ATTITUDE OF

CONSUMERS
TOWARDS INSURANCE
PRODUCTS…
MARKETING RESEARCH

PROJECT REPORT

LUCKNOW
2
 PROECT REPORT

ASSIGNED BY:
Prof.YASH SHRIDHAR

SUBMITTED BY:
PINKI RANA
SHAILENDRA PRAKASH
VIJAY AGGARWAL
MANISH MISHRA

ACKNOWLEDGEMENT

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 We feel heartfelt and sincere thanks to our faculty
Prof.Yash Shridhar who provided us the opportunity to
carry out our market research project in the insurance
sector.

Also we feel very great that our faculty gave us the

opportunity to work in group where we got so much
knowledge about group performance or project.

Also we would like to thank each other who worked on this

project in group.

Last but not the least I would like to thank all the
respondents who offered their opinions and suggestions and
sometimes critical views throughout the survey which made
me constantly update myself come out with a successful
project.

ABSTRACT

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The project aims to make a detailed study of Unit Linked Insurance Plans

(ULIPs) in the Indian context, a comparative analysis of ULIPs of some well

known selected companies and in the process identify the strengths and

weaknesses of IDBI FORTIS. The different selected companies apart from

IDBI FORTIS on which the project is entirely focused are namely:

a. ICICI PRUDENTIAL

b. BAJAJ ALLIANZ

C. LIFE INSURANCE CORPORATION OF INDIA

The comparative study is primarily based in terms of the various benefits

offered viz. Death Benefits, Health benefits, Maturity Benefits, financial

benefits & other benefits. The various parameters taken into consideration

were flexibility, transparency, liquidity and the number of funds options

available. The project consists of a detailed analysis of the comparison of

various ULIPS offered by the major players in the market. The results of the

project have been an outcome of a detailed analysis of primary data collected

through a survey in the Lucknow city. The project was done on the basis of a

primary survey. The survey was mainly conducted to study the consumer

perception, opinion and awareness of various insurance products. The number

of respondents targeted was 50.The sample of respondents included was

carefully selected targeting respondents from all age groups.

Table of contents

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s.no. Topics Pg. no.
1. Introduction.

2. Insurance in India.

3. Insurance companies in India.

4. Research methodology

5. RESEARCH DESIGN

6. SOURCES OF DATA

7. DATA ANALYSIS

8. INTERPRETATION

9. FINDINGS

10. CONCLUSION

11. ANNEXURE: QUESTIONNAIRE

INTRODUCTION

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 In the commercial arena, the choice of an effective
strategy is perhaps the most important and the toughest decision to take.
The decision to select among the grand strategies and deciding upon which
strategy will best meet the enterprise’s objectives is rendered complex by
multiple considerations. The same is also true with the insurance companies
in India who are constantly revamping their strategies and coming out with
innovative options to stay in the competition. There were days when Life
Insurance Corporation of India (LIC) was the only insurance company
available to people in India and where people synonymized Insurance to LIC.
Also since it was a Public Sector Undertaking (PSU) it has a great support
from people.

But now times have changed a lot of private players

have entered into the fray. There have been a lot of Indian companies
collaborating with foreign insurance giants like ICICI Prudential, Bajaj Allianz
etc who have already made their presence felt in the Indian Insurance
industry. Even though LIC is still the market leader with more than over 60%
of the market share, the private players are giving it a tough time. Since the
last decade the market share of LIC had fallen down by about more than
20%. The new private players have started offering a variety of unlimited
schemes right from insurance plans for a 30 day old baby to that of a 70 year
old senior citizen. Also the private companies have started creating the
importance and need of insurance in today’s life. They have started
positioning their brands and are marketing their products in such a way the
people have started feeling the need of security in their lives.

Taking into account the huge population and growing

per capita income besides several other driving factors, a huge opportunity
is in store for the insurance companies in India. According to the latest
research findings, nearly 80% of Indian population are without life insurance
cover while health insurance and non-life insurance continues to be below
international standards. And this part of the population is also subjected to

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weak social security and pension systems with hardly any old age income
security. As per our findings, insurance in India is primarily used as a means
to improve personal finances and for income tax planning; Indians have a
tendency to invest in properties and gold followed by bank deposits. They
selectively invest in shares also but the percentage is very small (4-5%). This
in itself is an indicator that growth potential for the insurance sector is
immense. It's a business growing at the rate of 15-20% per annum and
presently is of the order of around more than $55 billion. India is a vast
market for life insurance that is directly proportional to the growth in
premiums and an increase in life density. With the entry of private sector
players backed by foreign expertise, Indian insurance market has become
more vibrant.

A ULIP is a life insurance policy which provides a

combination of risk cover and investment. ULIPs have gained high
acceptance due to attractive features they offer like flexibility, transparency,
liquidity and a vast variety of fund option. Unit linked plans are suitable for
all customer profiles; however as a general belief the risk averse investors
tend to choose traditional plans and an informed customer prefers a ULIP.
ULIPs offer the kind of flexibility that no insurance product can. ULIPs
essentially combine the benefits of an insurance policy and a market-linked
investment. Investors can select a ULIP with an equity-debt combination that
is in line with their risk profile. A risk-taking investor would typically select
one with a high equity component, while a risk-averse investor would opt for
a debt-heavy one. Simply put, ULIPs are structured in such a way that the
protection element and the savings element are distinguishable, and hence
managed according to your specific needs. In this way, the ULIP plan offers
unprecedented flexibility and transparency. So with many players around for
a company to really be successful it has to really be very efficient on all
fronts. It has to constantly adapt to the changing consumer preferences with

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a lot of new innovations and implementing new technology try to different
from the lot. Especially if it is a new player in the market the company has to
really work very hard to get into the completion and stay afloat.

INSURANCE IN INDIA

Insurance may be described as a social device to reduce or eliminate risk of

loss to life and property. Under the plan of insurance, a large number of
people associate themselves by sharing risks attached to individuals. The
risks which can be insured against include fire, the perils of sea, death and
accidents and burglary. Any risk contingent upon these, may be insured
against at a premium commensurate with the risk involved. Thus collective
bearing of risk is insurance.

CHARACTERISTICS OF INSURANCE

1. Sharing of risks
2. Cooperative device
3. Evaluation of risk
4. Payment on happening of a special event
5. The amount of payment depends on the nature of losses incurred.

HISTORY OF INDIAN INSURANCE

Insurance has a long history in India. Life Insurance in its current form was
introduced in 1818 when Oriental Life Insurance Company began its

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operations in India. General Insurance was however a comparatively late
entrant in 1850 when Triton Insurance company set up its base in Kolkata.
History of Insurance in India can be broadly bifurcated into three eras:
a. Pre Nationalization
b. Nationalization and
c. Post Nationalization

Life Insurance was the first to be nationalized in 1956. Consolidating the

operations of various insurance companies formed Life Insurance
Corporation of India. General Insurance followed suit and was nationalized in
1973. General Insurance Corporation of India was set up as the controlling
body with New India, United India, National and Oriental as its subsidiaries.
The process of opening up the insurance sector was initiated against the
background of Economic Reform process, which commenced from 1991. For
this purpose Malhotra Committee was formed during this year who
submitted their report in 1994 and Insurance Regulatory Development Act
(IRDA) was passed in 1999. Resultantly Indian Insurance was opened for
private companies and Private Insurance Company effectively started
operations from 2001.

INSURANCE MARKET – PRESENT

The insurance sector was opened up for private participation a decade back.
For years now, the private players are active in the liberalized environment.
The insurance market has witnessed dynamic changes, which include
presence of a fairly large number of insurers both life, and non-life segment.
Most of the private insurance companies have formed joint venture
partnering well-recognized foreign players across the globe. The Indian life

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insurance market generated total revenues of $41.36 billion in 2007, thus
representing a compound annual growth rate (CAGR) of 11.84% for the
period spanning 2000-2007. Life insurance market had a growth of $22.46
billion within a period of 7 years with a growth rate of 118.24%. Estimated
life premiums rose to INR 1,470,800 million ($36.77 billion) in 2006 from INR
1,301,540 million ($32.54billion) in 2005. We envisage that life premiums in
2011 will be $65.96 billion, a growth larger than they were in 2007. The
performance of the market is forecast to accelerate, with an anticipated
CAGR of 9.78% for the four-year period 2007-2011 expected to drive the
market to a value of $65.96 billion by the end of 2011. There would be a
growth of $24.6 billion i.e. 59.48% in the next 4 years. Non-life premiums in
India were $6.53 billion in 2007. Gross written premium (GWP) in the Indian
non-life insurance market reached a value of $5.75 billion in 2006, this
representing an annual growth of 13.55% for the period spanning 2006-
2007. Estimated non-life premiums rose from INR230 billion ($5.75 billion) in
2006 to INR261 billion ($6.53 billion) in 2007.
We anticipate that non-life premiums will grow by a CAGR of 9.40% between
2007-2011. We are looking for non-life premiums to rise by $405 million over
the five years to the end of 2011 with a growth rate of 62.02%. With a huge
population base and large untapped market, insurance industry is a big
opportunity area in India for national as well as foreign investors. India is the
fifth largest life insurance market in the emerging insurance economies
globally and is growing at 32-34% annually. This impressive growth in the
market has been driven by liberalization, with new players’ significantly
enhancing product awareness and promoting consumer education and
information. The strong growth potential of the country has also made
international players to look at the Indian insurance market. Moreover,
saturation of insurance markets in many developed economies has made the
Indian market more attractive for international insurance players, according
to "Booming Insurance Market in India (2008-2011)”.

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 Total life insurance premium in India is projected to grow Rs 1,230,000
crore by 2010-11.

 Total non-life insurance premium is expected to increase at a CAGR of

25% for the period spanning from 2008-09 to 2010-11.

 With the entry of several low-cost airlines, along with fleet expansion
by existing ones and increasing corporate aircraft ownership, the
Indian aviation insurance market is all set to boom in a big way in
coming years.

 Home insurance segment is set to achieve a 100% growth as financial

institutions have made home insurance obligatory for housing loan
approvals.

 Health insurance is poised to become the second largest business for

non-life insurers after motor insurance in next three years.

 A booming life insurance market has propelled the Indian life insurance
agents into the ‘top 10 country list’ in terms of membership to the
Million Dollar Round Table (MDRT).

LIST OF INSURANCE COMPANIES IN INDIA

♣ Aegon Religare Life,

♣ Aviva Life,

♣ Bajaj Allianz,

♣ Bharti AXA,

♣ Birla Sunlife,

♣ HDFC Standard Life,

♣ ING Vysya Life,

♣ Kotak Mahindra Old Mutual Life,

♣ Max New York Life,

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♣ Metlife India and Reliance Life.

♣ SBI Life

♣ ICICI Prudential

♣ TATA AIG

♣ LIC

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 RESEARCH METHODOLOGY

Market research can be defined as a systematic and objective

process of gathering, recording and analyzing data that provides information
to guide business decisions. It is used either to understand market trends, to
find the optimal marketing mix, to devise effective HR policies, or to find the
best investment options.

In the present fast track business environment marked by cutthroat

Competition, many organizations rely on business research to gain a
Competitive advantage and greater market share. A good research study
helps an organization understand processes, products, customers, markets
and competition and to develop policies, strategies, and tactics that are most
likely to succeed.

ROLE OF BUSINESS RESEARCH IN DECISION-

MAKING

For effective planning and implementation of business

decisions. Accurate information about the internal and external business
environments is of primary importance. The key objective of business
research is to provide accurate, relevant, and timely information to the top
management, so that they can make effective decisions.

The business decision-making process in an organization going through the

following key interrelated stages:

* Problem/opportunity Identification

* Problem/opportunity prioritization and selection

* Problem/opportunity resolution

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* Implementing the selected course of action

Business Research helps the management in each of the stages by providing

useful and timely information.

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 RESEARCH DESIGN

A research design is the arrangement of conditioned for

collection and analysis of data in a manner that aims to combine relevance
to the research purpose which economy in procedure. Main characteristics of
research design can be summarized in two words-

1- Anticipation

2- Specification

My research design is “DISCRIPTIVE RESEARCH DESIGN”

TYPE OF RESEARCH:

The basic types of research are as follows:

1. Descriptive research:

The major purpose of this research is description of the state of affairs as it

exists at present.

2. Analytical Research:

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 In this research, the researcher has to use facts or information already
available these to make, and analyze these to make a critical evaluation of
the material.

3. Applied research:

It aims and finding a solution for an immediate problem facing a society or

an industry/business organization.

4. Fundamental research:

It mainly concerned with generalization & with the formulation of a theory

5. Quantitative Research: It is based on the measurement of quantity or

amount. It is applicable to phenomena that can be expressed in terms of
quantity.

6. Qualitative Research:

It is concerned with the qualitative phenomenon, i.e., phenomena relating to

or involving or king.

7. Conceptual Research:

It is related to some abstract ideas or theory.

8. Empirical Research:

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 It is data- based research, coming with conclusions which are Capable of
being verified by the observation and experiment.

9. Diagnostic Research:

Such a research fallow case –study method or in depth approaches to reach

the basic casual relation.

10. Exploratory Research:

The objective of this research is the development of hypothesis rather than

their testing.

STEPS IN THE RESEARCH PROCESS

1. Identifying & Defining Problem/ Opportunity

2. Planning the Research Design

3. Selecting a Research Method

4. Selecting the Sampling Procedure

5. Data Collection

6. Evaluating the Data

7. Preparing and presenting the Research Report

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 SOURCES OF DATA

In the data collection method, we have collected both primary and

secondary data to meet our objectives.

Primary Data:

The primary data was collected by a survey based on the

questionnaire. It was formulated on the basis of information carefully

gathered by me about the various mindsets of the people. This

questionnaire was mainly formulated to target the common man to see

his perception and awareness of various investment options available.

The number of respondents targeted was around 50 and the survey

was confined to LUCKNOW city.

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 PRIMARY DATA ANALYSIS

We have done a detailed survey in Hyderabad city to understand and study

the consumer’s responses. The primary data was collected through

questionnaires. This questionnaire was mainly formulated to target the

common man to see his perception and awareness of various investment

options available. The sample size of the survey was 50. Out of these 35

were male and 15 were female. The sample of respondents was carefully

selected covering people in all age groups and with different backgrounds

and occupations. The analysis of these questionnaires gives us an insight

about the mindset of people regarding various investments. We have also

used factor analysis in SPSS to extract the prominent factors influencing the

investments decisions of the customers .Customer preferences as to where

they would like to invest have been studied . Also we come to know about

the preferences given by customers towards various top life insurance

companies and their reasons for it. Here we see that most of the customers

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invest regularly from quite some time but since the last few months their

investments have come down due to recession and market slowdown.

Following is the analysis of the primary data collected through

questionnaires. The sample included respondents from all the age groups out

of which people in the age group 18-40 constituted around 70%.

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The sample of respondents was heterogeneous with people of various

occupations right from government service to ones who were self

employed. Out of these people who were working in private companies

constituted round 65%.

Also the customers’ preferences for different forms of savings have

been carefully studied. The main savings instruments generally

preferred by customers are bank deposits, fixed deposits, investments

and post office schemes. Out of these Investments has been preferred

by around 43% respondents and fixed deposits by around 27%.

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When we talk about making investment decisions around 45%

respondents considered their own decision and another 40%

respondents considered their family’s opinion before making any

important investment decision.

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The various forms of investments generally preferred by customers

have been identified as mutual funds, stocks and shares, insurance

products and government bonds. Out of these around 35% preferred

stocks and shares and around 20% preferred insurance products.

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The main reason for people to invest in the insurance products was

that they had the advantage of both life cover and tax benefits apart

from other normal benefits. Talking about the frequency of investment

around 45 respondents preferred investing once a year and another

25% preferred investing 2-3 times a year. It was also noticed that

greater majority of respondents owned an insurance policy. Only 11%

of the respondents did not own an insurance policy.

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Around 63% respondents felt that there was an amount of moderate to high

risk involved with ULIPs. Around 63% of the respondents owned an insurance

policy in LIC which clearly shows that LIC still continues to be the market

leader in as it has been since the last 50 years or so in spite of the presence

various powerful private players which are still finding hard to capture a

major market share. Around 13%b respondents chose ICICI Prudential.

Following is the rating (from 1-5, 1-bad, 5-best) given by respondents to the

five selected life insurance companies. Here we can clearly see that LIC has

the best rating. The reasons given by the respondents were that LIC was a

public sector company which is well established and has got loads of

experience.

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So following are the nine extracted prominent factors that influence the
consumer while making an investment decision:
1. Rate of return
2 .Death benefits and lock in period
3. Present market scenario and tax benefits
4. Past performance of the company
5. Flexible investment options and the risk
involved
6. Amount payable and the after investment
service
7. Opinion of media, friends and
acquaintances
8. Level of knowledge about investment
9 .Commercials associated with investments

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 FINDINGS

♣ There is a great future of the life insurance sector in India as 80% of

the Indian population is still without life cover and people are just now
coming in response to the awareness campaigns being carried out by
almost all the insurance companies.

♣ We have found out that age plays a major role in deciding the
investment patterns of people as generally the younger class of people
tend to take more risk and invest in various instruments more
frequently in a year.

♣ Life insurance Corporation (LIC) of India is the company to be least

affected during this market slowdown as NAV of its equity growth
funds came down just by 23% during this major recession.

♣ Life Insurance Corporation (LIC) of India is still the undisputed market

leader as 63% of the respondents surveyed owned a policy in it and it
has also got a tremendous rating of 4.2 out of 5 in the survey
conducted.

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CONCLUSIONS

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