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A PROJECT REPORTON

EMERGENCE OF MAX NEW YORK LIFE ONE OF THE BIGGEST PRIVATE LIFE

INSURANCE PLAYER

A COMPARATIVE ANALYSIS WITHOTHER MAJOR INSURANCE PLAYERS

Submitted as a part of curriculum in Masters ofBusiness Administration programme by INSTITUTE

OF MANAGEMENT SCIENCES UNIVERSITY OFLUCKNOW

Academic Year 2008-2009

AMAR KUMAR GUPTAMBA (RETAIL MANAGEMENT)

(INSTITUTE OF MANAGEMENT SCIENCES

UNIVERSITY OF LUCKNOW,LUCKNOW)

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CONTENTS

Chapter 1: EXECUTIVE SUMMARY 6

Chapter 2: INSURANCE AN INTRODUCTION 7

Chapter 3: INDUSTRY PROFILE 18

3.1 ORIGIN OF INSURANCE3.2 ORIGIN OF LIFE ASSURANCE IN INDIA

3.3 INSURANCE SECTOR REFORMS

3.4 POTENTIALITY OF INSURANCE IN INDIAN MARKET

Chapter 4: LIFE INSURANCE PRODUCTS 29

4.1: WHOLE LIFE POLICY

4.2: ENDOWMENT POLICY

4.3: MONEY BACK POLICY

4.4: TERM POLICY

4.5: ANNUITY

4.6: JOINT LIFE POLICY

4.7: GROUP INSURANCE

Chapter 5: IRDA ACT 1999 36

5.1: DUTIES, POWERS, FUNCTIONS

Chapter 6: PLAYERS IN INDIAN INSURANCE INDUSTRY 39

6.1: LIFE INSURERS

6.2: GENERAL INSURERS

6.3: INSURANEC BUSINESSChapter 7: COMPANY PROFILE 43

7.1: ABOUT ICICI PRUDENTIAL

7.2: PRODUCTS

7.3: ABOUR THE PARTNERS

7.4: INSURANCE PLANS

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Chapter 8: MARKETING RESERCH 58Chapter 9: CONCLUSION 88

Chapter 10: RECOMMENDATION 90

Chapter 11: BIBLIOGRAPHY 92

Chapter 12: ANNEXURE 93

QUESTIONNAIRE

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ACKNOWLEDGEMENT

There is always a sense of gratitude which one express to other for the helpful so

needy services they render during all phases of life. I would like to express my

gratitude towards all those who have been helpful to me in getting this mighty

task of training to a successful end.

First of all, I consider it a pleasant duty to express my heart felt appreciation

, gratitude and indebtedness to Mr. Abhishek Gupta (Manager- Agency

Recruitment) & Mr.Sumit Narang(Sales Manager) for his keen interest,

invaluable pain taking & excellent guidance, patience, endurance,

encouragement & thoughtful advice throughout the project work duration.

I would also like to be thankful to Mr. Kalhan Kaul (Branch Manager, MAX

NEW YORK LIFE INSURANCE, SHAHJAHANPUR), who has given me the right

way to prepare my project report.

I am also thankful to all my friends who gave me constant & continuous

inspiration to complete this project.

(AMAR KUMAR GUPTA)

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PREFACE

Insurance market is growing very fast. The opportunity is also high in this sector

as only 5% of Indian market is covered by this sector and the players are trying to

extend in to the rest untapped 95%.

Though LIC in India is the market leader, relatively younger private organization

are also doing well in this sector. This is the pick time for all the players tocapitalize this growth and increase their market share through good distribution

channel network. MAX NEW YORK is one of the major Life insurance player. who

is emerging a market leader among private insurance group.

The success story of good market share of different organization depends on the

distribution channel network of the organization. The distribution channel network

is the interface between the producer or service provider and user. Hence it

should be highly effective to create a good brand perception on its user.

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Chapter - 1

EXECUTIVE SUMMARY

The Indian Insurance Industry is broadly segmented into public and private

insurance companies. Before year 2000, only public sector insurance companies

were allowed to do business in India. But after year 2000, insurance sector was

thrown open for private insurance companies as well.

But as of now there now around 19 private life insurance companies and around

9 private non-life insurance companies doing business in India.

This report is prepared with an aim to provide an overview of present Indian

Insurance Industry. Also with LIC, heading the public life insurance companies

and MAX NEW YORK LIFE heading the private life insurance players, this report

also provides a comparative analysis of Life policies.

Based on this report , the prospecting insurance customers would get help in

choosing the right insurance products for themselves.

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Chapter - 2

INSURANCE AN INTRODUCTION

Insurance may be described as a social device to ensure protection of economic

value of life and other assets. 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.

Insurance is a contract whereby, in return for the payment of premium by the

insured, the insurers pay the financial losses suffered by the insured as a result of

the occurrence of unforeseen events. The term "risk" is used to describe the

possibility of adverse results flowing from any occurrence or the accidental

happenings, which produce a monetary loss.

Insurance is a pool in which a large number of people exposed to a similar risk

make contributions to a common fund out of which the losses suffered by the

unfortunate few, due to accidental events, are made good. The sharing of risk

among large groups of people is the basis of insurance. The losses of an

individual are distributed over a group of individuals.

Definitions:

General definition:

In the words of John Magee, Insurance is a plan by themselves which

large number of people associate and transfer to the shoulders of all,

risks that attach to individuals.

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Fundamental definition:

In the words of D.S. Hansell, Insurance accumulated contributions of all parties

participating in the scheme.

Contractual definition: In the words of justice Tindall, Insurance is a contract in

which a sum of money is paid to the assured as consideration of insurers

incurring the risk of paying a large sum upon a given contingency.

Characteristics of insurance

Sharing of risks

Cooperative device

Evaluation of risk

Payment on happening of a special event

The amount of payment depends on the nature of losses incurred.

The success of insurance business depends on the large number of people

insured against similar risk.

Insurance is a plan, which spreads the risk and losses of few people among a

large number of people.

The insurance is a plan in which the insured transfers his risk on the insurer.

Insurance is a legal contract which is based upon certain principles of

insurance which includes, utmost good faith, insurable interest, contribution,

indemnity, causas proxima, subrogation, etc.

The scope of insurance is much wider and extensive.

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Functions of insurance:

Primary functions:

1. Provide protection:- Insurance cannot check the happening of the risk, but can

provide for the losses of risk.

2. Collective bearing of risk: - Insurance is a device to share the financial losses

of few among many others.

3. Assessment of risk: - Insurance determines the probable volume of risk by

evaluating various factors that give rise to risk.

4. Provide certainty: - Insurance is a device, which helps to change from

uncertainty to certainty.

Secondary functions:

1. Prevention of losses: - Insurance cautions businessman and individuals to

adopt suitable device to prevent unfortunate consequences of risk by

observing safety instructions.

2. Small capital to cover large risks: - Insurance relives the businessman from

security investment, by paying small amount of insurance against larger risks

and uncertainty.

3. Contributes towards development of larger industries.

Other Function:

Means of savings and investment:

Insurance companies are business houses. The product they sell is financial

protection. To succeed and survive, they must cover theircosts, which

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include payments to cover the losses of policyholders, as well as sales andadministrative expenses, taxes and dividends.

Insurance companies have two sources of income for covering these costs:

premiums and investment income. The premiums are collected on a regular

basis and invested in Government Bonds, Gilt, stocks, mutual funds, real estates

and other conservative avenues. However, investment income depends on

market conditions, interest rates, economy etc. and varies from year to year.

Because of the uncertainty associated with the investment income, insurance

companies must generate enough income from premiums to cover the bulk of

their expenses.

The risk becomes insurable if the following requirements are complied with:

The insured must suffer financial loss if the risk operates.

The loss must be measurable in money,

The object of the insurance contract must be legal.

The insurer should have sufficient knowledge about the risks he accepts.

Fundamentals of Insurance

The fundamental Principles of the Insurance are as follows:

Insurable Interest: Insurable interest means the legal right to insure.

Insurable Interest is a must and only then the insurance contract is

enforceable at law. This principle differentiates aContract of insurance from

wager. Lack of insurable interest renders the contract null and void. For

Insurable Interest to exist there must be Property, Rights, Interest, Life or

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Liability; this must be insured and the Insured should have a legallyrecognizable relationship thereto. The Insured should be benefited by the

safety of the property or is prejudiced by its loss. Insurable Interest may arise

in the following manner:

1. Ownership: Absolute ownership entitles the owner to insure the property.

This is the commonest method whereby Insurable Interest arises.

2. Partial Interest is also insurable e.g. a mortgagee. A creditor can also

insure the life of his debtor but only to the extent of his loan.

3. Administrators and executors i.e. officials appointed by a court of law to

take care of a property may also insure the property.

4. Relationship does not automatically constitute insurable interest. The only

relationship recognized by law for this purpose is the one between a husband

and wife.

5. An employercan insure his employee under a Personal Accident Policy as

he has insurable interest in them.

Proximate cause: Generally, the claims are payable under insurance policies

if they arise out of events which are proximately caused by the insured perils.

In other words, the proximate cause of the event has to be peril covered by the

policy, so as to constitute a valid claim.

Contribution: An insured may have several insurance on the same subject

matter. If he recovers his loss under all these insurance, he will obviouslymake a profit out of loss. This will be an infringement of the principle of

indemnity. Common Law has, therefore, evolved the doctrine of contribution

whereby the insured is prevented from recovering more than his loss, despite

his having several insurance on the subject matter.

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Subrogation: The principle of indemnity seeks to prevent the insured from

making profit out of loss. However, it may so happen that that the insured may

recover his loss under his policy and he may also have rights against third

parties. If, after the insurance claim is settled, the insured is allowed to enforce

his rights against third parties and to retain whatever damages he receives

from them, he will certainly make a profit and the principle of indemnity will be

infringed.

Common Law has therefore, evolved the doctrine of subrogation as corollary

to the principle of indemnity. Subrogation may be defined as the transfer of

rights and remedies of the insured to the insurers who have indemnified the

insured in respect of the loss. The Common Law right of subrogation is implied

an all contracts on indemnity, as it arises only after payment of loss.

Utmost Good Faith: In all General Insurance contracts we know that a

property or interest or liability or life is offered for insurance and the insuredhas to take decisions on the acceptance of the proposal. If he decides to

accept the proposal a premium commensurate with the risk has to be charged.

To enable him to take necessary decision in this regard, the insurer must have

certain facts about the risk offered. These facts influence the judgment of the

insurer in deciding about the acceptance or otherwise of the risk and the rate

of premium to be charged, if accepted. Such facts are known as material facts.

Nature of Insurance Contracts

When the insured pays the premium and the insurers accept the risks, the

contract of insurance is concluded. The policy issued by the insurers is the

evidence of the contract. The contract of insurance, likeany other contract,for

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example a contract for the sale of goods, is subject to the general law of contractas embodied in the Indian Contract Act,1872.

According to this Act, a contract must have certain essential features in order to

make it legally valid and enforceable. The following are the essential elements:

a) Offer and acceptance: Usually, the offer is made by the proposer, and

acceptance made by the insurer.

b) Consideration: This means that the contract must involve some mutual benefit

to the parties. The premium is the consideration from the insured and the promise

to indemnity is the consideration from the insurers.

c) Agreement between the parties: Both the parties should agree to the same

thing in the same sense.

d) Capacity of the parties: Both the parties to the contract must legally competent

to enter into the contract. For example, minors cannot enter into insurance

contracts.

e) Legality: The object of the contract must be legal and the contract should not

violate any legal requirements. E.g. no insurance can be had for smuggled goods.

Risk

Reasonable or not, risks are inescapable in business. Every business venture is

something of a gamble, because the possibility of loss is as real as the prospects

for profits. And even though managers do everything possible to ensure that their

business succeeds, they cannot guard against every conceivable form of risk.

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Pure Risk versus Speculative Risk

Pure Risk: Events representing the kind of risk that no business can predict or

escape, known as Pure Risk, it is the threat of a loss without the possibility of

gain. In other words, a disaster such as avalanche or fire is costly for the

business it strikes, but the fact that no disaster occurs contributes nothing to a

firm's profit.

Speculative Risk: It is the type of risk that offers the prospect of making profit -

and prompts people to go into business in the first place. Every business

accepts the possibility of losing money in order to make money.

Approaches to Risk Management

Risk Management is the process of reducing the threat of loss due to

uncontrollable events. Steps in selecting a risk management approach:

To identify all the things those can possibly go wrong.

To consider the probability that an event will occur.

Techniques of Risk Management are:

1. Avoiding the Risk: When a company avoids risk, it eliminates the possibility that

a particular event will occur. To avoid the possibility of a suit, for example, not to

produce any products -which would, of course, eliminate both the threats of a

lawsuit and the opportunity to profit. With rare exceptions, avoiding risk entirely is

extremely difficult.

2. Reducing Risk: A more practical approach is to reduce the risk by taking

precautions. Risk reduction is an important element in most companies' approach

to risk management. Typical precautions include putting safety locks on doors to

prevent robberies, installing overhead sprinklers to minimize fire damage, and

periodic checking motor vehicles to prevent accidents.

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3. Assuming risk: Many companies draw on current revenues or set aside a"Contingency Fund" to cover unexpected losses. Setting aside money on regular

basis could be cheaper than purchasing insurance. Moreover, the company can

earn interest on the reserved cash. Such assumption of risk is also called self-

insurance or risk retention.

4. Transferring the risk: Most companies still rely on outside insurance firms for

financial protection against catastrophic losses. In buying insurance, companies

transfer the risk of loss to an insurance firm, which agrees to pay for certain types

of losses. In exchange, the insurance firm collects a fee known as a premium.

Insurable and Uninsurable Risks:

Insurable risks: An insurable risk - one that an insurable company will cover -

Generally meets the following requirements. The peril insured against must not be

under the control of the Insured. This means, of course that insurer do not pay for

losses that are intentionally caused by an insured, caused at the Insured's

direction, or caused with the insured's collusion. For example, a fire insurancepolicy excludes loss caused by the Insureds own arson. It does, however, include

loss caused by an employee's arson. Losses must be calculable, and the cost of

insuring must be economically feasible. To operate profitably, insurance

companies must have data on the frequency of losses caused by a given peril. If

this information covers a long period of time and is based on a large number of

cases, Insurance companies can usually predict quite accurately how many

losses will occur in the future. For example, the insurance companies to fix up the

rate of premium of Personal Accident Insurance may use the information of the

number of people who will die each year in India in accidents. The peril must be

unlikely to affect all insured simultaneously. Unless an insurance company

spreads its coverage over large geographic areas or a broad population base or

different classes of Insurance, a single disaster might force it to pay out all its

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policies at once. The possible loss must be financially serious to the Insured. AnInsurance company could not afford the paperwork involved in handling numerous

small claims of a few Rupees each. As a result, many policies have a clause

specifying that the insurance company will pay only that part of a loss greater than

an amount - the deductible or excess - stated in the policy. The excess represents

small losses that the Insured has to absorb.

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Chapter 3

INDUSTRY PROFILE

3.1 Origin of Life Insurance

Life Assurance was born in England when the first policy providing temporary

cover for a period of 12 months was issued as easy as 1583 A.D. The Amicable

Society started granting fluctuating sum on death since 1705 and a fix sum since

1757, With the development of mortality tables, the life Assurance acquired a

scientific character. The Equitable Society founded in 1762 was the first Society

established on scientific basis.

3.2 ORIGIN OF LIFE ASSURANCE IN INDIA

In India, after failure of two British companies, the European and the Albert in

1870, which attempted writing business on Indian lives, first Indian Life Assurance

Society was formed in the same year called Bombay Mutual Assurance Society

Ltd. It was followed by the Oriental Life Assurance Company Limited in 1874,Bharat in 1896 and Empire of India in 1897. The Idea of insurance was born out

of a desire of the people to share loss of an individual by many. Originally it

restricted to forms other than life assurance. It started with Marine Insurance,

where the losses on account of perils of sea were shared by all who were

engaged in trade. Reference to some forms of insurance, is found in the codes of

Hammurabi, Manu (Manav Dharma Shastra). The word `Yogakshema is used in

the Rig Veda suggesting that some form of community insurance was practiced

by the Aryans in India over 3000 years ago. In India during Buddhist period burial

societies existed which were mutual in their character and used to help a family

by building a house, protecting the widow, marrying the girls.

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The Swadeshi Movement of 1905 provided impetus to the formation of severalcompanies such as the `Hindustan Cooperative, the `United India, the `Bombay

Life, the `National. Further in the wake of freedom movement number of

companies such as the `New India, the `Jupiter the `Lakshmi emerged.

The Government began to exercise a certain measure of control on Insurance

business by passing the `Insurance Act in 1912. For controlling investment of

funds, expenditure and management, a comprehensive Act was passed known as

`The Insurance Act 1938. For controlling the affairs, the office of Controller of

Insurance was established. The act was extensively amended in 1950.

In the year 1955, approximately 170 Insurance Offices and 80 Provident Fund

Societies had been registered for transacting Life Assurance business in India.

There were, however, no full guarantees to the policyholders. The concept of

trusteeship was lacking. Many insurance companies went into liquidation. There

were malpractices in insurance business. For achieving the following purposes it

was felt necessary to nationalize the insurance business in India. To provide

security to the policyholders

(i) To utilize the funds for nation-building activities.

(ii) To avoid cut throat competition

(iii) To abolish mal-practices

(iv) To spread the insurance message to the rural areas.

The first step in this direction was taken by the Government of India by issuing the

Life Insurance (the Emergency provisions) Ordinance, 1956 on 19 th January,

1956. The then Finance Minister, Shri C. D. Deshmukh mentioned the purpose of

nationalisation as reaching the goal of socialistic pattern of society, rendering

genuine service to the people in the rural area. The Life Insurance

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Corporation Act (Act XXXI of 1956) was passed by the Parliament in June 1956which came in force on 1st July 1956. The Life Insurance Corporation of India

came into existence on 1st September 1956.

3.3 INSURANCE SECTOR REFORMS

Having looked at the insurance sector, let us look at the efforts made by the

government to make the industry more dynamic and customer friendly. To begin

with, the Malhotra committee was set up with the objective of suggesting changes

that would achieve the much required dynamism.

The Malhotra Committee Report

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

Governor R. N. Malhotra, was formed to evaluate the Indian insurance industry

and recommend its future direction. In 1994, the committee submitted the report

and gave the following recommendations:

Structure

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

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

these subsidiaries can act as independent-corporations

All the insurance companies should be given greater freedom to operate

Market Regulations:

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

allowed to enter the industry

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

entity

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Foreign companies may be allowed to enter the industry in collaboration withthe domestic companies

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

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

each state

Regulatory Body

The Insurance Act should be changed

An Insurance Regulatory body should be set up

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

made independent

Investments

Mandatory Investments of LIC Life Fund in government securities to be

reduced from 75% to 50%

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

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

Customer Service

LIC should pay interest on delays in payments beyond 30 days

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

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

the insurance industry

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Overall, the committee strongly felt that in order to improve the customer servicesand increase the coverage of the insurance industry should be opened up to

competition.

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

failure on the part of new players could ruin the public confidence in the industry.

Hence, it was decided to allow competition in a limited way by stipulating the

minimum capital requirement of Rs.1 bn. This amount is not very high for foreign

firms, as it translates to only about US$25 million. Further, to date it is unclear

whether equity should be payable in one go or should be brought in as

installments. Also, the foreign equity participation was to be restricted to only

40%.

The committee felt the need to provide greater autonomy to insurance companies

in order to improve their performance and enable them to act as independent

companies with economic motives. For this purpose, it had proposed setting up

an independent regulatory body.

The industry and analysts find that there is lack of clarity in the following areas:-

Though coverage of rural areas was to be made compulsory, it raises the

question as to who would subsidies the rural policies as they would be difficult

to service and hence costs will go up.

There is some confusion with respect to investments. Where should the funds

be invested? Currently 70% of the funds with LIC & GIC are invested inGovernment securities. Would new entrants be allowed to invest in GOI

securities?

The report also does not enumerate exit options available to the new entrants.

In the event of failure, there should be an arrangement made whereby the

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other Companies pool in to bail the customers, who in all probability would bemiddle class individuals.

3.4 POTENTIALITY OF INSURANCE IN INDIAN MARKET

Marketing inefficiency of general insurers has kept society in dark even when so

many personal as well as commercial lines of insurance covers are available for

them. Insurers have failed to identify the need of the individual risk factors and

thereafter selecting proper market segments and developing demand of these

needs by adopting proper marketing mix. There is great scope of commercial lineof insurance as we are developing at a very fast rate but the potentiality and

scope of personal lines of insurance is vast as this areas is still under-tapped.

Product designing and pricing is also simple and growth of this portfolio is

guaranteed in this country which has a base of over 100 crore population, where

there are about 25 crore dwellings, 20 crore schools, colleges and educational

institutions and about 5 crore small and big shops. But despite this the Indian

insurers share in personal line of business is very low or negligible.

There are enormous growth opportunities to Indian as well as foreign insurers

because of such a huge base of population there is ample scope to introduce the

new line of covers as per the changing needs and to increase the per capita share

of the insurance by encouraging risk transfer by investing small portion of the

savings of the individuals.

By opening up the sector far more opportunities has came up in insurance and

reinsurance market. After privatization of this sector presence of the foreignplayers has also increased. Therefore the insurers, in time to come, will have to

change their attitude from selling of the product to marketing of the protection

needs of the insured and for this what is required is:

Effective product planning

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Suitable pricing

Efficient promotion and physical distribution.

Proper physical evidence.

Good and well trained sales force.

Your Plans, Your Dreams & Their Future:

The Essence of Life Insurance

Your family counts on you every day for financial support: food, shelter,

transportation, education, and much more. You and your spouse have plans for

your future and dreams for your family: another child, a bigger home, a new

business, college education, travel, retirement Life insurance is all about

making sure your family has adequate financial resources to make those plans

and dreams come true, if you were to die prematurely. And just as your spouse

and children (as beneficiaries) count on you, you count on your spouse. That's

why coverage for your spouse is also important. If he or she were to die

unexpectedly, you would feel similar financial strains. This is especially true today,

with so many "double income" families.

When Should Someone Invest?

The answer, of course, is right now! Since no one can tell when the best time to

invest is, it is whenever you have the money! One should first invest in any plans

for which tax-deductible contributions can be made because these types of

savings reduce current taxes. Then, any more surplus funds should be invested in

a variable annuity, especially in equities so as to get the maximum growth of the

capital.

Insurance as a Safety Net

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The function of insurance is to protect you against losses you can't afford. This isdone by transferring the risks of a person, business, or organization -- the

"insured" -- to an insurance company, or "insurer." The insurer then reimburses

the insured for "covered" losses -- i.e., those losses it pays for under the policy's

terms.

As the insurance consumer, you pay an amount of money, called a premium, to

the insurer to transfer the risk. The insurer pools all its premiums into a large fund,

and when a policyholder has a loss, the insurer draws funds from the pool to pay

for the loss. Life is full of unexpected events that can create large financial losses.

For example, whenever you drive, it is possible that you may have a costly

accident. Risks affect you by causing worry about potential loss and how to deal

with the consequences. Insurance reduces anxiety over a possible loss and

absorbs the financial brunt of its consequences. However, while insurance

coverage is essential, how much and what type of insurance people need differ

with each individual. You must decide how much risk you're willing to tolerate

without insurance. For example, benefits for disability policies typically begin aftera waiting period of one to six months. Therefore, you should ensure that you have

some form of coverage or financial resources before the policy period begin.

Where Can I Get Insurance?

Since insurance can be expensive, it makes sense to get more than one price

quote for coverage. At one time, we in India had no option but the nationalized

insurance companies like LIC, GIC, etc. Now several private players, often with

foreign tie-ups, are entering the fray. There are now several companies selling

any one type of insurance, each with its own price structures, coverage, and

policy exclusions. To help consumers choose among the various types of

coverages, companies train sales representatives in the technical points of their

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insurance products. Many representatives work for just one insurance company.There are also brokers and independent agents -- self-employed business people

who sell insurance on commission for several insurers -- who claim they can

comparison shop to get the best coverages for consumers. Certain banks also

sell insurance.

What Type of Insurance Agent Should I Trust?

With multiple players in the life insurance field now, a choice should be first made

regarding the insurance company before choosing an agent. To determine acompany's willingness to pay claims, ask a policyholder who has filed several

claims. Obviously, the more claims an insurer has handled with no complaints, the

more likely that the company will provide you with good service. Barring LIC, the

remaining players in life insurance are still new in the field, so this kind of

information will not be available for another few years at the least. It remains to be

seen how the newer players will perform on the claims front, but given the

regulatory framework and their strong parentage, their performance should be

comparable, if not better than LIC.

It is quite imperative that your insurance agent be competent and professional

enough to clearly understand your insurance requirements and suggest a

suitable scheme. Also, with insurance companies offering varying rate of

commissions on different schemes, there is a likelihood that a 'not-so-

professional' agent may be tempted to recommend a scheme which pays him a

higher commission, though it may not be very suitable for your needs. This isespecially so in the case of LIC, sole provider of life insurance in our country till

recently, where the eligibility criteria are not very rigorous and very often the level

of knowledge and competence of the agents leaves a lot to be desired. The new

players seem to be much more stringent in appointing agents and more

committed in providing training to them. In today's context, especially in case of

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LIC, it may be advisable to go in for an agent who comes recommended from oneof your friends, relatives or associates. Further, the agent should be able to

provide you with a comparison of multiple schemes and also explain them in

simple terms, so that you are are able to make an informed decision. In case an

agent is not inclined to spend the time and resources to provide you with relevant

information and solve your queries, it may be better to give a go-by to such a

person and start looking for a new agent. The market is becoming increasingly

competitive and it should not be a difficult task to find a good agent.

Life Insurance Players:

Bajaj Allianz General Insurance: Bajaj Allianz General Insurance Company

Limited is a joint venture between Bajaj Auto Limited and Allianz AG of

Germany. Both enjoy a reputation of expertise, stability and strength.

Birla Sun Life Insurance: The Aditya Birla Group contributes its knowledge of

the Indian market while Sun Life Financial contributes global expertise in the

areas of protection and wealth management.

HDFC Standard Life Insurance: HDFC and Standard Life have a long and

close relationship built upon shared values and trust. Providing long term

financial security to policy holders will be the constant endeavor.

ICICI Prudential Life Insurance: The Company was granted Certificate of

Registration for carrying out Life Insurance business, by the Insurance

Regulatory and Development Authority.

ING Vysya Life Insurance: ING, the worlds second largest life insurance

company together with Vysya Bank, one of Indias leading private sector

banks, forms ING Vysya Life Insurance.

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Chapter 4

LIFE INSURANCE PRODUCTS

4.1 WHOLE LIFE POLICY

These are low-cost insurance plans where the sum assured is payable on the

death of the insured

A typical whole life policy runs as long as the policyholder is alive. In other words,

the risk is covered for the entire life of the policyholder, which is why it is knownas whole life policies.

The policy money and the bonus are payable only to the nominee of the

beneficiary upon the death of the policyholder. The policyholder is not entitled to

any money during his or her own lifetime, i.e. there is no survival benefit.

Whole life policies are fairly rigid and inflexible and are suitable only in a few, very

specific cases.

Whole Life Policy can be a good initial policy to buy since its cost is very low. That

is an important consideration when one is just starting a career.

4.2 ENDOWMENT POLICY

Under these plans, the sum assured is pay-able on the maturity of the policy or in

case of death of the insured individual before maturity of the policy. Endowment

policies cover the risk for a specified period at the end of which the sum assured

is paid back to the policyholder along with the entire bonus accumulated during

the term of the policy. It is this feature - the payment of the endowment to the

policyholder upon the completion of the policys term -, which rightly accounts for

the popularity of endowment policies. The original sum assured and the

accumulated bonus - received back comes handy from the endowment can either

be used for buying an annuity policy to generate a

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monthly pension for the whole life, or put it in any other suitable investment of his

choice. As compared to whole life policies, the premium rates for endowment

policies are higher and the bonus rates are lower. On the plus side, these polices

offer an endowment - representing a return on his premium payments payable to

him in his own lifetime when the policy comes to an end.

4.3 MONEY BACK POLICY

Unlike ordinary endowment insurance plans where the survival benefits are

payable only at the end of the endowment period, money back policies provide for

periodic payments of partial survival benefits during the term of the policy, of

course so long as the policy holder is alive.

An important feature of this type of policies is that in the event of death at any

time within the policy term, the death claim comprises full sum assured without

deducting any of the survival benefit amounts, which may have already been paid

as money-back components. Similarly, the bonus is also calculated on the full

sum assured

Under money back policies premiums can be paid as per the insurance

companys policy. These could be quarterly, half yearly or annually. The

premiums for these policies are payable for the selected term of years, or till

death if it occurs earlier.

By buying such policies one can receive income at regular intervals other than the

risk cover it provides. Also a good amount of bonus on the full sum assured is

quite a good bargain Individual before expiry of the policy

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4.4 TERM POLICY:

Term policies; cover only the risk during the selected term period. If the

policyholder survives the term, the risk cover comes to an end.

A Term plan is designed to meet the needs of people who are initially unable to

pay the larger premium required for a whole life or an endowment assurance

policy, but they hope to be able to pay for such a policy in the near future.

No surrender, loan or paid-up values are granted under these policies because

reserves are not accumulated. If the premium is not paid with the days of grace,

the policy will lapse without acquiring a paid-up value.

However, a lapsed policy may be revived during the lifetime of the life assured but

before the expiry of the period of two years from the due date of the first unpaid

premium on the usual terms. Accident and / or Disability benefits are not granted

on policies under the Term plan.

4.5 ANNUITY (PENSION PLAN)

These plans provide for either immediate or deferred pension for life. The pension

payments are made till the death of the annuitant (per-son who has a pension

plan) unless the policy has provision of guaranteed period.

An annuity is an investment that one make, either in a single lump sum or through

installments paid over a certain number of years, in return for which one receive

back a specific sum every year, every half-year or every month, either for life or

for a fixed number of years.

After the death of the annuitant or after the fixed annuity period expires for annuity

payments, the invested annuity fund is refunded, perhaps along with a small

addition, calculated at that time.

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Annuities differ from all the other forms of life insurance discussed so far in one

fundamental way - an annuity does not provide any life insurance cover but,

instead, offers a guaranteed income either for life or a certain period.

Typically annuities are bought to generate income during ones retired life, which

is why they are also called pension plans. Annuity premiums and payments are

fixed with reference to the duration of human life.

4.6 JOINT LIFE POLICY

Joint life policies are similar to endowment policies in as much as these policies

also offer maturity benefits to the policyholders, apart form covering the risks as

all life insurance policies.

But these are categorized separately as these cover two lives together thus

offering a unique advantage in some cases; notable, for a married couple or for

partners in a business firm.

Under a joint life policy the sum assured is payable on the first death and again on

the death of the survivor during the term of the policy. Vested bonuses would also

be paid besides the sum assured after the death of the survivor. If one or both the

lives survive to the maturity date, the sum assured as well as the vested bonuses

are payable on the maturity date.

The premiums payable cease on the first death or on the expiry of the selected

term, whichever is earlier.

Accident benefits equivalent to the sum assured are available under this plan on

the first death. However, if both lives are covered under Double Accident Benefit

(DAB), the surviving life is covered under DAB until the end of the policy year, in

which the first life dies under the cover of the policy.

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These benefits are available with respect to both lives if

Both lives perish simultaneously owing to an accident. To avoid such an

eventuality, nomination is allowed under the policy OR

Both die within the specified period as a result of the same accident OR

The second life also dies in the same policy year as result of another accident. To

avoid such an eventuality, nomination is allowed under the policy.

Particularly for couples - Joint life policies provide dual-purpose income and risk

protection for both belonging to every income group and class of society.

Under a joint life plan though the premium payment stops after the first life's

death, bonuses continue to accrue on the basic Sum Assured till Maturity Date or

till the death of the second life, if earlier.

4.7 GROUP INSURANCE

Group Insurance offers life insurance protection under group policies to various

groups such as employer-employee, professionals, co-operatives, weaker

sections of society etc. It also provides insurance coverage to people under

certain approved occupations at the lowest possible premium cost. Besides

providing insurance coverage, it also offers group schemes to employers, which

provide funding of gratuity and pension liabilities of the employers Group

insurance plans have low premiums. Such plans are particularly beneficial to

those for whom other regular policies are a costlier proposition. Group insurance

plans extend cover to large segments of the population including those who

cannot afford individual insurance. As such the premia one need to pay is

comparatively lower and at the same time one can avail of insurance benefits.

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The main features of the schemes are low premium and simple insurabilityconditions. Premiums are based upon age combination of members, occupation

and working conditions of the group.

A number of group insurance schemes have been designed for various groups.

These include employer-employee groups, associations of professionals (such as

doctors, lawyers, chartered accountants etc.), and members of cooperative

banks, welfare funds, credit societies and weaker sections of society. Creditor-

Debtor groups are also offered group insurance schemes. Group insurance

schemes providing uniform cover can be granted to outstanding loans. These

groups are Members of primary housing societies where housing loans are

granted by State Apex housing societies, borrowers granted loans by Institutional

agencies in Public/Joint Sectors for housing purposes and borrower members of

cooperative societies/banks formed by employees of the same employers

4.8 SPECIAL PLAN

Special plans are insurance policy plans available from the national insuranceproviders to serve the needs of citizens that cannot be commonly classified or

segregated. These special plans are designed to satisfy needs ranging from debt-

clearance in event of the death of the insured to financial aid in the event of a

medical mishap.

Special plans also provide financial assistance for handicapped dependants as

well as emergency surgery required if and when a medical condition arises. Since

special plans are designed for people with diverse and specific needs, theaverage citizen may not necessarily need or use them. Yet, in the normal course

of life, situations may arise when one may need to provide for unplanned or

unexpected contingencies and mishaps.

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Chapter 5

IRDA ACT 1999

As per the section 4 of IRDA Act' 1999, Insurance Regulatory and Development

Authority (IRDA, which was constituted by an act of parliament) specify the

composition of Authority.

The Authority is a ten member team consisting of :

(a) a Chairman;

(b) five whole-time members;

(c) four part-time members,

(all appointed by the Government of India)

5.1 DUTIES, POWERS AND FUNCTIONS OF IRDA

Section 14 of IRDA Act, 1999 lays down the duties, powers and functions of

IRDA..

(1) Subject to the provisions of this Act and any other law for the time being in

force, the Authority shall have the duty to regulate, promote and ensure

orderly growth of the insurance business and re-insurance business.

(2) Without prejudice to the generality of the provisions contained in sub-section

(1), the powers and functions of the Authority shall include

(a) issue to the applicant a certificate of registration, renew, modify,

withdraw, suspend or cancel such registration;

(b) protection of the interests of the policy holders in matters

concerning assigning of policy, nomination by policy holders,

insurable interest, settlement of insurance claim, surrender

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value of policy and other terms and conditions of contracts ofinsurance;

(c) Specifying requisite qualifications, code of conduct and practical

training for intermediary or insurance intermediaries and agents;

(d) Specifying the code of conduct for surveyors and loss

assessors;

(e) Promoting efficiency in the conduct of insurance business;

(f) Promoting and regulating professional organizations connected

with the insurance and re-insurance business;

(g) Levying fees and other charges for carrying out the purposes of

this Act;

(h) calling for information from, undertaking inspection of,

conducting enquiries and investigations including audit of the

insurers, intermediaries, insurance intermediaries and otherorganizations connected with the insurance business;

(i) control and regulation of 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 64U of the Insurance Act,

1938 (4 of 1938);

(j) Specifying the form and manner in which books of account shallbe maintained and statement of accounts shall be rendered by

insurers and other insurance intermediaries;

(k) Regulating investment of funds by insurance companies;

(l) Regulating maintenance of margin of solvency;

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(m) Adjudication of disputes between insurers and intermediaries orinsurance intermediaries;

(n) Supervising the functioning of the Tariff Advisory Committee;

(o) specifying the percentage of premium income of the insurer to

finance schemes for promoting and regulating professional

organizations referred to in clause (f);

(p) Specifying the percentage of life insurance business and

general insurance business to be undertaken by the insurer in

the rural or social sector; and

(q) Exercising such other powers as may be prescribed.

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Chapter 6

PLAYERS IN INDIAN INSURANCE INDUSTRY

6.1 LIFE INSURERS

Insurance industry, as on 1.4.2000, comprised mainly two players: the state

insurers:

Life Insurance Corporation of India (LIC)

6.2 GENERAL INSURERS:

General Insurance Corporation of India (GIC) (with effect from Dec'2000, a

National Reinsure)

GIC had four subsidiary companies, namely ( with effect from Dec'2000, these

subsidaries have been de-linked from the parent company and made as

independent insurance companies.

1. The Oriental Insurance Company Limited

2. The New India Assurance Company Limited,

3. National Insurance Company Limited

4. United India Insurance Company Limited.

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Yr: 2000-2007: Insurance Industry in the year 2000-2001 had 15 new entrants,

namely:

Life Insurers:

S.No. Name of the Company

1 Max New York Life Insurance Co. Ltd.

2 HDFC Standard Life Insurance Company Ltd.

3 ICICI Prudential Life Insurance Company Ltd.

4 Om Kotak Mahindra Life Insurance Co. Ltd.

5 Birla Sun Life Insurance Company Ltd.

6 Tata AIG Life Insurance Company Ltd.

7 SBI Life Insurance Company Limited

8 ING Vysya Life Insurance Company Private Limited

9 Allianz Bajaj Life Insurance Company Ltd.

10 Metlife India Insurance Company Pvt. Ltd.

11 Reliance Life Insurance Company Ltd.

12 Shriram Life Insurance Company Ltd.

13 Sahara India Life Insurance Company Ltd.

14 Bharti AXA Life Insurance Company Ltd.

15 Aviva Life Insurance Company Ltd.

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General Insurers:

S.No. Name of the Company

1 Royal Sundaram Alliance Insurance Company Limited

2 Reliance General Insurance Company Limited.

3 IFFCO Tokio General Insurance Co. Ltd

4 TATA AIG General Insurance Company Ltd.

5 Bajaj Allianz General Insurance Company Limited

6 ICICI Lombard General Insurance Company Limited.

6.3 INSURANCE BUSINESS:

Insurance business is divided into four classes :

1) Life Insurance 2) Fire Insurance 3) Marine Insurance and 4) Miscellaneous

Insurance.

Life Insurers transact life insurance business; General Insurers transact the rest.

No composites are permitted as per law

Legislation (as on 1.4.2000):

Insurance is a federal subject in India. The primary legislation that deals with

insurance business in India is:

Insurance Act, 1938, and Insurance Regulatory & Development Authority Act,

1999.

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Insurance Products (as on 1.4.2000) (for latest information get in touch with thecurrent insurers website information of insurers is provided at the web page for

insurers):

Life Insurance:

Popular Products: Endowment Assurance (Participating) and Money Back

(Participating). More than 80% of the life insurance business is from these

products.

General Insurance:

Fire and Miscellaneous insurance businesses are predominant. Motor Vehicle

insurance is compulsory.

Tariff Advisory Committee (TAC) lays down tariff rates for some of the general

insurance products.

New products have been launched by life insurers. These include linked-products.

For details, please visit the websites of life insurers.

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Chapter 7

COMPANY PROFILE

7.1 ABOUT MAX NEW YORK

Max New York Life Insurance Company Ltd . is a joint venture between New York

Life; a Fortune 100 company and Max India Limited; one of India's leading multi-

business corporations. The company has positioned Itself on the quality platform. In line

with its vision to be the Most Admired Life Insurance Company in India , it hasdeveloped a strong corporate governance model based on the core values of excellence,

honesty, knowledge, caring, integrity and teamwork. The strategy is to establish itself

as a Trusted Life Insurance Specialist through a quality approach to business.

Incorporated in 2000, Max New York Life started commercial operation in 2001. In line

with its values of financial responsibility, Max New York Life has adopted prudent

financial practices to ensure safety of policyholder's funds. The Company's paid up is

Rs. 1,232 crore.

Having set a Best in Class Agency Distribution Model in place, the company is spearheadinga major thrust into additional distribution channels to further grow its business. The company

has multi-channel distribution that includes the agency distribution, partnership distribution,

bancassurance, distribution focused on emerging markets and alliance marketing through

employed sales force. The company currently has33 bancassurance relationships, 14

corporate agency tie-ups and direct sales force at 14 locations. Max New York Life has put

in place a unique hub and spoke model of distribution to deepen rural penetration. The company

has 39 (9 hub office 30 spoke offices) offices dedicated to emerging markets in Punjab and

Haryana. Max New York Life offers a suite of flexible products. It now has 38 products covering

both life and health insurance and 8 riders that can be customized to over 800 combinations

enabling customers to choose the policy that best fits their need. Besides this, the company

offers 6 products and 4 riders in group insurance business.

The company currently has more than 10,424 employees.

Promoters:

Max New York Life is a joint venture between Max India Ltd., one of Indias

leading multi-business corporate and New York life, a Fortune 100 company. Max

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New York Life Insurance, incorporated in 2000, is one of Indias leading privatelife insurance companies. The company offers both individual and group life

insurance solutions. It has established a wide distribution network across India.

Through its wide network of highly competent life insurance agent advisors and

flexible product solutions, Max New York life Insurance is creating a partnership

for life with its customers in India.

Max India Ltd.

Founded in 1985, Max India Limited is a Public Limited company listed on theNSE and BSE of India with over 26,000 shareholders. Today, Max India Limitedis a multi-business corporate, driven by the spirit of Enterprise, focused onKnowledge, People and Service oriented businesses of:

Healthcare (Max Healthcare)

Life Insurance (Max New York Life Insurance)

Clinical Research (Neeman Medical International)

Max also Maintains Interests in:

Specialty Plastic Products for the packaging industry (Max Speciality

Products)

Healthcare Staffing (Max Health Staff)

Prominent shareholders are Mr Analjit Singh and a leading private equity firm,Warburg Pincus which accounts for 28.7% of the total shareholding. Thebalance shareholding is held by the public and Institutional Investors.

Till 1999, The Companys Main Interests and Partnerships were thefollowing:

Business

Bulk Active Pharmaceuticals

Electronic Component Distribution

Mobile Telephony

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V-SAT Communications

Plating Chemicals

Information Technology

Partners

DSM Gist Brocades

Motorola, USA

Avnet Inc., USA

Hutchison Telecom Ltd. Hong Kong

Comsat Investment Inc., USA & Lockheed Martin, USA

Atotech, Germany

Mind Crossing, USA

In 2000, the Company reinvented and restructured itself to focus on thebusinesses of Life under the them, LifeOur Focus.

Max New York Life Insurance, founded as a Joint Venture between Max India

Limited and New York Life, a Fortune 100 company, is one of the leadingprivate life insurers in India.

Max Healthcare, a subsidiary of Max India Limited is Indias first provider ofcomprehensive, standardized, seamless, and integrated world-class healthcareservices.

Neeman Medical International (NMI) is an International Clinical Researchprovider operating across three locations spanning North America, Asia andLatin America. Each location is backed by comprehensive infrastructure andhighly skilled and experienced personnel.

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New York Life LLC

New York Life Insurance Company,(www.newyorklife.com) a Fortune 100

company founded in 1845, is the largest mutual life insurance company in the

United States and one of the largest life insurers in the world. Headquartered in

New York City, New York Lifes family of companies offer life insurance,

annuities and long-term care insurance. New York Life Investment

Management LLC provides institutional asset management and retirement plan

services. Other New York Life affiliates provide an array of securities products

and services, as well as institutional and retail mutual funds.The mission of New York Life is to maintain its superior 'financial strength',

adhere to the highest standards of 'integrity' and demonstrate 'humanity' by

treating its customers, agents and employees with compassion, consideration

and respect.

New York Life is one of the largest and strongest life insurance companies in

the world with more than USD$215 billion assets under management and has

received among the highest ratings for financial strength from the life insurance

industry's principal rating agencies: A.M. Best (AA+), Standard & Poor's (AA+),

Moody's (Aa1), Fitch (AAA). According to Moody's, "New York Life's rating

reflects the company's good quality investment portfolio, ample liquidity, andsound capitalization, as well as the good growth potential of its international

business.

As a leader in the insurance industry, New York Life continues to bring to its

operations new management concepts, advanced technologies, new

distribution and training systems and innovative insurance products.

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Children Plans

Parenting is all about creating the right environment for your children to grow in. Thecare & love that you shower on them must also be accompanied with the properplanning for their future. Helping your child "win the battle of life" is the best gift that aParent can give to his child. Max New York Life with their children plans makes itpossible for you to achieve this dream of giving your child a happy and financiallysecured future. Following are the products, which will provide financial support to yourchildren, while pursuing their dream careers, getting married, buying a home etc:

Children's Endowment to 18 (Par)

Children's Endowment to 24 (Par)

SMART Steps

SMART Steps Plus

SMART Steps Single Premium

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Retirement Plans

People retire but needs don't. Max New York Life with their retirement planscomes forward to support you in your old age and makes the unfulfilled dreams ofyour life come true. Retirement is like a second life, where you can fulfill all yourdreams, which you have been pushing aside in your past because of lack of time.Our retirement plans make sure that you maintain your comfortable lifestyle anddon't compromise with your wishes because of lack of financial resources in yourold age.

Easy Life Retirement (Par)

SMART Invest Pension

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Health Plans

A very common saying - "Heath is Wealth", may have become old but it's true.Diseases can grab anyone at anytime. So, you have to pre-plan in such a waythat you don't have any financial constraint at the time, when your loved ones arein severe pain. Everybody believes that "prevention is better than cure" and adaptstrict diet plans, exercise daily for it as well but no matter how well you take careof your self, diseases can grab you anytime. So, Max New York Life's Health

Plans have been designed to take into account the diverse set of needs at timesof an individual's ill health. These health plans provide you financial security atthe time of health treatments required.

LifeLine MediCash

LifeLine Wellness Plus

LifeLine MediCash Plus

LifeLine Safety Net

LifeLine Wellness

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Savings Plans

It must be admitted that a certain degree of instability lies in every individual's life.Foreseen and unforeseen needs can arrive at any point of time. Max New YorkLife's savings plans will help you. Our dual benefits saving plans recognizes yourneed for a complete all round financial protection and therefore provides you lifecover and helps in the growth of your money.

Money will fly soon, if not taken care of. Therefore, we offer you diverse savingsplans, which would undoubtedly suit your needs and your budget.

Whole Life Participating

Life Gain Plus 25 (Par)

20 year Endowment (Par)

Life Pay Money Back

Endowment to Age 60 (Par)

Life Gain Endowment

Life Gain Plus 20 (Par)

Life Partner

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Rural Plans

Can anybody remember when the times were not hard and money notscarce?

Max New York Life's Rural Plans have been tailored especially to meet all kindsof requirements of rural customers or investors. The Hassle free procedures andLow & affordable premiums, being the key features of rural plans, proves MaxNew York Life exceptional in offering their incredible services to all the classes ofour society. The following Rural plans have been designed keeping in mind the

rural investors. So that they don't have to worry about the high premium rates andcomplex application forms.

Easy Term Policy

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What is Max VijayThe Background As human beings we all have dreams and aspirations, a desire to achieve andgo beyond. Go beyond the present, changing our lives and for some, changingthe lives of others too for the better. We are all firm believers in the hand ofdestiny, however that doesnt deter us from trying, thankfully. Yet there arethose, who through the drudgeries and miseries of their everyday life,sometimes feel trapped refusing to seek and explore an otherwise unexploredpath.The Vision Created with the vision to empower every Indian to secure his dreams, MaxVijay is an honest endeavor to provide financial security to the under-servedmasses by creating a life insurance product rooted in a deep understanding oftheir financial needs.So what is Max Vijay, a salutation, a victory path or an insurance policy?Max Vijay is not just another life insurance policy of MNYL; Max Vijay is thesymbol of victory of the common man, a beacon for a better tomorrow. Webelieve that true win for India lies in encouraging people to save their hardearned money, a small contribution that would go on to change their future.While the underlying reality remains that MoneyIt just slips through MaxVijay initiative will empower people, provide hope and will offer insurance cumsaving solutions to the under-served packed in the form of an InsuranceSavings Box (Beema Gullak)Max New York Life Insurance Company Limited proudly presents a

unique Life Insurance policy Max Vijay which is

About making better tomorrow possible

A Clear sight of goal - Fulfillment of dream

A belief in the path to achieve the goal, and

Vijay is the Triumph of human life

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Chapter- 8

MARKET RESEARCH

What is Market Research?

Market research is the systematic design, collection, analysis, and reporting of

data and findings relevant to a specific marketing situation facing the company.

Market research firms fall in to the three categories:

1) Syndicated-service research firms-These firms gather consumer and tradeinformation, which they sell for a fee.

2) Customs market research firms-These firms are hired to carry out specific

projects. They design the study and report the findings.

3) Specialty-line market research firms-These firms provide specialized

research services to other firms.

Benefits of Market Research

Information gained through marketing research isn't just "nice to know." It's solid

information that can guide your most important strategic business decision.

Market research is effective when the findings or conclusions you reach have a

value that exceeds the cost of the research itself.

Market research guides your communication with current and potential

Customers

Once you have good research, you should be able to formulate more effectiveand targeted marketing campaigns that speak directly to the people you're trying

to reach in a way that interests them. For example, some retail stores ask

customers for their zip codes at the point of purchase. This information, which

pinpoints where their customers live, will help the store's managers plan suitable

direct mail campaigns.

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Market research helps you identify opportunities in the marketplace.

For example, if you are planning to open a retail outlet in a particular geographic

location and have discovered that no such retail outlet currently exists, you have

identified an opportunity. The opportunity for success increases if the location is in

a highly populated area with residents who match your target market

characteristics. The same might be true of a service you plan to offer in a specific

geographic area or even globally, via the Internet.

Market research minimizes the risk of doing business.

Instead of identifying opportunities, the results of some market research may

indicate that you should not pursue a planned course of action. For example,

marketing information may indicate that a marketplace is saturated with the type

of service you plan to offer. This may cause you to alter your product offering or

choose another location.

Market research helps you evaluate your success.

Information gathered through market research helps you to determine if you're

reaching your goals. In the above example, if your product's target market is

women between the ages of 35 and 50, then you're making progress toward your

goal. (If not, this information can indicate a needed change in marketing strategy!)

Marketplace competition is information about the other companies

Within your area of business. Research answers these questions: Who are my

primary competitors in the market? How do they compete with me? In what

ways do they not compete with me? What are their strengths and weaknesses?

Are there profitable opportunities based upon their weaknesses? What is their

market niche? What makes my business unique from the others? How do my

competitors position themselves? How do they communicate their services to

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the market? Who are their customers? How are they perceived by the market?Who are the industry leaders? What is their sales volume?

Environmental factors information uncovers economical and political

Circumstances that can influence your productivity and operations. Questions

to be answered include: What are the current and future population trends?

What are the current and future socio-economic trends? What effects do

economic and political policies have on the your target market or my industry?

What are the growth expectations for my market? What outside factorsinfluence the industry's performance? What are the trends for this market and for

the economy? Is the industry growing, at a plateau, or declining?

Target market. What is the best target market for the products or services being

offered by the organization? How large is the target market and how can it be

described? What are the attitudes, opinions, preferences, lifestyles, and so on of

its members?

Products/services. Regarding particular, products and services, how satisfied or

dissatisfied is the target. market with what is currently available?

What product features and benefits do those consumers desire? How do they

compare the organizations product with those offered by competitors?

Price.How much value does the target market place on the product in question?

What products are they willing to substitute for the product in question? What

prices are charged for those substitutes? What advantages in features or

benefits or appealsdoes the organizations product have that might allow it to

charge a higher price?

Distribution. What distribution channel is the target market most likely to use

when purchasing the product in question? Is the organizations pricing in line with

what the target market expects to pay for the product when purchased through

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that channel? Does the pricing include the size of margin the channel traditionallyexpects to receive? Will the channel be able to provide the service or support

needed for the product?

Promotion. What can the organization say in its advertisements about its product

that will appeal to the target market and lead them to consider the organizations

product more attractive, than those offered by competitors?

Through what medium(s) (television, newspaper, billboards, etc.) should the

organization advertise? What specific vehicles (i.e., what specific televisionprograms or newspapers) should the organization use to carry the

advertisements? How often should the advertisements appear, and how much

money should the organization spend on advertising? Should personal selling be

used and, if so, how? What kinds of promotions would have a favorable effect on

the target market?

Market Research

The Process

Market research, like other components of marketing such as advertising, can be

quite simple or very complex. You might conduct simple market research such as

including a questionnaire in your customer bills to gather demographic information

about your customers. On the more complex side, you might engage a

professional market research firm to conduct primary research to aid you in

developing a marketing strategy to launch a new product.

Regardless of the simplicity or complexity of your marketing research project,

you'll benefit by reviewing the following seven steps in the market research

process.

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Step One: Define the Problems, the decision alternatives, and the researchobjectives:

The market research process begins with identifying and defining the problems

and opportunities that exist for your business, such as:

1 Launching a new product or service.

2 Low awareness of your company and its products or services.

3 Low utilization of your company's products or services. (The market is familiar

with your company, but still is not doing business with you.)

4 A poor company image and reputation.

5 Problems with distribution, your goods and services are not reaching the

buying public in a timely manner.

Step Two: Set Objectives, Budget and Timetables

Objective:With a marketing problem or opportunity defined, the next step is to

set objectives for your market research operations. Your objective might be to

explore the nature of a problem so you may further define it. Or perhaps it is to

determine how many people will buy your product packaged in a certain way and

offered at a certain price. Your objective might even be to test possible cause and

effect relationships. For example, if you lower your price by 10 percent, what

increased sales volume should you expect? What impact will this strategy have

on your profit?

Budget: How much money are you willing to invest in your market research?

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How much can you afford? Your market research budget is a portion of youroverall marketing budget. A method popular with small business owners to

establish a marketing budget is to allocate a small percentage of gross sales for

the most recent year. This usually amounts to about two percent for an existing

business. However, if you are planning on launching a new product or business,

you may want to increase your budget figure, to as much as 10 percent of your

expected gross sales. Other methods used by small businesses include analyzing

and estimating the competition's budget, and calculating your cost of marketing

per sale.

Timetables:Prepare a detailed, realistic time frame to complete all steps of the

market research process. If your business operates in cycles, establish target

dates that will allow the best accessibility to your market. For example, a holiday

greeting card business may want to conduct research before or around the

holiday season buying period, when their customers are most likely to be thinking

about their purchases.

Step Three: Select Research Types, Methods and Techniques

There are two types of research: primary research or original information

gathered for a specific purpose and secondary research or information that

already exists somewhere. Both types of research have a number of activities and

methods of conducting associated with them.

Secondary research is usually faster and less expensive to obtain that primary

research. Gathering secondary research may be as simple as making a trip toyour local library or business information center or browsing the Internet.

See Market Research Types, Methods and Techniques for more details about the

activities and methods for primary and secondary research.

Step Four: Design Research Instruments

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The most common research instrument is the questionnaire. Keep these tips inmind when designing your market research questionnaire.

1 Keep it simple.

2 Include instructions for answering all questions included on the survey.

3 Begin the survey with general questions and move towards more specific

questions.

4 Keep each question brief.

5 If the questionnaire is completed by the respondent and not by an interviewer

or survey staff member, remember to design a questionnaire that is graphically

pleasing and easy to read.

6 Remember to pre-test the questionnaire. Before taking the survey to the

printer, ask a few people-such as regular customers, colleagues, friends or

employees-to complete the survey. Ask them for feedback on the survey's

style, simplicity and their perception of its purpose.

7 Mix the form of the questions. Use scales, rankings, open-ended questions

and closed-ended questions for different sections of the questionnaire. The

"form" or way a question is asked may influence the answer given.

Basically, there are two question forms: closed-end questions and open-

end questions.

Step Five: Collect Data

To help you obtain clear, unbiased and reliable results, collect the data under the

direction of experienced researchers. Before beginning the collection of data, it is

important to train, educate and supervise your research staff. An untrained staff

person conducting primary research will lead to interviewer bias.

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Stick to the objectives and rules associated with the methods and techniques youhave set in Step Two and Step Three. Try to be as scientific as possible in

gathering your information.

Step Six: Organize and Analyze Data

Once your data has been collected, it needs to be "cleaned." Cleaning research

data involves editing, coding and the tabulating results. To make this step easier,

start with a simply designed research instrument or questionnaire.

Some helpful tips for organizing and analyzing your data are listed below.

1 Look for relevant data that focuses on your immediate market needs.

2 Rely on subjective information only as support for more general findings of

objective research.

3 Analyze for consistency; compare the results of different methods of your

data collection. For example, are the market demographics provided to you

from the local media outlet consistent with your survey results?

4 Quantify your results; look for common opinions that may be counted together.

Step Seven: Present and Use Marketing Research Findings

Once marketing information about your target market, competition and

environment is collected and analyzed, present it in an organized manner to the

decision makers of the business. For example, you may want to report your

findings in the market analysis section of your business plan. Also, you may want

to familiarize your sales and marketing departments with the data or conduct a

company-wide informational training seminar using the information. In summary,

the resulting data was created to help guide your business decisions, so it needs

to be readily accessible to the decision makers.

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RESEARCH STUDY

8.1. RESEARCH OBJECTIVES

The objective of the project is to find out the consumer Satisfaction or

Preference and behavior of customer towards Insurance Sector especially

towards MAX NEW YORK.

What all are the stimuli effecting there choices before selecting a Insurance

company. Is it the credibility, good return or celebrity endorser.

It also helps in letting the above Insurance know its basic position in relation to its

competitors in the market & how better can it help re-design its product in

achieving higher sales growth.

The study of this research also analyses the findings and provide MAX NEW

YORK with the effective recommendations or suggestions.

RESEARCH METHODOLOGY

Research Design

A research design is a type of blue print prepared depending on various types of

blueprints available for the collection, measurement and analysis of data. A

research design calls for developing the most efficient plan of gathering the

needed information. The design of research study is based on the purpose of the

study.

A research design is the specification of methods and procedures for acquiring

the information needed. It is overall operational pattern or framework of

the project that stipulates what information is to be collected from

which source by what procedures.

Types, Methods and Techniques

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Secondary Research

Usually the easiest and least expensive, secondary research is information that

already exists somewhere. It may be a study, a group of articles on a topic, or

demographic or statistical data gathered by someone else. For example, the

demographic data about car owners in your county available from your Chamber

of Commerce may be just the information you need-and it's already gathered!

Secondary Research Activities

1 Review and analyze the existing data on your target markets available from

magazines, books, published research studies, government publications, etc.

2 Evaluate the competition.

3 Assess environmental factors such as social, economic, political, etc.

Secondary Research Methods

Because secondary research already exists, no specific scientific method or

technique is needed to collect information. Instead, your efforts are spent locating

and gathering market information from reliable sources. Don't forget the Internet.

Many of the resources listed below, such as magazines, trade associations and

government resources now have materials available online.

Some resources for gathering secondary research information include:

1 Libraries and other public information centers - Look in reference

centers for resource materials and other existing data on your market.

2 Books and business publications - Many books have been written on

specific industries and markets. Look for helpful existing data and

environmental factors.

3 Magazines and newspapers - Each and every day, studies and other

survey results are released as news events. Also, look into news about

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environmental factors such as the leading economic indicators or theupcoming local political elections.

4 Trade associations - Most associations have reports on the industries they

serve, the standards they operate under and leaders in the field.

Many even conduct educational seminars on trends and other issues.

Associations are also helpful in researching the competition. Chambers of

Commerce - The local Chamber is a terrific resource for information on the

community you hope to serve, other local businesses and maps of the area.One can also learn from other members at Chamber networking events.

1 Banks, real estate and insurance companies may keep information and

statistics on the communities they serve.

2 Wholesalers and manufacturers - Contact these enterprises for

information on the industry standards, customers, costs, distribution, potential

problems

3 Indian government resources can provide extensive demographic data on

population, markets and the economy like Census Bureau of India .

4 Media representatives - Advertising salespeople at TV, radio, and print

media outlets keep information on the markets their viewers, listeners, and

readers to help influence potential advertisers.

5 Competition - Ask directly for company brochures, menu of products and

services, prices, annual reports, etc. One may have to disguise him/her self

as a potential customer!

Primary Research

Sometimes, the information you need doesn't exist-anywhere! You've searched

the Internet, you scoured the library, journals and databases all to no avail. That's

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when you may need to conduct primary research, or research conducted for aspecific purpose. FYI, the secondary research you may have used was probably

someone's primary data once.

Primary

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