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A Study On Customer Awareness And Preference Of Life Insurance Policies With

Reference To Kotak Life Insurance

SK EDUCATION AND RESEARCH CENTRE www.skprojectwork.com 1

A PROJECT REPORT

ON

“ A Study On Customer Awareness And Preference Of Life Insurance Policies

With Reference To Kotak Life Insurance”

Abstract The main issue in the life insurance market today is there are many insurers in the market when compared to 2 decades ago, Now consumers can decide to which insurer they may go with and even a diversified plans are available with all the insurers, This projects main problem is regarding has the advertisement and other steps taken b the Kotak Life Insurance Company has it reached the level needed, for this i have used a sample size of 100 people.

The primary objective of this project was to find out the consumer perception towards Kotak life Insurance Company, and to find out the awareness of the consumers about the insurance plans available with the company.

So a survey was taken using the descriptive method was adapted since it suits this primary objective, and the analysis used in the project are Chi-Square Analysis and Simple Percentage Analysis Method has been used. And the finding and suggestion followed by conclusion are given in the final part of the project.




CONTENTS

CONTENTS Page No.

Chapter I

1.1 Introduction – An Overview 10

1.2 Life Insurance Market 11

1.3 History of Insurance 12

1.4 Introduction to Industry 13

Chapter II

2.2 Statement of The Problem 14

Chapter III

3.1 Objectives Of The Study 15

Chapter IV

4.1 Research Methodology 16

4.2 Review of Literature 22

4.3 Scope of The Study 25

4.4 Limitation of The Study 26

Chapter V

5.1 Company Profile 27

5.2 Product Profile 34




Chapter VI

6.1 Analysis & Interpretation 53

Chapter VII

7.1 Findings 57

Chapter VIII

8.1 Suggestions 59

Chapter IX

9.1 Conclusion 60

Appendices

Questionnaire 61

Bibliography 63




Introduction – An Overview With largest number of life insurance policies in force in the world,

Insurance happens to be a mega opportunity in India. It’s a business

growing at the rate of 15-20 per cent annually and presently is of the order

of Rs 450 billion. Together with banking services, it adds about 7 per cent

to the country’s GDP. Gross premium collection is nearly 2 per cent of GDP

and funds available with LIC for investments are 8 per cent of GDP.

Yet, nearly 80 per cent of Indian population is without life insurance

cover, health insurance and non-life insurance continue to be below

international standards. And this part of the population is also subject to

weak social security and pension systems with hardly any old age income

security. This itself is an indicator that growth potential for the insurance

sector is immense.

A well-developed and evolved insurance sector is needed for

economic development as it provides long term funds for infrastructure

development and at the same time strengthens the risk taking ability. It is

estimated that over the next ten years India would require investments of

the order of one trillion US dollar. The Insurance sector, to some extent,

can enable investments in infrastructure development to sustain economic

growth of the country.

With a large capital outlay and long gestation periods, infrastructure

projects are fraught with a multitude of risks throughout the development,

construction and operation stages. These include risks associated with




project implementation, including geological risks, maintenance,

commercial and political risks. Without covering these risks the financial

institutions are not willing to commit funds to the sector, especially because

the financing of most private projects is on a limited or non- recourse basis.

Insurance companies not only provide risk cover to infrastructure projects,

they also contribute long-term funds. In fact, insurance companies are an

ideal source of long term debt and equity for infrastructure projects. With

long term liability, they get a good asset- liability match by investing their

funds in such projects.

IRDA regulations require insurance companies to invest not less than

15 percent of their funds in infrastructure and social sectors. International

Insurance companies also invest their funds in such projects.

Life Insurance Market The Life Insurance market in India is an underdeveloped market that

was only tapped by the state owned LIC till the entry of private insurers.

The penetration of life insurance products were 19 percent of the total 400

million of the insurable population. The state owned LIC sold insurance as

a tax instrument, not as a product giving protection. Most customers were

under- insured with no flexibility or transparency in the products. With the

entry of the private insurers the rules of the game have changed.

Innovative products, smart marketing and aggressive distribution.

That's the triple whammy combination that has enabled fledgling private




insurance companies to sign up Indian customers faster than anyone ever

expected.

The growing popularity of the private insurers shows in other ways.

They are coining money in new niches that they have introduced. The state

owned companies still dominate segments like endowments and money

back policies. But in the annuity or pension products business, the private

insurers have already wrested over 33 percent of the market. And in the

popular unit-linked insurance schemes they have a virtual monopoly, with

over 90 percent of the customers.

Indians, who have always seen life insurance as a tax saving device,

are now suddenly turning to the private sector and snapping up the new

innovative products on offer.

The private insurers also seem to be scoring big in other ways- they

are persuading people to take out bigger policies. For instance, the

average size of a life insurance policy before privatization was around Rs

50,000. That has risen to about Rs 80,000. But the private insurers are

ahead in this game and the average size of their policies is around Rs 1.1

lakhs to Rs 1.2 lakhs- way bigger than the industry average.

The 12 private insurers in the life insurance market have already

grabbed nearly 9 percent of the market in terms of premium income.

The new business premium of the 12 private players has tripled to Rs 1000

crore in 2002- 03 over last year. Meanwhile, state owned LIC's new

premium business has fallen.




History of Insurance The history of life insurance in India dates back to 1818 when it was

conceived as a means to provide for English Widows. Interestingly in those

days a higher premium was charged for Indian lives than the non-Indian

lives as Indian lives were considered more risky for coverage.

The Bombay Mutual Life Insurance Society started its business in

1870. It was the first company to charge same premium for both Indian and

non-Indian lives. The Oriental Assurance Company was established in

1880. The first general insurance company- Tital Insurance Company

Limited was established in 1850. Till the end of nineteenth century

insurance business was almost entirely in the hands of overseas

companies.

Insurance regulation formally began in India with the passing of the

Life Insurance Companies Act of 1912 and the provident fund Act of 1912.

Several frauds during 20's and 30's sullied insurance business in India. By

1938 there were 176 insurance companies. The first comprehensive

legislation was introduced with the Insurance Act of 1938 that provided

strict State Control over insurance business. The insurance business grew

at a faster pace after independence. Indian companies strengthened their

hold on this business but despite the growth that was witnessed, insurance

remained an urban phenomenon.

The Government of India in 1956, brought together over 240 private

life insurers and provident societies under one nationalized monopoly

corporation and LIC was born. Nationalization was justified on the grounds




that it would create much needed funds for rapid industrialization. This was

in conformity with the Government's chosen path of State lead planning

and development.

The (non-life) insurance business, however, continued to thrive with the

private sector till 1972. Their operations were restricted to organized trade

and industry in large cities. The general insurance industry was

nationalized in 1972. With this, nearly 107 insurers were amalgamated and

grouped into four companies- National Insurance Company, New India

Assurance Company, Oriental Insurance Company and United India

Insurance Company. These were subsidiaries of the General Insurance

Company (GIC).

Statement Of Problem: The main problem in this project this to find out has the

advisements and other promotional steps taken by the company has

it reached the consumer.

Objectives Of The Study 3.1. Primary Objectives

The primary objective of this project is to find out the customers

perception about the products of Kotak Mahindra Old Mutual Life Insurance

Ltd

To assess the level of customer awareness about Kotak Life

Insurance policies.




3.2 Secondary Objectives To understand the perception of customers about Kotak Life

Insurance vis-à-vis its competitors in the segment.

To measure the perception of customers towards Kotak Life

Insurance in terms of the quality, security and services provided to them.

To know the most preferred policy.

To know whether the service offered by the company is satisfied the

needs of all groups of people.

To find out the benefits preferred by the customers.

To know about their views about the company and to assess to their

views.

To determine the use of Internet for valuable information and decision

- making process.

Research Methodology 4.1.1. Research

Research means a search for knowledge sometimes it may a

scientific and systematic search for pertinent information on a specific topic.

4.1.1.1 Research Design




A research design is the arrangements of conditions for collection and

analysis of data in a manner that aims to the research purpose with

economy in procedure.

It stands for advance planning of the method to be adopted for collecting

the relevant data and technique to be used in the analysis, keeping in view

the objectives of the research and availability of the respondent’s time and

money.

Descriptive research design, which includes surveys and facts- findings

enquiries of different kinds. The major purpose of the descriptive research

is for the descriptive of the state affair, as it exists at present.

4.1.1.2. Population

The population consists of customers for Kotak Life Insurance Company,

Chennai.

4.1.1.3. Sample Size

The sample size is 100 customers. The sample size was determined by

taking in to account all the components required for efficiency,

representation, reliability and flexibility.

4.1.1.4. Sampling Method

The sampling used is Random sampling which comes under probability so

that every member of the population has an equal chance of being

selected.

4.1.1.5. Tools For Analysis




The data collected was analyzed using tools such as,

Simple Percentage analysis.

Chi-square test.

4.1.2. Methods Of Data Collection Data are collected from both primary and secondary sources.

4.1.2.1. Primary Data

Primary data’s are collected by the researcher. The primary data are

those, which are collected for the 1st time and thus happens original in

character. The primary data were collected through personal investigation

with the help of questionnaire.

4.1.2.2. Secondary Data

Secondary in information is any data originally generated for same purpose

other than the present research objectives. The secondary data are those

which are already been collected by someone else and which have already

been passed through statistical process. Secondary data were collected

from journals, company brochures and the internet.

4.1.2.3. Data Analysis

The collected data was analyzed using percentage, chi-square test

and weighted average method. In the tables, various attributes are divided,

categorized and expressed along with percentages so as to be easy for




analysis. Various bar diagrams in both vertical and horizontal manner are

drawn parallel to each other in different length depending upon the

responses in various question from which we can comparatively note the

deviation in the diagrams.

4.1.3. Chi-Square Test Chi square test is a non parametric test used most frequently in

marketing research test to the hypothesis. This is employed for testing

hypothesis when distribution of population is not know and when nominal

data is to be analyzed. Chi square test aims to determine whether

significant differences exist among group of data or whether differences are

due to sampling.

Chi square analysis is a complex mathematical subject that cannot be

fully treated here. The following discussion of the two methods is designed

to help the reader gain an understanding of the basic concept underlying

them. For the most part, the discussions avoid the complex mathematics

that is an integral part of the techniques. Chi square analysis can be used

to test for the statistical significance of difference observed between two

equivalent sets of categories that result from field survey or experiments. A

chi square analysis can be used when the data satisfy four conductions.

There must be two observed sets of data and one expected set of

data.

Typically these data sets are in table form or in frequency distribution

form. The two set of data must be based on the sample size.




Each cell in the data contains an observed or expected count of five

or larger.

The Different cells in a row or column represent categorical variable

There are three commonly encountered of chi square analysis.

Perhaps the most common occurs when researchers observe that, for a

certain product, men shows different distribution of consumption rates than

women, or that the user of certain brand in the city A shows a different kind

of distribution that the users of the same brand in the city. B researchers

often must test whether the difference in such distributions are statistical

significant. With the help of chi square test, one can ascertain whether the

given discrepancy between theory and observation is due to chance or due

to failure of theory to fit into observed fact.

The observed and expected frequencies completely coincide when the

value of chi square increase, the discrepancy and expected frequencies

increases. The following formula is used for calculate Chi-square test.

4.1.3.1. Null Hypothesis (Ho)

Consumers do not differ in their opinion on the various selection

criteria of LG (IT) products.

4.1.3.2 Alternative Hypothesis (H1)

Consumers differ in their opinion on the various selection criteria of

LG (IT) products.

4.1.3.3 Percentage Method




Percentage refers to a special kind of ratio. Percentages are used in

comparisons between two are more series and also to describe the

relationship. Percentage reduces everything to a common base and they

are by allowing the meaningful comparison to be made.

4.1.3.4. Decision:

The calculated values of chi-square are compared with tabulated

values at a certain level of significance. Generally, the level of significance

is taken to be 5%. If the calculated value exceeds the tabulated value then

the null hypothesis is not accepted or else the null hypothesis is accepted.

4.1.3.5. Preparation Of The Report:

In both quantitative and qualitative research the report includes a brief

executive summary of the findings, depending on the assignment from

marketing management. The research may or may not include a full

description of the methodology used for quantitative research, also includes

tables and graphics to support the findings. A sample of the questionnaire

is usually included in the appendix to enable management to evaluate the

objectives of the findings.

Scope Of The Study A large number of new players have entered the market and are

vying to gain market share in this rapidly improving market. The study deals

with Kotak Life Insurance in focus and the various segments that it caters




to. The study then goes on to evaluate and analyze the findings so as to

present a clear picture of trends in the Insurance sector.

Limitations Of The Study The data collected from the customers may be baised.

Due to time constraints a detailed study could not be made.

Only limited numbers of question were asked.

The samples were chosen from Chennai only as they seemed

relevant. This may not be representative of the entire population.

The liking or loyalty of the respondents to a particular Insurance

company might have made him respond unwillingly.

Company Profile 5.1.1 The Partnership:

Kotak Mahindra Old Mutual Life Insurance Ltd is a joint venture between

Kotak Mahindra Bank Ltd., its affiliates and Old Mutual. A company that

combines its international strengths and local advantages to offer its

customers a wide range of innovative life insurance products, helping them




in taking important financial decisions at every stage in life and stay

financially independent. The company is one of the fastest growing

insurance companies in India and has shown remarkable growth since its

inception in 2001. Kotak Life Insurance employs around 5,565 people in its

various businesses and has 197 branches across 141 cities.

5.1.1.1. Kotak Mahindra - Background:

The Kotak Mahindra group is one of India’s leading banking and financial

services organizations, with offerings across personal financial services;

commercial banking; corporate and investment banking and markets; stock

broking; asset management and life insurance. The Kotak Group has over

1,300 offices, and services around 5.9 million customer accounts across

India. Kotak also has offices in London, New York, San Francisco,

Singapore, Dubai and Mauritius

5.1.1.2. Old Mutual - Background:

Old Mutual is an international savings and wealth management company

based in the UK. Originating in South Africa in 1845, it is among the top

100 largest companies in the FTSE100. The group has a balanced portfolio

of businesses offering Asset Management, Life Assurance, Banking and

General Insurance Services in over 40 countries, with a focus on South

Africa, Europe and the United States, and a growing presence in Asia

Pacific. Old Mutual employs approximately 54,000 employees worldwide

with its primary listing on the London, secondary listing on the

Johannesburg stock exchanges as well as in Namibia, Malawi and

Zimbabwe.

5.1.1.3. About Kotak Life Insurance:




Kotak Life Insurance Company Limited is one of India’s leading

private life insurance companies offering a range of individual and group

insurance solutions. It is a joint venture between Kotak Life Insurance’s

Product portfolio comprises solutions, which meet various customer needs

such as Protection, Pension, Savings, and Investment. The company

currently has 21 retail and 6 group products in its portfolio.

Kotak Life Insurance maintains very high professional standards

during product offerings by providing sound financial advice, efficient post-

sale service, and immaculate financial security. Ongoing training for

conventional products, and specialized training, for unit-linked products, for

its financial consultants, has also helped its customers choose the product,

best suited for their needs.

Kotak Life Insurance operates across more than 700 cities and

towns of the country supported by its strong network of more than 1,

50,000 Financial Consultants. Kotak Life Insurance also has more than 383

corporate agents and other sales intermediaries including banks for

distribution of insurance products.

Kotak Life Insurance’s gross premium income, for the year ending March

31, 2009 stood at Rs. 4,859 crores and new business premium income

stood at Rs. 2,685 crores. The company has covered over 9, 59,000 lives

year ending March 31, 2009.

Findings It is found that 93% of the Respondents think that investing in life

insurance is a better option whereas only 7% of them have not.




It is found out that out of the total respondents, 47% of the

Respondents are aware of life insurance, 23% of them are aware of non life

insurance and 30% of them are aware of both the kinds of insurance.

It is found that out of total respondents, 89% of the respondents

availed life insurance policies and only 11% of them are not aware of life

insurance policies.


Respondents have taken life insurance policies because they think that

investing in life insurance is a protection for them and 22% of them taken

due to social obligation and bank insistence.


Respondents look for security while 19% of them look for easy settlement

and return while taking a life insurance policy.


Respondents are aware of Kotak Life.

Television is the main mode that creates awareness about Kotak Life

among the Respondents 36% of the respondents agreed upon it.

It is found that out of the total respondents 54% of the respondents

feels that the advertisement given by Kotak Life is good and only 10% of

them feels that it is poor.

It is found out that LIC is preferred mostly for the investment with 43%

and Kotak Life comes second with 29%.





respondents feels that Kotak Life is a better insurance provider than the

other insurance Companies.


respondents though having policies in Kotak Life are not aware about the

schemes of Kotak Life and only 15% of them are aware of it.


respondents selected Kotak Life because they feels that the service

provided by Kotak Life is good.

It is found that out of the respondents, 45% of the Respondents have

taken one policy with Kotak Life and 11% of them have taken three

policies.

It is found that out of the Respondents, 56% of the Respondents

prefers that Kotak Life is good, and 11% of them prefers bad.


respondents have taken policies for below 50000 and 4% of them have

taken policies worth 100000-500000.


respondents feels that the services provided by Kotak Life is good while 2%

of them feels that the services of Kotak Life is poor.


respondents will definitely recommend Kotak Life, while 20% of them will

definitely not recommend Kotak Life to others for taking policies.




Conclusion The study about customer awareness and preference about Kotak

Life Insurance policy was very interesting and informative. It is found out

that most of the respondents are aware about Kotak Life. Though the

awareness level is high about Kotak Life among the public, the preference

level is not up to the mark due to strong competition in the market.

Suggestions made were based on the study. Findings will certainly help the

company to understand its position in the insurance market and also to find

the level of demand for Kotak Life Insurance policies among the public.

This is synopsis of “A Study On Customer Awareness And Preference Of Life Insurance Policies With Reference To Kotak Life Insurance”

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