
1957 General Insurance Council, a wing of the Insurance Association of India, Framed a
code of conduct to ensure fair conduct and sound business practices. The General
Insurance in India was nationalized in 1972 with The General Insurance Business
(Nationalization) Act, 1972, which came into effect from 1st January 1973. The after
effect of this being that 107 insurers amalgamated and grouped into four companies viz.
the National Insurance Company Ltd, the New India Assurance Company Ltd, the
Ãriental Insurance Company Ltd and the Ênited India Insurance Company Ltd.

For India, the Insurance Industry surely offered a great opportunity, the two main
reasons for it being its large population and a larger untapped market segment of this


 
 
   
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population. ëith an annual growth rate of about 30 ± 35 percent and a combined

contribution of 7 percent to country¶s GDP, together with banking services, this sector
came into limelight. Despite such big opportunities, the penetration level figures sounded
pathetic. If not lesser, at least 80% of Indian population are without Life Insurance cover
and the health insurance, indicating the huge growth potential in India. This huge growth
potential and high annual growth rate led to introduction of regulations in this sector and
the formation of the Malhotra Committee in 1933, headed by former Finance ecretary
and RBI Governor to evaluate the Indian insurance industry and give its
recommendations was a significant development in the area. It was during this period that
the government began realizing the fact that the industry had a huge growth potential, but
was rather immature to be able to perform the task efficiently, and the foreign players
who were already established in this industry, would prove to be of great help in
establishing this industry in India. Also, they realized that the foreign brands would not
easily gain the trust of the people, but could surely help the Indian players gain an
experience in the field, before they could further expand their operations in the foreign
market. o, the most significant reform that was allowing the participation of overseas
insurance companies with 26% capital.

After a thorough analysis of all the facts related to the Indian market, the major
provisions that the committee came up with were:

r? Private companies with a minimum paid capital of Rs. 1Bn should be allowed to
enter the industry.
r? Foreign companies may be allowed to enter the industry in collaboration with the
domestic companies.
r? Ãnly one tate Level Life Insurance Company should be allowed to operate in
each state.


 
 
   
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What is IRDA?

r? Till 1999, there were not any private insurance companies in Indian
insurance sector. The Govt. of India, then introduced the Insurance Regulatory
and Development Authority Act in 1999, thereby deVregulating the insurance
sector and allowing private companies into the insurance. Further, foreign
investment was also allowed and capped at 26% holding in the Indian insurance
companies. In recent years many private players entered in the Insurance sector of
India. Companies with equal strength competing in the Indian insurance market.
Currently, in India only 2 million people (0.2 % of total population of 1 billion),
are covered under Mediclaim, whereas in developed nations like ÊA about 75 %
of the total population are covered under some insurance scheme. ëith more and
more private players in the sector this scenario may change at a rapid pace.
r? µInsurance Regulatory and Development Authority (IRDA)¶ was established
in 1999 by the Act of the parliament to protect the interest of the policy holders.
r? Also, to regulate, promote and ensure orderly growth of the insurance industry.
r? IRDA consists of a 10 member team that comprises a Chairman, 5 wholeVtime
members and 4 part time members.
r? Mr.T.. Vijayan took over as the chairmen of IRDA on 4th May, 2006.
r? It is making an attempt to bring the Indian insurance sector at par with the global
standards; the IRDA has been framing regulations and registering the private
sector insurance companies since its incorporation as a statutory body.


 
 
   
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Functions of IRDA

r? IRDA allows registration of new players in the field of insurance.

r? It also has the authority to renew, modify, withdraw, suspend or cancel such
registration.
r? IRDA protects the interests of the policy holders in the matters concerning
assigning of policy, nomination by policy holders, insurable interests, settlement
of insurance claims, surrender value of the policy & others term and conditions of
contracts of insurance.
r? It specifies requisite qualifications, code of conduct and practical training for
intermediary or insurance intermediaries or agents.
r? It specifies the code of conduct for surveyors and loss assessors.
r? It promotes efficiency in the conduct of insurance business
r? It promotes and regulates professional organization connected with the insurance
and reVinsurance business.
r? It levies fees and other charges for carrying out the purposes of the IRDA Act,
1999.
r? It calls for information, undertakes inspection of, conducts enquiries and
investigations including audit of the insurers, intermediaries, insurance
intermediaries and other organization connected with the insurance business.
r? It controls and regulates the rates, advantages, terms and conditions that may be
offered by insurers in respect of general insurance business not so controlled and
regulated by the Tariff Advisory Committee under section 64Ê of the Insurance
Act, 1938 (4 of 1938).
r? It specifies the form and manner in which books of accounts shall be maintained
and statement of accounts shall be rendered by insurers and other insurance
intermediaries.
r? It regulates investment of funds by insurance companies.


 
 
   
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r? It regulates maintenance of margin of solvency. Therefore, Life insurance

companies have to deposit Rs 100 crores with IRDA before acquiring a license.
r? It adjudicates disputes between insurers and intermediaries of insurance
intermediaries.
r? It supervises the functioning of the Traffic Advisory Committee.
r? It specifies the percentage of premium income of the insurer to finance schemes
for promoting and regulating professional organizations.
r? It specifies the percentage of life insurance business and general insurance
business to be undertaken by the insurer n the rural or social sector; and
r? It also exercises such other powers as may be prescribed in the Act.


 
 
   
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Listed Life Insurance Companies

Si Foreign Registration Date of Year of

Insurers
No Partners Number Registration Operation

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Besides Life Insurance, all the aboveVmentioned companies provide coverage in Medical
Insurance, Automobile Insurance, Accident Insurance, Home Insurance and many others.
In short, the future of insurance companies in India looks bright.


 
 
   
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Current Scenario
India with above 200 million middle class house hold shows a huge untapped potential
for players in the insurance industry. aturation of markets in many developed economies
has made the Indian market even more lucrative for global insurance majors. Indians,
have always seen life insurance as a tax saving device, are now suddenly turning to the
private sector that are providing them new products and variety for their choice. The
entry of private sector that are providing them new products and variety for their choice.
The entry of private players after liberalization has added colors to the rather dull
sounding industry. The new product innovations, the use of latest technology to improve
the network and distribution and the competitive spirit existing among the private players
has been giving string competition to LIC¶s monopoly. ëith the entry of the private
players, the service quality has improved drastically and a frequent product innovation is
being experienced. LIC¶s market share has been constantly declining and has been
distributed amongst the private players. A look at the facts and figures indicate that since
2002 ± 03 the market share of LIC¶s has declined from a high of 95% to about 66% till
date and is still in the declining phase.


 
 
   
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REGISTERED INSURERS IN INDIA

(As on 30th eptember, 2010)

Type of business Public Private

Sector Sector Total
Life Insurance 1 22 23
General Insurance 6* 18** 24
Reinsurance 1 0 1
Total  40 4

* Includes specialized insurance companies V ECGC and AIC

** Includes three tandalone Health Insurance Companies ±

tar Health & Allied Insurance Co. Apollo Munich Health Insurance Co. and Max
Bupa Health Insurance Co. includes L&T General Insurance Company Ltd.,
which was Granted registration in 2010V11.


 
 
   
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Market Share Of The Insurance Companies


 
 
   
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As of the previous table the following pie diagrams are made:V

REGULAR PREMIUM

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INGLE PREMIUM

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RENEWAL PREMIUM

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Challenges That The Life Insurance Sector Faces

To retain the already existing customers and increase the customer base is the major
challenge that the industry faces. For this, each player has been trying to constantly
improve the products and services offered by them as they are well aware of the fact that
the customer is the king now, and every single mistake done on their part would let them
lose to their competitors, increasing use of latest technology, technology updating have
become inevitable for survival in the sector. Providing the best customer service has
become one of the main objectives, as this is one area where they could gain an edge over
their competitors. The entry of foreign players has further increased the competition for
the domestic players as they bring in international best practices in service through use of
latest technologies.

Reaching Out To The Rural Population:

Rural India seems to have an appetite for mobile phones, computers, and cars and add to
it we have insurance. ëith merely two years of the industry being opened, not
surprisingly, the new corners are making losses.The rural consumers shows an
increasingly propensity for insurances products. A research recently conducted exhibited
that the rural consumers are willing to dole out anything between Rs 2,900 and Rs 3,500
as premium each year. In the insurance the awareness level for life is the highest in rural
India, but the consumers are also aware about motor, accidents and cattle insurance. In a
study conducted by MART the results showed that nearly one third said that they had
purchased some kind of insurance with the maximum penetration skewered in favour of
life insurance. The study also pointed out the private companies have huge task to play in
creating awareness and credibility among the rural population. The Regulatory and
Development Authority (IRDA) has set stiff rural target for insurance companies. As per

 
 
   
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the IRDA, for the life sector, in the first year, 5 percent of the total policies written should
come from the rural sector. This is expected to go up to 15 percent in the next five years.
imilarly, for the nonVlife sector, two percent of the total gross premium income should
come from the rural sector going up to 5 percent in five years, according to the
regulation. These moves surely will make the investment the rural area a big start.

Product Innovation

In the recent period, there has been a surfeit of new and innovative products offered by
the new played. Companies are constantly designing new products with the intention of
covering a major portion of the unexplored market. ëith this, the customer has the
opportunity to unitVlinked investment products. Customers are offered unbundled
products with a variety of benefits as riders from which they can choose. This allows the
customer to buy products and services based on their true needs and not just traditional
money back policies. The customers are now more inclined towards investments instead
of just a life cover which most of the people take just for the sake taxVbenefits only. ëith
a variety of options present in the market, and many savings and investments plans, these
needs are satisfied, but still many unexplored areas are yet to be covered.


 
 
   
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Wide distribution channels

Insurance agents are the main source of networking in the insurance sector.In spite of this
concept being well established and broad distribution. Due to LIC¶s monopoly and its
presence for a long time, it already has a very well established and broad distribution
channel and presence, but for the new player it may be expensive and time consuming to
bring up a distribution network of such standards. Hence, to have a competitive
advantage, they are looking at diverse areas of distribution channel. Knowledge of proper
usage of the insurance channels available in an alert and skillful way becomes essential to
achieve success. Currently, the distribution channels that are available in the market are:

1.? Direct elling

2.? Corporate Agents
3.? Group elling
4.? Broker and CoVoperative ocieties
5.? Banc Assurance


 
 
   
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Technological Innovations:

In such a dataVrich industry as assurance, there is dire need to use the data for trend
analysis and personalization. Instead of focusing on their different products lines insurers
are now looking for ways to offering highly targeted insurance products that are tailored
to the individual customers with the highest propensity to buy them. ëith increased
competition among insurers, service has become a key issue. ëith the awareness levels
increasing among the customers and they increasingly techV savy, they don¶t want to
accept the current value propositions, instead they give more weightage to personalized
interactions and look for additional features, addVons and better service. ëith the target
customers varying from lower class, the set of rules and treatment strategies required for
customer management vary considerably. As the customers prefer personalized
interactions, it becomes essential for the insurers to capture customer information in an
integrated system.ëith the explosion of website and greater access to direct product or
policy information in an integrated system. ëith the explosion of website and greater
access to direct product or policy information, there is a need to developing better
techniques to give customers a truly personalized experience. This would help the
organization to create more impact and generate new revenue through cross selling and
up selling activities. The customer can hereby use the knowledge database to manage
their products or the company information and invoices, claim records, and histories of
the service inquiry. The use of appropriate technology would help the insurance
companies effectively to foster customer loyalty, attract new customers and improve
operational efficiency by providing common information across their lines of business.


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

11: Ãriental Life Insurance Company, the first life insurance company on Indian soil
started functioning.

1©0: Bombay Mutual Life Assurance ociety, the first Indian life insurance company
started its business.

1â12: The Indian Life Assurance Companies Act enacted as the first statute to regulate
the life insurance business.

1â2: The Indian Insurance Companies Act enacted to enable the government to collect
statistical information about both life and nonVlife insurance businesses.

1â3: Earlier legislation consolidated and amended to by the Insurance Act with the
objective of protecting the interests of the insuring public.

1â56: 245 Indian and foreign insurers and provident societies are taken over by the
central government and nationalized. LIC formed by an Act of Parliament, viz. LIC Act,
1956, with a capital contribution of Rs. 5 crore from the Government of India.

The General insurance business in India, on the other hand, can trace its roots to the
Triton Insurance Company Ltd., the first general insurance company established in the
year 1850 in Calcutta by the British.


 
 
   
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Impact Of Budget On Insurance:

A look at the scenario that existed after the 2005V06 budget showed that the budget
dampened the spirit of insurance companies. Hardly any changes were made in the
general insurance sector, the change in the tax structure may have had some impact on
the life insurers, but the removal of the sector 88 relief came as a severe blow.

U? Dire need for FDI hike in insurance sector: The applause of the Finance
Ministry for the tremendous growth in the insurance sector goes in vain, as there
were no steps being taken for increasing the FDI in this sector. tringent action
needs to be taken by the government in this regard it plans to see the insurance
sector reach the zenith of its success. The interests of the Ênion Finance Ministry
to delink the FDI limit from the Insurance Act, when it was amended, on
implementation would empower any future government to increase the FDI limit
through an executive order without taking the issue to the Parliament.
U? Removal of sec -tax relief: the removal of the section 88 tax relief on life
insurance products came as a severe blow on the life insurance companies. It was
anticipated that the removal of tax relief would have an adverse impact on the
flow of investments into life insurance products.
U? Continuation of Sec 10(10)(d): The decision to continue this section was a major
blow too for the insurance players. For the life insurance companies to avail
optimum benefit under this section, a need for change in their strategy was
desired. Till them, the life insurers were selling life insurance products mostly on
taxVbenefit grounds, but the situation demanded the selling of products with an
investment pitch. The investment limit in pension plans was unaltered at Rs
10,000. o these plans were not be eligible to enjoy the luxury of the expanded
limit of Rs1 lakh allowed for investments/expenditures that could be claimed as a
deduction from income. This was likely to have an adverse impact on the overall
growth of the sector. Pension plans were the only investment avenue where
specific limits continued to apply.

 
 
   
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BRIEF HISTORY OF LIFE INSURANCE CORPORATION (LIC)

Bharat Insurance Company (1896) was also one of such companies inspired by
nationalism. The wadeshi movement of 1905V1907 gave rise to more insurance
companies. The Ênited India in Madras, National Indian and National Insurance in
Calcutta and the CoVoperative Assurance at Lahore were established in 1906. In 1907,
Hindustan CoVoperative Insurance Company took its birth in one of the rooms of the
Jorasanko, house of the great poet Rabindranath Tagore, in Calcutta. The Indian
Mercantile, General Assurance and wadeshi Life (later Bombay Life) were some of the
companies established during the same period. Prior to 1912 India had no legislation to
regulate insurance business. In the year 1912, the Life Insurance Companies Act, and the
Provident Fund Act were passed. The Life Insurance Companies Act, 1912 made it
necessary that the premium rate tables and periodical valuations of companies should be
certified by an actuary. But the Act discriminated between foreign and Indian companies
on many accounts, putting the Indian companies at a disadvantage.

The first two decades of the twentieth century saw lot of growth in insurance business.
From 44 companies with total businessVinVforce as Rs.22.44 crore, it rose to 176
companies with total businessVinVforce as Rs.298 crore in 1938. During the mushrooming
of insurance companies many financially unsound concerns were also floated which
failed miserably. The Insurance Act 1938 was the first legislation governing not only life
insurance but also nonVlife insurance to provide strict state control over insurance
business. The demand for nationalization of life insurance industry was made repeatedly
in the past but it gathered momentum in 1944 when a bill to amend the Life Insurance
Act 1938 was introduced in the Legislative Assembly. However, it was much later on the
19th of January, 1956, that life insurance in India was nationalized. About 154 Indian
insurance companies, 16 nonVIndian companies and 75 provident were operating in India
at the time of nationalization. Nationalization was accomplished in two stages; initially
the management of the companies was taken over by means of an Ãrdinance, and later,


 
 
   
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the ownership too by means of a comprehensive bill. The Parliament of India passed the
Life Insurance Corporation Act on the 19th of June 1956, and the Life Insurance
Corporation of India was created on 1st eptember, 1956, with the objective of spreading
life insurance much more widely and in particular to the rural areas with a view to reach
all insurable persons in the country, providing them adequate financial cover at a
reasonable cost.

LIC had 5 zonal offices, 33 divisional offices and 212 branch offices, apart from its
corporate office in the year 1956. ince life insurance contracts are long term contracts
and during the currency of the policy it requires a variety of services need was felt in the
later years to expand the operations and place a branch office at each district headquarter.
reVorganization of LIC took place and large numbers of new branch offices were opened.
As a result of reVorganization servicing functions were transferred to the branches, and
branches were made accounting units. It worked wonders with the performance of the
corporation. It may be seen that from about 200.00 crores of New Business in 1957 the
corporation crossed 1000.00 crores only in the year 1969V70, and it took another 10 years
for LIC to cross 2000.00 crore mark of new business. But with reVorganization happening
in the early eighties, by 1985V86 LIC had already crossed 7000.00 crore um Assured on
new policies.

Today LIC functions with 2048 fully computerized branch offices, 100 divisional offices,
7 zonal offices and the corporate office. LIC¶s ëide Area Network covers 100 divisional
offices and connects all the branches through a Metro Area Network. LIC has tied up
with some Banks and ervice providers to offer onVline premium collection facility in
selected cities. LIC¶s EC and ATM premium payment facility is an addition to customer
convenience. Apart from onVline Kiosks and IVR, Info Centers have been
commissioned at Mumbai, Ahmedabad, Bangalore, Chennai, Hyderabad, Kolkata, New
Delhi, Pune and many other cities. ëith a vision of providing easy access to its
policyholders, LIC has launched its ATELLITE AMPARK offices. The satellite


 
 
   
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offices are smaller, leaner and closer to the customer. The digitalized records of the
satellite offices will facilitate anywhere servicing and many other conveniences in the
future.

LIC continues to be the dominant life insurer even in the liberalized scenario of Indian
insurance and is moving fast on a new growth trajectory surpassing its own past records.
LIC has issued over one crore policies during the current year. It has crossed the
milestone of issuing 1,01,32,955 new policies by 15th Ãct, 2005, posting a healthy
growth rate of 16.67% over the corresponding period of the previous year.

From then to now, LIC has crossed many milestones and has set unprecedented
performance records in various aspects of life insurance business. The same motives
which inspired our forefathers to bring insurance into existence in this country inspire us
at LIC to take this message of protection to light the lamps of security in as many homes
as possible and to help the people in providing security to their families.


 
 
   
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OBJECTIVES OF LIC

r? pread Life Insurance widely and in particular to the rural areas and to the socially and
economically backward classes with a view to reaching all insurable persons in the
country and providing them adequate financial cover against death at a reasonable cost.

r? Maximize mobilization of people's savings by making insuranceVlinked savings

adequately attractive.

r? Bear in mind, in the investment of funds, the primary obligation to its policyholders,
whose money it holds in trust, without losing sight of the interest of the community as a
whole; the funds to be deployed to the best advantage of the investors as well as the
community as a whole, keeping in view national priorities and obligations of attractive
return.

r? Conduct business with utmost economy and with the full realization that the moneys
belong to the policyholders.

r? Act as trustees of the insured public in their individual and collective capacities.

r? Meet the various life insurance needs of the community that would arise in the changing
social and economic environment.

r? Involve all people working in the Corporation to the best of their capability in furthering
the interests of the insured public by providing efficient service with courtesy.

r? Promote amongst all agents and employees of the Corporation a sense of participation,
pride and job satisfaction through discharge of their duties with dedication towards
achievement of Corporate Ãbjective.


 
 
   
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Mission
"Explore and enhance the quality of life of people through financial security by
providing products and services of aspired attributes with competitive returns, and
by rendering resources for economic development."

Vision
"A trans-nationally competitive financial conglomerate of significance to societies
and Pride of India."

Members On The Board Of The Corporation

Shri. T.S. Vijayan (Chairman)

Shri. D.K. Mehrotra (Managing Director V LIC)

Shri. Thomas Mathew T. (Managing Director V LIC)

Shri. A.K. Dasgupta (Managing Director V LIC)

Shri. Ashok Chawla (Finance ecretary, Ministry of Finance, Govt. of India)

Shri. R. Gopalan (ecretary, Department of Financial ervices, Ministry of Finance,

Govt. of India.)

Shri. Yogesh Lohiya (Chairman cum Managing Director, GIC of India)

Shri S.Sridhar, Chairmain & Managing Director , Central Bank of India

Dr. Sooranad Rajashekhran

Shri. Monis R. Kidwai

Lt. General Arvind Mahajan ( Retd.)

Shri Anup Prakash Garg

Shri Sanjay Jain


 
 
   
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LIC OPERATES ALL OVER INDIA


 
 
   
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Ã
Ã
 Ã 




Managing Director

Executives Directors

Chiefs

Zonal Managers

Regional Managers

Divisional Managers

100 Seniors Divisional Managers

Marketing Managers

Sales Managers

Senior Branch Managers (Head of the Branch)

Assistant Branch Managers Sells

Development Officers

Different Agent


 
 
   
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The Recruitment Process:

Besides winning laurels for the customer care, Life Insurance Corporation of India is also
a preferred organization to work with. Numerous Indians have joined in as LIC Agents
and created a profession out of selling of Insurance policies and investment plans. The
recruitment process with LIC offices follows a notification of the available vacancy
through various media advertisements to invite applications. National Level LIC
Examination are held and the candidates are selected on basis of the Exam Results.

There are various jobs that are open to competent individuals who want to make a
career in LIC. ome type of jobs available is as an agent, a financial service executive, a
direct sales executive and many more. As the topic of this project is Insurance elling I
have focused on the recruitment procedure of agents, since they are the main force of the
organization and are directly linked to the selling of insurance policies. Let¶s learn about
the recruitment as well as the training procedure of these agents as the quality of service
is dependent on their performance.


 
 
   
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Types of Agents Recruited:

Before nationalization, there were µAgents¶, µSpecial Agents¶, µChief Agents¶ and so on. The
chief agents seemed to be employing people who were later absorbed as employees of LIC of
India. These agents continued to serve the LIC. Collection of premium, remitting it to the LIC
and issuing the G

 receipt to the policy holders was considered as the main role of these
agents. They were more of an intermediary tool in premium collection rather than marketing
avenues.

After nationalization, the LIC was appointing the following types of agents:

r? generally appointed agents(usually known as just ³Agents´ ± nonVstipendary)

r? Rural Career Agents(called as RCA¶s ± stipendary for the first 3 yrs)
r? Êrban Career Agents (called as ÊCA¶s ±stipendary for th first 3 yrs).
In this paper, the authors consider all agents as retailers, since only occasionally they sell
Group Insurance policies.

Ênder the IRDA Regulations 2000, there are only two types of agents recruited, who
can typically be grouped as retailers and wholesalers
r? Agents of general category(usually known as just µagents¶)
r? Bancassurance or corporate agents
Here again, the agents who sell individual policies may also sell Group Insurance
policies, wherein their role is that of an wholesaler.

The LIC¶s penetration in the rural market was possible through distinct
agents to cover different groups of customers like rural, semiVurban, urban etc. But after
privatization of the insurance sector, the LIC of India is forced to standardize all its
agents recruitment. Therefore even the recruitment of ÊCA¶s (Êrban Career Agents) for
its Career Agents Branches has been stopped since 2005.


 
 
   
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Eligibility Conditions For Agents Recruitment:

³~

G



 
 








 


  

  
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G



 says ri.Thiyagarajan, who was an employee of the erstwhile Prithvi
Insurance Company and later also served LIC of India after nationalization.

From 1972, there were specific eligibility norms laid out. As per the LIC of India
(Agents) Rules 1972, the eligibility conditions vary according to the type of agents.

THE AGENT:
1.? hould have completed 18 yrs of age and no limit on the maximum age.
2.? hould have passed X TD, if they reside in a town with over 1 lakh population
or should have passed VIII TD, if from a town with less than 1 lakh population.
However, the Divisional Manager of LIC was empowered with the discretion to
waive the educational qualification if he was convinced that the candidate has a flair
for marketing.

r? THE RCA¶s (RÊRAL CAREER AGENT):

1.? hould have completed 21 yrs of age and not more than 35 yrs of age.
2.? hould have passed X TD.
3.? hould hail form a rural area.

r? THE ÊCA¶s (ÊRBAN CAREER AGENT):

1.? hould have completed 22 yrs of age and not more than 35 yrs of age.
2.? He/she should be a graduate, if hailing from a city with more than 5 lac
population.
3.? hould have passed XII TD, if they reside in a city with less than 5 lakh
population.


 
 
   
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After privatization, the eligibility norms laid down by IRDA are as follows:
1.? The minimum age should be 18 yrs and no limit on maximum age.

2. The education qualification is XII TD in urban areas and X TD if hailing from
rural areas with population less than 5000, where more than 75% are engaged in
agriculture.

ëith a view to standardize the agents, the qualifying conditions for recruitment were also
standardized. As a consequence, LIC could not be flexible in relaxing the eligibility
conditions of agents recruited. The lack of discretion enjoyed so far, indeed cause a
stifling condition for LIC of India. It was earlier able to market its product effectively by
recruiting people with popularity and influence from a village background as its agents
(retailer) even if he did not fulfill the minimum educational qualification.

The Recruitment Process in LIC:

But According to ri.Thiyagarajan, retd. employee of LIC , the Development
Ãfficers who were then known as field officers, were identifying agents and the Branch
Manager was appointing agents by issuing license for 1 year, the fee for license varied
from Rs.15 to Rs.25 for different type of agentsV whether Agents, pecial Agents or
Chief Agents. The LIC Agents Rules (1972) was more specific about the recruitment
process. Ãther than ÊCA¶s all the agents are almost always identified by the
Development Ãfficers of LIC. The prospective candidate is convinced into taking up
agency. Then the candidate is interviewed by the Branch Manager and usually is accepted
without much hassle. The candidate then pays Rs.15/V to obtain license to act as an agent.
The license is immediately issued and the agent can procure business from the very first
day. These agents undergo training and test after the appointment.


 
 
   
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The Êrban Career Agents, on the other hand are usually recruited in
batches by the LIC management through newspaper advertisements. The 3 ±tier system
of ManagerVDevelopment ÃfficerVAgent, prevalent in other agency recruitment is not
found in ÊCA recruitment. The Branch Manager is directly responsible for recruiting and
training agents.
As per the IRDA Regulations 2000, except Banc assurance and other Corporate
agents, all agents are identified by the Development Ãfficers. The candidate then
undergoes a training for 100 hours1, of which 10 hrs consists of handsVon training in
branch office functions and 5 hrs of field training imparted by the appointing
Development Ãfficer. This training is conducted by the Agents¶ Training Centre (ATC)
and Divisional Training Centre (DTC) of LIC. The candidate then has to pay as
examination fee, Rs.525/V to the Insurance Institute of India and Rs.150/V to LIC of India
as processing fee and appears for the preVrecruitment test conducted by the Insurance
Institute of India. Ãnce the candidate clears the preVrecruitment test, by scoring a
minimum of 50% marks, the candidate has to appear for an interview conducted by the
Marketing Manager of LIC. The candidate should score a minimum of 60% in the
interview to become eligible to receive the license. The license to act as an insurance
agent is issued by the IRDA on payment of Rs.250/.

The erstwhile simplicity of agent¶s recruitment procedure is now replaced by a

methodical but time consuming and elaborate procedure laid down by the IRDA. Now it
takes around 2 months for an applicant to get his license and start procuring business. It is
also noted, that the expense involved in obtaining Agent¶s license has increased manifold.

?????????????????????????????????????????????????????????????
1
The 100 hrs training has now been reduced to 50 hrs from Nov 2007 onwards.


 
 
   
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Training Process:

During the preVprivatization period, the training and test followed appointment of
the agent. The training was usually informal with the Development Ãfficer being around
the agent to educate about the products and train them in marketing skills. This training
extends over a long period of time like the guruVshikshya method of teaching. The
Development Ãfficer would accompany the agent whenever he meets a prospective client
, to sell policies. The agent would by observation, gradually learn to approach the
customer, canvass for business, get various requirements for policy completion and postV
sales service like loan processing, revival of lapsed policies, or maturity or death claim
servicing. The calculation of premium payable for a specified sum insured and age under
a specified policy formed a very important and major aspect of training.

The ÊCA¶s were given fullV time training on various aspects of insurance
products, premium calculation and Branch Ãffice functional procedures for 45 days, by
the Branch Manager. An exam was also conducted at the end of the training to assess the
candidate¶s familiarity with insurance concepts.

The post privatization era is witnessing a significant transformation in the training

process. The preVrecruitment training familiarizes the candidate with Insurance
terminology, Insurance concepts and Insurance products.

The handsVon training conducted by the Branch Manager trains in the working of
the Branch Ãffice especially in scrutiny of proposals, underwriting lives, policy servicing
and frontVend operations.


 
 
   
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The fieldVtraining is imparted by the Development Ãfficer, covering sales

behavior, demonstrative sales calls, learning how to solve customer servicing problems,
surveys about customer needs and requirements etc. This is very much the practical onV
theVjob training. Also all the agents appointed after 19.07.2000 are required to attend 25
hours of training, at the time of license renewal, on completion of every 3 yrs, to update
themselves about the products and market trends. Further, during the course of the
agency, the agents are trained by LIC on various occasions by engaging private
trainers/motivators.


 
 
   
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The Consumer Perception Towards Insurance:

It is the other side of the coin that if a policy has to be sold it is equally the psyche of the
consumer to buy it or not to buy it. Hence learning the mind of the buyer is very
important. Besides the training of the agent also the thinking has to be known thoroughly.

1)? Retention of the Customers is the essence of Insurance business, Imtiyaz.H

Ltd.VASI DO, Insurance Times (Pg 20).Feb 200©-:

Retaining a customer is four times cheaper than acquiring a new one. The retention of
the customers is of utmost importance in the insurance industry in specification.
Insurance business is of the relationship building process. were one customer leads to
the building of other one. A satisfied customer is like a word of mouth advertisement
for the company. The needs of the existing customers should be identified and
satisfied well rather than only concentrating at the new accounts. All possible
measures needs to taken to retain the customers as it is lesser costlier as well as
provides stability to the business.


 
 
   
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2) Sampada kapse & D.G kodwani, Insurance as an investment option, The

Insurance Time, May2003
At national as at individual level the excess of income after consumption level
savings as funds for investment. urplus funds can be invested in either real asset or
in financial assets. Purpose of investment is to protect one¶s wealth against erosion of
value due to inflation and to earn risk adjusted return. There are three motives which
drive people to purchase insurance products in India.
_ Desire to cover risk
_ Tax benefit
_ aving motives
It is argued that in this paper that in the changing scenario for the insurance sector
there is going to be a good opportunities for insurance sector to expand its market
base. For this purpose there is need to improve the features of the insurance products
to make them more liquid or short term schemes could be increased. It is shown that
although rewards implied by the insurance products particularly by the tax benefits
are quite close to those observed in banks and small saving scheme of the
governments. The performance of mutual funds which come in many different types
is found to be reasonable compared to the risk involved. The survey indicates that it
may not be very difficult to win over the confidence of small investors towards
insurance policies if good marketing techniques are adopted to educate the targeted
population about the uses of insurance policies from investment point of view.


 
 
   
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Data Analysis And Interpretation of Data:

The demographic profile of the respondents is analyzed on the basis of age, gender,
occupation, Educational qualification and annual income. The age distribution of sample
respondents is shown in the table below:
AGE DISTRIBUTION:-

AGE GROUP BELOW 20-40 40-60 ABOVE TOTAL

20 60
NO OF 5 50 39 6 100
RESPONDENTS
PERCENTAGES 5 50 39 6 100

AGE DI~RIBU~I N



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Interpretation
It is clear from the Table; a vast majority of respondents (85%) fall in the age band of 20V
60 years. Ãut of 100 respondents around 50% are between 20V40 years and 38% are
between 40V60 years of age.


 
 
   
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Gender of respondents

GENDER NUMBER OF PERCENTAGE

RESPONDENTS
MALE 69 69
FEMALE 31 31
TOTAL 100 100

NUMBER
REP NDEN~








Interpretation
Ãut of the 100 samples drawn 69 (69%) are male and it depicts the domination men in
the life insurance sector. Ãnly 31 (31%) of them are females.


 
 
   
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Occupation Distribution:

OCCUPATION NUMBER OF PERCENTAGES

RESPONDENTS
PROFESSIONAL 16 16
EMPLOYEE 63 63
BUSINESS 21 21
TOTAL 100 100

UPA~I N
REP NDEN~




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INTERPRETATION
Ãccupation wise, around 60% of respondents are employees and the rest are equally
represented by professional and businessmen.


 
 
   
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EDUCATIONAL QUALIFICATIONS OF RESPONDENTS

EDUCATIONAL NUMBER OF PERCENTAGES

QUALIFICATIONS RESPONDENTS
UPTO HIGH SCHOOL 16 16
INTERMEDIATE 23 23
DEGREE AND 47 47
ABOVE
TECHNICAL 14 14
TOTAL 100 100

EDUA~I NAL QUALI
IA~I N







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INTERPRETATION:-
It is also revealed from the previous Table, that more than 60% of the respondents are
graduates or technically qualified. Remaining 23% are intermediate and only 16% are
high school passed.


 
 
   
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ANNUAL INCOME OF RESPONDENTS

ANNUAL NUMBER OF
INCOME RESPONDENTS
BELOW 60000 20
60000-120000 40
120000-10000 17
10000-240000 12
ABOVE 240000 11
TOTAL 100

NUMBER
REP NDEN~









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INTERPRETATION:-
Around 60% of the respondents have an annual income below 1, 20,000 and only 17%
have income in the range of 1,20,000V1,80,000. Also 11% have income above
Rs 2, 40,000.

 
 
   
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TYPE OF POLICY

TYPE OF POLICY NO OF RESPONDENTS

WHOLE LIFE 5
ENDOWMENT 14
MONEYBACK 18
PENSION FUND 8
ULIP 52
OTHERS 3
TOTAL 100

N
REP NDEN~









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INTERPRETATION:-

Ãut of the total population more than 50% of the respondents have unit linked insurance
plans (ÊLIP) and only 18% have money back policies and endowment plans are with
only14% of customers.


 
 
   
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Periodicity of the Policy:-

PERIODICITY OF THE NUMBER OF
POLICY REPONDENTS
5 YEARS 8
5-15 YEARS 42
15-25 YEARS 38
ABOVE 25 YEARS 12
TOTAL 100

NUMBER
REP NDEN~






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INTERPRETATION:-

The table spells that around 80% of the respondents have policies with a maturity period
of 5 to 25 years and only 12% have policies with a maturity period of more than 25 years.


 
 
   
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AWARENESS LEVELS OF RESPONDENTS:-

As a contractual relationship exists between the insurer and the insured, it is the duty of
the insurance company to disclose of the policy details. The policy holders are not
excused with any ignorance to the contract and it is the policyholders to get acquainted
with the rules and regulations of the policy. o the study about awareness level of
customers assumes paramount significance.

COMPANY YES NO
NAME
LIC 72 28

LI


 

INTERPRETATION:-
From the graph it shows that 72% of the people are well aware of the policies explained
by the insurance agents, and are also well aware of their policies terms and conditions.
Hence it is gratifying to note that LIC is more transparent and divulge concrete details
about policy and empower its policy holders in a much better way.


 
 
   
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SATISFACTION LEVEL ABOUT SERVICE QUALITY:

Like any other service sector, the insurance sector is also evaluated by its ability to
provide quality services to its customers. In the modern market, the products are designed
exclusively for the customers and the quality is the leading criterion for the selection of
particular product. Hence, the insurance providers should realize the changes in the
market and adopt new weapons in the form of high quality services.

LEVEL LI

ULLY A~IYIED ?
PAR~IALLY A~I
IED ?
N ~ A~I
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~ ~AL ?

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INTERPRETATION:
From the above tables it shows that 57% customers are fully satisfied with LIC¶s service
quality and 28% in LIC are only partially satisfied and remaining are not satisfied.
It is evident that customers, in general, are satisfied with the quality of services provided
by LIC and there is significant difference in the service quality across both sectors.


 
 
   
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Problems faced by the Customers :

The problems faced by policyholders are many and varied. It is the duty of any insurance
company to make an amicable settlement of these problems. ome important problems
faced by policyholders analyzed are complex formalities for opening a policy, levy
hidden charges, excessive penalties for nonpayment of premium, undue delay in
settlement of claims, lack of timely communication, lack of cooperation by
officials/agents, inefficient grievance redressal mechanism, misleading information by
the agents and lack of technical knowledge or training. A few of them have been taken
into account here.

V? ACCEIBILITY ÃF THE AGENT.

YE N

LI  ?
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INTERPRETATION:

LIC shows that an alarming 32% of the people are not satisfied with their accessibility to
the organizations employees or the agents.


 
 
   
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V? CÃMPLEX FÃRMALITIE

YE N

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INTERPRETATION:

In LIC 61% customers feel that the formalities for opening a policy are too complex and
the documentation is time taking.


 
 
   
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Grievance Redressal Mechanism

LEVEL N 

ULLY A~I
IED  ?
PAR~IALLY A~I
IED ?
N ~ A~I
IED
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Grievance Redressal
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INTERPRETATION:

From the above figure it is clear that 42% and 26% customers are fully satisfied with the
grievance redress mechanism of LIC. But also an alarmingly high 30% of customers of
LIC are not satisfied with their process.


 
 
   
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V? CLAIM ETTLEMENT PRÃCE DELAY

LAIM E~~LEMEN~ YE N

PR E

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LAIM E~~LEMEN~




INTERPRETATION

It is a matter of concern for LIC that around 83% say that it makes undue delay in claim
settlement


 
 
   
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V? Information by the agent

IN
RMA~I N BY ~E YE N

AGEN~

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IN
RMA~I N BY ~E AGEN~

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INTERPRETATION:

According to the figure we can infer that where 69% customers are provided with correct
information.


 
 
   
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TIME TAKEN TO SOLVE A PROBLEM?

~IME ~AKEN ~  LVE ~E

PR BLEM
WI~IN  UR ?
WI~IN DAY ?
WI~IN M N~ ?
WI~IN YEAR ?

~IME ~AKEN ~  LVE A PR BLEM

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INTERPRETATION:

This shows that 85% of the people have got their problem solved within days and some
have got their problems solved within a month which is bad. The preferred time
according to the consumers is within days.


 
 
   
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What are the factors for choosing an agent to take out a policy?
Criteria I- Reach

REA
NEARBY ?

AR

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REA
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INTERPRETATION:
By this projection it is seen that many people prefer to have an agent who is far off. The
reason for this was because many people did not want any one nearby to know about their
financial status.


 
 
   
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Criteria II- Service:

ERVIE
REGULAR 
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M N~LY
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ERVIE
   



INTERPRETATION:
By this chart it can be seen that a consumer prefers his servicing on a regular basis and
not just monthly or on a bluemoon.


 
 
   
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Criteria III-Promptness:

PR MP~NE
 ME IMMEDIA~ELY  ?
 ME WEN ALLED ?

PR MP~NE
 
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INTERPRETATION:
Consumers prefer their agents to come immediately when he/ she is called and not just
appears at their doorsteps later.


 
 
   
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Criteria IV-Trustworthiness

~RU~W R~INE
~RU~W R~Y ?
N ~ ~RU~W R~Y ?


 
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INTERPRETATION:
Here the diagram shows that not a single person would prefer to have been serviced by an
agent whom they feel is not trustworthy.


 
 
   
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On what basis do you choose your policy?

P LIY  IE
RE~URN  ?
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E  VER
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~AX AVING ?

REA N ~  E A P LIY

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INTERPRETATION:

The majority of people surveyed show that they look forward towards the returns they get
from the investment. Their next priority is the life cover followed by tax savings.


 
 
   
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METHODOLOGY

Research can be defined as a scientific and systematic search for pertinent

information on a specific topic.
The objectives of the study was to understand the customer nature of buying policies, the
basis on which they decide which policy to invest in, and also how do they decide which
agent to approach.
PRIMARY RESEARCH

The sole purpose of conducting primary research is that it is important to find out the
perception of the people towards the agents, as well as what they expect in the service
after investment.

METHOD OF DATA COLLECTION

The two main methods by which primary data can be collected are observations
and communication.

In my research I have collected primary data by means of communication i.e. I

designed a questionnaire with a view to collect the requisite information.

Although questionnaires are classified into 4 types such as structuredVindirect, structuredV

direct, unstructuredVindirect, unstructuredVdirect, the type we have followed is structured
±direct questionnaire as the people whom I would approach would not reveal their true
salary and other confidential information.

The secondary data was collected from:

1) Books
2) Magazines
3) Internet
4) Articles


 
 
   
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STRUCTURED DIRECT QUESTIONNAIRE METHOD:

Here, I have formed a formal list of questions which are related to the survey. tructured
questionnaire is asked directly and gives precise information about the attitude and
preferences of the people towards choosing an agent as well as the policy.

SOME OF THE ADVANTAGES OF CHOOSING STRUCTURED

QUESTIONNAIRE ARE AS FOLLOWS

r? It facilitates the collection of information in a systematic and orderly manner as the

questions have been formulated in advance.
r? ince the questions asked by us happen to be identical and were asked I the same
order, the information is generally not vitiated on account of the varying
characteristics of we interviewers.
r? uch questionnaire makes it far easier to edit, tabulate and interpret the data it
contains.

SAMPLING

In the questionnaire the samples were made and the answers to the questions directly
helped to make a direct conclusion once the data was tabulated and then expressed in pie
charts.

MEASUREMENT TECHNIQUES EMPLOYED

Checkboxes:
This standard tool was used by us to encircle the appropriate option the respondent
agreed with. ³Yes´ and ³No´ type of questions were also used.


 
 
   
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Findings and Recommendations:

Every study is completed only if it has certain outcomes in the form of findings and
certain recommendations for the correction of faulty areas that have been found during
the course of the study.

Findings from the data:

Following is the consumer behavior that can be understood by this study:

1)? It is clear that the majority i.e. more than half of investor¶s investing in insurance are
the young people in the age group of 20V40.

2)? It can be said that males dominate in having life insurance policies.

3)? Majority of people having life insurance are employed.

4)? The most preferred plan among the investor¶s is unit linked plans because of its high
returns.

5)? It is very much clear that the awareness level of the customers of LIC is much higher
than that of the private sector.

6)? A greater number of customers of LIC are either fully or partially satisfied.

7)? Employees or agents of LIC are not easily accessible when compared to private sector
and customers have to try several times in order to meet LIC employees etc.

8)? Most of the respondents of LIC feel that formalities for opening a policy are too
complex and take longer time.

 
 
   
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9)? Two fifth of the customers of LIC are fully satisfied with its grievance redress
mechanism.

10)? It is a threat for LIC that more than four fifth of the customers of LIC feel that it
unduly delays in claim settlement.

11)?It is evident that individual risk coverage is the most preferred criteria among the
investors.

12)?The study also shows that people prefer agents who do not reside near to their houses
as they would not like others to knows about their financial status.

13)?Consumers also prefer that the service offered by the agent should be on a regular
basis and not just on a monthly basis.

14)?The consumers also feel that if once the agent is called then he should come as soon
as possible and not turn up late at their dooesteps.

15)?The main factor shows that an agent is only chosen if the consumer perceives him/
her to be trustworthy.

16)?Majority of the people who take a policy look at the returns that they would be
receiving and not just life cover.

17)? The expected time for a consumer to solve a problem is within days anything beyond
that is considered to be a faulty service.


 
 
   
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Recommendations:

To increase the level of insurance penetration LIC may focus on bringing products that suit
to the rural customers.

The Company if possible should invest in advertising, conduct road shows, and spend
money on hoardings, so that it can better propagate awareness about its various lesser
known products.

LIC should also tie up with several other banks apart from the existing ones to sell its
products i.e. through banc assurance.

The Company has the option of tying up with local NGös for selling its rural insurance
products.

Customer friendly documentation i.e. it should be made easier and faster.

LIC should keep a check that its agents equally promote all its products.

LIC may provide additional funds to its development officers and agents.

All the hidden charges should clearly be stated in the form and explained by the agent and
LIC should provide better training to its agents.

Claim settlement process should be made fast and must not involve lengthy decision making
process.


 
 
   
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Learning
This project has given me a good opportunity to learn a lot about the insurance sector in
general and LIC in particular and especially about the basic technicalities involved right
from selling to servicing and lastly the claim settlement process. I also had a chance to
see how closing takes place in insurance companies. ëhile dealing with retail customers
I had a really enriching experience. I learnt how to judge a customer and offer him/her a
product which would interest him.

Conclusion:
The entry of private sector insurance companies into the Indian insurance sector triggered
off a series of changes in the industry. Even with the stiff competition in the market
place, it is evident from the study that the public sector giant LIC dominates the Indian
insurance industry. In today¶s competitive world, customer satisfaction has become an
important aspect to retain the customers, not only to grow but also to serve. Increased
competition, wide range of product offerings and multiple distribution channels cause
companies to value satisfied and highly profitable customers. Customer service is the
critical success factor in a company and providing top notch customer service
differentiates great customer service from indifferent customer service. Consumers prefer
to take LIC products because they feel that LIC is much more secure than any other
insurance company in India. Besides this they also feel that having themselves insured
they have a guarantee that they or their nominee would be paid for the sum they were
insured.


 
 
   
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BIBLIOGRAPHY

For industry study and analysis:

www.investmentcommissiion.in
www.irdaindia.org
www.acfdcindia.com
www.licofindia.com

For research work:

www.licofindia.com
www.scribd.com
www.indiahousing.com
www.mindbranch.com
www.yahoosearch.com
www.firstapex.com


 
 
   
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Questionnaire Designed To Carry Out The Consumer Perception Towards

Insurance.

Name: __________________________________________________
Gender:
a)? Male b) Female
Age Group:
a)? Below 20 b) 40-60
b)? 20-40 d) Above 60

Occupation: a) Professional c) Employee

c)? Business

Educational
Qualification: a) Upto high school c) Degree and above
b)? Intermediate d) Technical

Annual income: a) Below 60000 b) 60000-120000

c) 120000-10000 d) 10000-240000
e) Above 240000

Type of policy a) Whole life b)Endowment c)Money back

taken: d)Pension e)ULIP f)Others

Aware of the
products taken: a)Yes b)No


 
 
   
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Satisfied with
the service: a)Fully b) Partially c)Not

Have you been

faced by a problem: a) Yes b) No

If so has it
been solved: a)Yes b)No

If yes then
how quick?: a)Within hours c) Within days
b) Within months d) Within years

Has your previous maturity been settled in time?

a) Yes b) No

Has the data provided by the agent been accurate?

a) Yes b) No


 
 
   
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What are the factors for choosing an agent to take out a policy?
Criteria I- Reach
a)? Nearby b) far off

Criteria II- Service

a)? Regular b) monthly

Criteria III-Promptness
a)? Comes immediately b) comes when called

Criteria IV-Trustworthiness
a)? Trustworthy b) not trustworthy

Choosing a Policy: a) Returns b) tax saving c) life cover

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